This is one of the best justifications I have ever seen about why businesses need to pay attention to trends:
“The right product markets, technology, and geography are critical components of long-term economic performance. Bad industries usually trump good management, however: in sectors such as banking, telecommunications, and technology, almost two-thirds of the organic growth of listed Western companies can be attributed to being in the right markets and geographies. Companies that ride the currents succeed; those that swim against them usually struggle. Identifying these currents and developing strategies to navigate them are vital to corporate success.”
The above quote is from an article in the recent McKinsey Quarterly. The article goes on to identify ten trends to watch in 2006.
Most of the trends identified in the McKinsey article span a much longer time horizon than just the upcoming year. They also focus more on big businesses, than small business.
Still, they are helpful if you want to gain a broad, long-term, big-picture view of where our world is trending, and spot promising opportunities. Here are the Top Ten Trends according to McKinsey:
1. Centers of economic activity will shift profoundly, not just globally, but also regionally – Asia will overtake Europe economically, although the U.S. will have the largest economic growth for the next 20 years.
2. Public-sector activities will balloon, making productivity gains essential – Aging populations are creating demand for public services, which in turn will increase taxes.
3. The consumer landscape will change and expand significantly – Consumer spending power in emerging economies is growing. Here in the U.S., the Hispanic consumer is growing.
4. Technological connectivity will transform the way people live and interact – The article notes, “For perhaps the first time in history, geography is not the primary constraint on the limits of social and economic organization.”
5. The battlefield for talent will shift – A global labor market is opening up.
6. The role and behavior of big business will come under increasingly sharp scrutiny.
7. Demand for natural resources will grow, as will the strain on the environment.
8. New global industry structures are emerging – According to the article, “In many industries, a barbell-like structure is appearing, with a few giants on top, a narrow middle, and then a flourish of smaller, fast-moving players on the bottom. ”
9. Management will go from art to science. Gut instinct management is dead, the authors say. I say, “maybe.”
10. Ubiquitous access to information is changing the economics of knowledge – Think open-source knowledge creation.