Why would you need to think about world megatrends when you’re focused on your business?
Well, you’re no doubt familiar with the saying, taken from the paper by MIT meteorologist Edward Lorenz that gave rise to chaos theory:
A butterfly flapping its wings in Brazil could set off a tornado in Texas.
In other words, little things – even far away — can have big consequences, because everything is connected.
Even bigger things can have disastrous consequences, as the automotive industry found in April (2016) when yet another earthquake hit Japan. Companies including Toyota, with their “just in time” (JIT) inventory system, found their supply chains disrupted as factories that manufactured parts were damaged, forcing stoppages.
Some reports suggest Toyota’s output will drop by up to 80,000 units. Meaning US showrooms will run short of Prius, Scion, and Lexus models and prices will increase. Other car manufacturers that use Japanese parts will be affected, as will businesses waiting for new fleets of vehicles. And, of course, Toyota’s institutional investors take a hit when the stock price drops.
These are just a few of the effects that world megatrends can have around a single environmental issue — one that has economic, social, even political effects across the globe. Which requires companies everywhere to build their strategic foresight capacity and better anticipate the future by trendspotting more broadly.
In case you think Japan has problems that couldn’t happen here, consider Kathryn Schultz’s New Yorker article entitled The Really Big One: An earthquake will destroy a sizable portion of the coastal Northwest. The question is when. Or the fact that Facebook recently invested in a 430,000 square feet campus in an area of Silicon Valley that, should the sea level rise by one foot or more, would require employees to work in the roof garden. Causing one local planner to say, “I don’t know why they chose to build there.”
The reason why is probably the same reason we tend not to look further than our own industries—sometimes not even beyond our own business—when making strategic plans. And that’s understandable. After all, in the light of a continually changing and pressured present, it’s only human nature to want to ignore forces outside our direct control. We tend to talk about disruptions as if they come out of left field. But signs from the future are always there, if you know where to look.
Scenario Planning and Strategic Foresight
In the case of Japan car and electronics companies, for example, while they have no control over Mother Nature, they can control from whom they buy their parts and presumably have considerable influence over where those manufacturers build new factories. Such as outside tectonically active areas. They do control their insistence on a fragile “JIT” system when it may make more sense to abandon that for a more flexible “split spend” approach. And any company can (and should) invest time thinking about future scenarios so that if or when disaster strikes, they’re more agile and sure-footed than would otherwise be the case.
But there’s something else you miss when you stick to monitoring industry trends alone. Or ignore anything that’s happening outside your own four walls. It’s only by factoring in global shifts across a broader range of topics that you come to discover “white space” opportunities that give you a competitive advantage.
Your thoughts on using world megatrends?
Take our poll, or share your selection in the comments box, including the reason for your choice:
How knowledgeable is your company’s leadership about world megatrends—the forces impacting long-term social, economic, environmental, political and technological shifts?
- Very: We monitor the pace of change, long-term, across all of those five themes
- Somewhat: We stay informed only about megatrends we consider directly impact our business
- Not Very: Industry trends are our main focus
- Not at All: Too busy fighting fires to look beyond our business and the present
Dr. Liz Alexander is Leading Thought’s in-house futurist.