This is no ordinary Trend Briefing ;)
It's an exclusive preview from our new book, Trend-Driven Innovation. A complete, end-to-end guide to spotting trends AND using them to create products, services and campaigns that people love! So, are you ready to start your trend-driven journey?
But in the end, business success can be boiled down to a simple formula: anticipate what your customers will want next, and give it to them.
You want to know where customers are heading next.
The problem? The received wisdom on how to find out is wrong.
Just figure out what customers are going to want, and give it to them! Easy, right? Of course not.
Every CEO, startup founder, innovator and marketer is (or should be!) obsessed by the question of where customers are headed.
One approach? Ask customers what they want, via surveys, questionnaires, panels and more. But what people say they want and what they really want are often light-years apart.
Okay, forget asking people – what about watching them? Sure, this kind of ethnographic fieldwork can yield deep insights, but it’s hard, slow and expensive.
But wait, problem solved! We have Big Data… But while data is often great when it comes to optimizing what you’re already doing, taken alone it rarely generates the radical insights that can underpin something truly new.
So what’s the answer?
The secret to actionable foresight? Watch businesses, not consumers.
We did say it was a counter-intuitive truth ;)
If there’s a secret at the heart of Trend-Driven Innovation, it’s this:
You can know what your customers are going to want next. Not by asking them, watching them, or crunching their data. But by looking at the innovations that they’re lavishing attention on now.
Yes, that’s right. The key to actionable foresight lies in looking at the overwhelming onslaught on innovation – new brands, products, services, campaigns, experiences and more – that now whiz past our eyes and across our screens every day.
But how can that be true? Why does watching, and interrogating, innovations lead to actionable foresight on what your customers will want next?
The answer lies in the expectations those innovations are creating. And to understand why that’s so important, it pays to take a closer look at one fundamental question: what is a consumer trend, anyway?
A consumer trend is a new manifestation among people – in behavior, attitude or expectation – of a fundamental human need, want or desire.
Trends emerge as innovators address basic human needs in new ways.
That's why watching innovations is at the heart of our trend spotting methodology.
When we say ‘trends’, we’re not talking about aging populations, the rise of China, or the price of oil. Rather, we mean consumer trends.
These trends are made of three building blocks: (i) basic human needs, (ii) drivers of change, and (iii) innovations.
In short, new consumer trends emerge when drivers of change – technological, social, economic and more – unlock new ways of serving basic human needs, such as connection, safety, value, fun (the list is endless). You can learn much more about that in Trend-Driven Innovation.
Here’s the really important part: you can see new consumer trends emerging when you look at clusters of innovations that are leveraging change to address a basic human need in a new way.
Innovations aren’t trends. But they allow us to see the trends that are coming next. Think Airbnb and the ongoing trend for access over ownership (see the next slide). Patagonia and the trend for radically transparent, ethical business. Ben & Jerry’s and the trend for more human, playful brands.
Did you see the epic trend for access over ownership coming?
Way back in our 2006 TRANSUMERS Briefing, we highlighted how a whole range of innovations were serving the human desire for convenience and novelty in a new way. Those innovations were offering customers access to products as and when needed, rather than ownership (and often leveraging the internet to achieve that). If you’d spotted those innovations back then – and analyzed the customer expectations they were helping to create – then years ago, you could have spotted the epic, ongoing trend for access over ownership. A trend that today we see Uber, and a host of others, riding.
But how do a cluster of innovations that serve a basic need in a new way become a trend with the power to spread across the globe? The answer lies in two words: expectation transfer.
Game-changing innovations create new customer expectations.
And once expectations have been created, they spread. That's expectation transfer!
When an innovation serves a basic need in a new way, it sets new customer expectations. That is, it primes customers to expect something new.
And then the really important part happens: expectation transfer.
Once created by a game-changing innovation, new expectations spread across markets, industries, product and service categories, and demographics. And thanks to the global brain, they spread faster than ever. Eventually, they’ll spread all the way to your door!
That’s why any customer today riding in a car expects the entertainment system to be as intuitive as an iPhone. It’s why customers primed by streaming content (Napster became iTunes became Spotify) now expect instant access to a whole range of physical goods, from cars to clothes.
And, most importantly, it’s why watching innovations – and interrogating them for the new customer expectations they set – is the (not so secret) secret to actionable foresight.
LET'S SEE EXPECTATION TRANSFER IN ACTION...
