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Macro Trends

I learned early on that strategists extrapolate their knowledge to predict future events, even though folks always disclaim "no one can predict the future." So planning teams conduct environmental analyses, external analyses, trend analyses, etc.

Here I call them macro (outside your firm and it's immediate market) trends (likely behaviors).

As a Strategic Planning Consultant with over 20 years of experience, I have developed a sense of what are reasonable assumptions to make about future events.

A macro trend has a long life, a result of many forces in your community that you cannot manipulate. Like a river, you go with the current or exhaust yourself fighting it. Usually, as a strategic planning team formulates a strategy, we start with and lump trends into areas of analysis in our external environment - our market and our community. We are assessing opportunities and threats for a SWOT.

• Demographics - population groups, life spans, family composition, disposable incomes
• Economics - capital, business processes, productivity, work patterns, management
• Environment - raw resources, ecosystems, transportation channels, habitat
• Government - world events, politics, laws, public and economic policy, regulation
• Society - lifestyles, values, religion, leisure, culture, education, public-health
• Technology - innovations, scientific discoveries, economies of scale

Since 2008, I have commented on economic trends in my blog using Twitter. Like many of you, I don't want to be caught off guard again.

A trend may fall under several of areas, but as a strategic planning facilitator, I resist the temptation to put it under two or more, since you can overstate its importance.

Most strategists feel that four areas need to be studied in detail: politics, economics, society (demographics) and technology, which is often called a PEST assessment, particularly in Europe. Add environmental and legal to get a PESTEL (or PESTLE) assessment.

One definition for "driver" is a trend in the community, as it builds momentum, that will trigger an opportunity for your business. For example, in the 1970s Royal Dutch Shell saw the need for more refineries as an opportunity with the driver being the 1973 Oil Shock. A current driver for web meetings is increasing travel costs, which will increase demand for Webex and Citrix Go to Meeting.

This chart suggests that Just In Time Deliver has lowered the total capacity of US Industries since the late 1990s. JITD is a driver affecting plant retirements, expansion and hirings.

Click to see larger image

We can estimate demographic trends well into the future while politics seems to evolve along the election cycle.

Economics - the business cycle our focus - is data rich but prone to short term surprises. Technology trends are identified from industry associations as the best firms innovate and create the standards so their products will have an advantage in the market.

The questions are do you move early or wait? If you wait, do you hedge your bets? Is the trend an opportunity to take advantage of, or a threat that will make doing business very difficult?

Next, how do you assess and track these trends.