Trend Hunting on the Periphery
The other week, I was in Beijing facilitating a company offsite. The company had absolutely no operations in Beijing, and no plans to start operations there. It is a disciplined operator, so this wasn't a junket either. So, what was the company doing in Beijing? It was smartly spending time at the periphery of its industry.
One of the challenges facing market leaders is that transformational trends are only obvious when it is too late. Transformation typically starts in seemingly disconnected industries, or as innocent offerings targeting completely different customer segments.
To spot transformational trends early, companies need to follow the guidance of Wharton professor George Day and long-time McKinsey & Co. thought leader (and current Innosight board member) Richard Foster: they need to experience the peripheries of their industry.
Start with peripheral customers. MIT Professor Eric von Hippel has long advocated spending time with what he calls "lead users." These on-the-cutting-edge users can often be powerful sources of innovation insights as their unique needs lead to them kludging together novel solutions. Young customers often are the first to snatch up new technologies because they don't have to unlearn engrained behaviors. Consider customers facing extreme constraints as well. For example, a few years ago we helped a company looking at hydration opportunities to investigate the workarounds created by soldiers in Iraq.
Also investigate peripheral companies. Look to interesting startup companies or established companies that could one day edge into your market. Avoid the temptation to limit yourself to traditional industry demarcations. As markets increasingly converge and collide, odds are high that the company that will transform your industry will start in a completely different industry. Investigate companies that are solving similar problems that you solve for your customers. Pay particular attention to those companies that are solving those problems in different ways, or targeting completely different customer groups.
At these peripheries, watch carefully for early signs of transformation. One clear sign is the coupling of a solution that makes it simpler for people to address an identified pain point with a business model that looks unattractive to historical market leaders. Remember that transformation starts innocently, so ask what developments would indicate an accelerating pace of change.
Getting to the periphery not only helps to spot transformation early, it exposes leaders to new mindsets that support the pursuit of innovation and growth. For example, my client visited a range of startup companies as well as more established, but non-competitive industry disruptors (for example, a supplier). Leaders returned from these visits with a number of interesting insights. One observed how the fear of running out of cash motivated incredible creativity in startup enterprises. Another noted how a representative of a mid-sized, young company expressed an interesting tension: he boasted of his firm's egalitarian culture while admitting, "The boss really should be telling you these things." Several commented about how deeply committed leaders were to innovation. Almost all had a maniacal customer focus.
You won't get these kinds of insights hobnobbing with the usual suspects at industry trade events. Find ways to get to the periphery to better prepare yourself for the transformations to come.
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.