As readers of our FIVE TRENDS FOR 2016 already know, in January 2015, Intel CEO Brian Krzanich announced a USD 300 million fund to build a more diverse workforce.
Of course, that move played into already existing expectations around brands and ethics. But the bold (and expensive!) initiative, along with similar moves by other brands early in 2015, also helped SET new expectations when it comes to brands making positive changes to their internal culture, and then telling the world about them. Since then, we’ve been watching those expectations spread across industries and regions…
...to on-demand taxis in Thailand. In May 2015, on-demand taxi service GrabTaxi expanded its GrabLife driver welfare programme to Thailand, after launching a similar fund in Singapore. The fund offers eligible drivers life insurance, income protection and crisis support, as well as access to educational opportunities.
...to the same industry in India. In September 2015, taxi service Ola announced that it would give free family medical insurance to all drivers on its platform. The brand also offers all drivers free quarterly health checks.
...to retailers in the US. In October 2015, outdoor apparel retailer REI announced that it would close all 143 of its US stores on Black Friday. The brand gave all staff a paid day off, and encouraged them to spend it outside in nature. In 2014, Black Friday was one of REI's most profitable trading days.
...and beyond! Eventually these expectations – that is, the trend we call INSIDER TRADING – will spread to YOUR door! That's expectation transfer in action. You can learn more about how we used similar clusters of innovations to spot some of our best-known trends, from FLAWSOME to POST-DEMOGRAPHIC CONSUMERISM in Trend-Driven Innovation.
A constant tsunami of innovations are setting new customer expectations every day.
Watch those innovations, draw lines between them, and interrogate innovation clusters for the new expectations they set. BOOM, you're spotting trends, and that means actionable foresight on what YOUR customers will want next!
Think of all those innovations as bets on the future.
But what about the bets that lose?
Once you’re convinced that watching innovations generates actionable foresight on what customers will want next, it’s a short leap to the idea that the more innovations you see the better.
You can think of every single innovation – new product, service, campaign, and more – as a bet on the future put into the market to cater to both current and anticipated customer needs and wants. Tracking as many innovations as possible allows you to tap the collective intelligence of the business crowd when it comes to the question: what will customers want next?
When you spot a cluster of similar bets – preferably across a range of industries and markets – you’ll know that you could be on to something. Analyze those bets through the lens of the fundamental needs and wants that underpin them, and the result is actionable foresight.
Just remember, it’s not about whether any single innovation that you used to spot the trend succeeds or fails. It’s about the new expectations the innovations create, and what they mean for you.
A QUICK STORY ABOUT SUCCESS AND FAILURE.
Let's take a look at three smartphones...
This is Project Ara, Google's effort to build and launch a fully modular smartphone. Smashed your screen? Just slot in a new one! Want to upgrade the camera? Ditto! Users will be able to mix and match new modules as they please. Google say they hope to bring the phone to market in 2016.
This is the Blackphone 2, launched in September 2015. It's a smartphone built around the promise of end-to-end data encryption. There's even a physical fuse that will blow if someone tries to tamper with the firmware! Since launching the Blackphone 1 in 2014, manufacturers Silent Circle have raised USD 50 million.
This is the Fairphone 2, launched in September 2015. It's a smartphone with a conscience. The Dutch manufacturers avoid conflict minerals, pay workers in China a fair wage and improved their working conditions. And it's modular, too (they beat Google to it ;). The original Fairphone, launched in 2013, sold 60,000 units after a successful crowdfunding campaign.
We're not saying that THESE will be the phones in everyone's pocket in 2016.
But from a trend spotting perspective, that's not the point...
Project Ara, the Blackphone and the Fairphone: all three are, in their own way, exciting and deeply worthwhile innovations.
Will any of them they replace the iPhone and Samsung Galaxy as the world’s best-selling smartphones in 2016? Almost certainly not. Indeed, these projects might even crash and burn in the coming 12 months.
But when it comes to trends, that really isn’t the point. What matters are the expectations these phones create. And remember, customers don’t have to purchase or even use these phones to have their expectations reconfigured. They just have to hear about them to start asking why isn’t my phone modular? Why can’t my phone encrypt my data? Why can’t my phone be manufactured ethically!?
In fact, you may well be asking yourself those questions about your phone right now!
And the big smartphone manufacturers know that these expectations are heading their way…