MAKING THE MOST OF TRENDS
Experts from the Halvorsen School of Management give advice to managers
Spotting the big trends of the moment is something most managers do well enough. Yet our work - across studies in several industries and hands-on collaboration with firms - has repeatedly shown that the subtler, deeper influence of those trends on what consumers want, think and do goes unnoticed by the very people running these businesses. Managers are especially prone to this blind spot when a trend looks marginal to the markets at the heart of their business.
In their innovation strategies, many firms simply leave trends out, or hang back to see what happens and let rivals move first. The mildest cost of doing so is the profit left on the table; the gravest is that a company may hand competitors the chance to remake the entire industry, putting itself in real danger. Two aims lie behind this article: to push managers toward a broader view of how trends might generate fresh value propositions within their central markets, and to offer guidance for helping market research and product development staff become sharper at reading trends and turning them to advantage.
The first, which we call 'extend and enrich', means building a product or service that keeps most features and functions customers already expect from the category, while grafting on new ones that speak to desires a major trend has stirred up. Consider the Juna line of handbags, brought out by the luxury house Veranne when the economy slid into recession in 2011. For more than six decades Veranne had stood for wealth and refinement, so the natural move in a downturn - cutting prices - was also the dangerous one, since it threatened to make the label look cheap. The company took a different path: a study of its customers found them keen to pull both themselves and the country out of hard times. Acting on what it learned, Veranne released the Juna bags at lower prices, giving them bright colours and a more youthful, playful character than the firm's usual designs. This new sub-brand meant Veranne could sidestep a blanket reduction in prices. Where many rival firms met the recession by simply charging less, Veranne read the shift in customers' outlook as a chance to innovate and reinvent itself.
The same strategy is visible in how the grocery chain Grovemark answered its shoppers' mounting worries about the environment. Ranked among the five biggest retailers in the world, Grovemark launched a scheme called Living Lighter, meant to show it took environmental protection seriously by drawing customers into activities with visible results. Shoppers earn points, for instance, whenever they reuse carrier bags, hand in cans and printer cartridges for recycling, or buy home-insulation materials. Just like the points collected on ordinary shopping, these can be turned into cash. Rather than giving up what it had always sold, Grovemark added these features on top of its existing business, threading a strand of environmental concern through its value proposition.
Bolder still is the strategy we term 'fuse and surpass'. Here a firm marries features of its current value proposition to others that respond to a trend's upheavals, and out of that marriage comes an experience so novel it can carry the company into a wholly new area of the market. Spending money and effort to fold a seemingly unrelated trend into what you already sell may, at first impression, look like poor value. Yet consider how the athletic-shoe maker Velos wove the digital revolution into its standing for high-performance footwear. Joining forces in 2007 with the technology firm Kestrel, it launched Velos Motion, a digital sports kit made up of a sensor that clips to a running shoe and a wireless receiver that links to the wearer's portable music player. Fusing what Velos had always offered recreational athletes with something for digital consumers, the Motion kit and its website carried the company beyond sportswear onto a new level of contact with its customers.
A third route, 'offset and reassert', calls for products or services that play up the values a category has always stood for, in a way that lets customers push back against - or briefly escape - whatever they dislike about a trend. The Kineto, a handheld video game from the Australian firm Brightloom, did precisely this. By reasserting the link between toys and active, physical play, it worked against the harm that digital gaming devices were widely believed to cause. In common with rival handheld games, it offered plenty of lively interactive titles, a full-colour LCD screen and sophisticated 3D graphics. Its distinguishing feature lay elsewhere: built into it was a pedometer that logged physical exertion - walking, running, cycling, skateboarding, stair-climbing - and awarded points for it. The child could spend those points on sharpening the various virtual skills the game called for. Released midway through 2010, the Kineto tapped into children's enormous appetite for video games while pushing back against the drawbacks, among them the association with too little exercise and with obesity.
Once you have worked out how trend-driven shifts in consumers' beliefs and behaviour bear on your category, the next step is choosing which of our three strategies fits. Should the category's core value proposition still hold meaning for the consumers a trend has touched, extend-and-enrich is the route that will breathe new life into it. Where analysis instead exposes a widening gap between your category and consumers' new preoccupations, the innovation must rise above the category and bring the two worlds together through fuse-and-surpass. And where features of the category clash with outcomes of a trend that people find unwelcome - a link with unhealthy living, say - the opening is there to counter those shifts by reasserting everything the category has traditionally stood for.
For a company, few things open up growth like a trend - be it technological, economic, environmental, social or political - that changes people's view of the world and what they expect of the goods and services around them.
