ILLUSTRATION BY RUTH MACAPAGAL
Big changes bring big opportunities. It is fundamentally important to keep your ears close to the ground and constantly obsess over trends.
I will highlight some of the global trends that will surely influence many of my readers’ businesses to sharpen your awareness, and hopefully those of your teams, for the importance of trends and how they can impact your business.
Why trends are the basis of your success—or failure
As the trusted advisor and counselor to many of the world’s most influential companies, family businesses, market leaders and conglomerates, I am like a doctor who sees many, many cases. This allows me to not only see patterns, but also clear cause-effect relationships.
One of these cause-effect relationships is that the companies that constantly obsess over trends have much less to worry about than the ones that do not. Many of the famous failures in corporate history—from Nokia to Blackberry, from Myspace to Yahoo, from Kodak to Pan Am and Toys R Us—can be traced back to clear neglect of trends analysis.
If you are still not worried because you think you are in a comfortable market position or even a market leader, think again: Since 2000, around 52 percent of Fortune 500 companies have either ceased to exist, been purchased or gone bankrupt.
Case studies
Most companies don’t analyze trends and their impact and are caught being reactive rather than proactive. The more you become aware of trends, the more you can surf them like waves and use them for your business. If you do not, you risk being caught blindsided and even drowning like the famous failures I mentioned above.
One of our Asian clients in the fast-moving consumer good industry asked us to do a five-year strategic road map with their entire group of companies before their massive global expansion. What became clear during our work with them was that they had not taken some fundamental trends into account that would have a big effect on their customer base. One of these trends could have easily eroded their profits.
We taught them that relevance creates response. As a result, they changed their expansion model, diversified the group and changed the marketing approach toward their younger audience to become more relevant.
Coca-Cola approached us with a request for support to one of their largest bottlers at a time when they were facing political and economic uncertainty in some of their key territories. In our analysis of trends, we found that despite all the uncertainties and major changes in these countries, the underlying trends would still support the rising consumption of their core products. What they rather had to focus on to weather the storm was to unify their teams across borders.
Global trend: Deglobalization
If the pandemic and the Russian-Ukraine-North Atlantic Treaty Organization (NATO) conflict have taught the world a lesson, it is above all how much more interconnected and truly globalized our world economies have become. As one of our Asian clients in the food manufacturing industry put it, “At a time when the effects of the pandemic were still ongoing, who would have ever imagined that a distant war would have such a crippling impact on the global economy?”
However, the pandemic and the Russian-Ukraine-NATO conflict have also instilled fear in most countries and have started to cause de-globalization. Countries want to become more self-reliant and independent to avoid overdependence on others.
Global trend: Independence and self-sufficiency
Think about how resources are going to be allocated going forward. In the last decades, the allocation of resources has mostly been driven by economic considerations and profit. Resources and capital would go where products could be produced for the least amount of money.
We are now moving to a situation where there is more ideological or political resource allocation due to conflicts like the one between Russia and Ukraine. But it’s also due to the two superpowers China and the United States competing for global dominance. Thus, we will certainly be witnessing more problems like trading restrictions in the future.
We will also be seeing considerably more nationalism, independence and self-sufficiency in countries. Why? Because countries are worried that they could be cut off in the event of a war but also that they might be too dependent upon other countries if a similar unforeseen event like the global pandemic may strike out of the blue.
Global trend: Rising prices and inflation
In a world where we are moving away from an efficient global economy to one where resources are allocated in part due to ideological or political considerations, this drives up prices and increases inflationary tendencies. Inflation is additionally supported by rising supply chain prices and bad monetary policy. Economies such as the United States have been printing too much money and accumulating too much debt.
The Russian-Ukraine-NATO conflict has changed the entire energy consumption economics for a large part of the world, away from a most efficient sourcing model to one motivated by political and ideological alliances. Countries have to take political sides, which impacts their economic decisions.
With the United States and China continuing to battle for superpower domination, countries the world over will have to take sides again and again in the future. Power alliances will dictate political decisions and therefore economic decisions as well.
Global trend: China’s impact on the world
China’s population is in decline for the first time now since the great famine in the 1950s. Its population projections could mean higher labor costs and that this may no longer become the “Chinese century.” India, whose population is expected to overtake China within this coming decade, could assume a much stronger position then.
However, if China will no longer be one of the leading economic engines as it has been for much of the last 20 years, this will mean higher, not lower, costs for the global economy and the production of goods.
A global recession?
While forecasts like these are always tricky, and timing is even harder to predict, gurus like renowned investor Stanley Druckenmiller warn that rising inflation, the war in Ukraine, rising interest rates and deglobalization could push the odds of a global recession to the highest in decades.
Three to thrive
Someone in your company needs to know how to translate the impact of these global trends and others on your economy, your industry and your businesses.
If you have not made trends impact analysis a core priority of your annual strategic planning sessions and long-term road maps, you are in for some big surprises. Analyze these: How can we exploit this trend for our business? What impact will it have on our industry? How will it change the needs and preferences of our customers and clients? How can we serve them even better knowing this? Do we need to pivot or introduce new products or services?
If you don’t have the expertise in trend analysis in-house, get the right experts to support you. INQ
Tom Oliver, a “global management guru” (Bloomberg), is the chair of The Tom Oliver Group, the trusted advisor and counselor to many of the world’s most influential family businesses, medium-sized enterprises, market leaders and global conglomerates. For more information and inquiries: www.TomOliverGroup.com or email Tom.Oliver@inquirer.com.ph.