Five tips for better trend-watching

The folks at Trendwatching.com have a great primer on trend-spotting and -tracking, especially for consumer trends. Here’s my condensed, paraphrased version (be sure to read the whole, entertaining essay if you’re interested in this).

1. Know why you’re tracking trends. It’s probably to help you dream up profitable new goods and services, i.e., “profitable innovation.” Successful innovations often satisfy existing, dormant consumer needs in new and attractive ways. Trend-watching isn’t futurism; it’s about observing and understanding what’s already happening, the major and the minor, the mainstream and the fringe.

2. Have a point of view. Be a generalist, looking for context. Develop a view of the future of consumerism. Look across industries for insights. Ask why something is appealing to consumers, instead of being judgmental.

3. Weave your Web of resources. “[C]elebrate the incredible wealth of trend resources at your fingertips, many of them free or dirt cheap!” Examples of info sources: Web sites, blogs, books, news, newsletters, Google Alerts, trade shows, customers, “eavesdropping, chat rooms, conversations…”

4. Fine-tune your trend framework. Three levels:

• Macro trends. Categorize them using the STEEP approach: Social, Technological, Economic, Environmental, Political
• Consumer trends
• Industry trends

The three levels of trends affect each other. “Just remember that industry trends, which firms are so keen on understanding, are at the mercy of macro and consumer trends, not the other way ’round.” Look for connections among the trends you’re tracking — the matrix. Come up with creative names for the trends, which makes them memorable and interesting.

5. Embed and apply. Create your own, in-house trend group, with executive support. Tap a network of colleagues as trend-spotters. Have weekly or monthly discussions and distribute the results. Ultimately, the goal is to turn the trends into innovations for your company:

• Influence or shape your company’s vision
• Come up with a new business concept, venture or brand
• Add something new for a certain customer segment
• Speak the language of those consumers already ‘living’ the trend: show them you get it (via marketing, advertising, PR)

Seek out the gadflies, the iconoclasts, the mavericks

Even when they make you uncomfortable. No, because they make you feel uncomfortable.

Gadflies, iconoclasts and mavericks are the people who have the unconventional ideas that can lead to disruptive innovation, or shake up a complacent company. And these are the folks who can identify the “wild cards” that could dramatically alter our future scenarios.

One of the roles of a futurist is to help organizations explore ideas that cause discomfort. As long-time futurist Joe Coates says, futurists are different from regular consultants because, among other things, futurists pay attention to wild cards, discontinuities — and “speak the unspeakable.”

Intelligence Briefs

Innovation metrics? A U.S. Department of Commerce advisory committee will report this fall on its effort to define metrics for measuring the impact of innovation on the economy. — InnovationMetrics.gov / CFO magazine (June 2007)

Avoiding group-think: U.S. spy agencies are starting to acknowledge that they need to recruit more racial and ethnic minorities, especially first-generation Americans who could help fill critical gaps in knowledge and analysis. — The Washington Post (15 August 2007)

Age discrimination: Employers must prepare for more age discrimination claims by unsuccessful job candidates age 40 and older, as the labor pool ages and courts reject traditional legal defenses. — Workforce Management (20 August 2007)

Prices & Costs: Record prices for wheat, the main European Union grain crop, are driving up costs for livestock producers, millers and biofuel refiners. — The Wall Street Journal (4 September 2007)

Kiddie domains: A small but growing number of parents are getting domain names for their young kids, long before they can do more than peck aimlessly at a keyboard. It’s not known exactly how many, but the practice is no longer limited to parents in Web design or information technology. — Associated Press (discovered via Innovation Watch / ABC News)

Online market insights: Consumer research firm Packaged Facts has unveiled a series of reports that offer consumer goods marketers a look at product trends and retail insights about eBay Inc.’s online marketplace (which has 241 million users worldwide). — MarketResearch.com

Study: Experts aren’t necessarily better forecasters than ordinary Joes

There’s a geopolitical conflict, or a labor dispute. You’d think that long-time experts in the field — who’ve seen this kind of thing time and time again — would be the best at predicting the outcome of those disputes. But they aren’t.

“The short answer is that they [expert predictions] are of little value in terms of accuracy. In addition, they lead people into false confidence,” says Kesten Green of Monash University in Australia.

The forecasts of experts who use their unaided judgment are little better than those of novices, according to a new study in a publication of the Institute for Operations Research and the Management Sciences (INFORMS).

When presented with actual crises, such as a disguised version of a 1970s border dispute between Iraq and Syria and an unfolding dispute between football players and management, experts were able to forecast the decisions the parties made in only 32% of the cases, little better than the 29% scored by undergraduate students. Chance guesses at the outcomes would be right 28% of the time.

Moreover, the study’s authors say that relying on “expert predictions” discourages decision-makers from investigating alternative approaches.

However, remember that the results above were based on experts’ “unaided judgment” (translation: off-the-top-of-the-head opinions). The researchers say that experts can improve their forecasts by using “reliable decision-support tools,” such as:

• simulated interaction, a type of role-playing for forecasting behavior in conflicts, which reduced experts’ forecast errors by 47%
• structured analogies, which reduced experts’ forecast errors by 39%.

More information on this topic is available at ConflictForecasting.com.

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Source: “The Ombudsman: Value of Expertise for Forecasting Decisions in Conflicts,” by Kesten C. Green of Monash University in Australia, and J. Scott Armstrong of the Wharton School at the University of Pennsylvania. It appears in the INFORMS journal Interfaces, Vol. 37, No. 3.

CFOs predict: The top business risks through 2009

Top five business risks through 2009:

1. Competition
2. Pricing and currency
3. Economy
4. Supply chain
5. Property*

* Fire/explosion, mechanical/electrical breakdown, natural disaster

Note: 62% of financial executives expect risk from competition to increase through 2009, while only 4% expect it to decrease.

Top five emerging business risks through 2009:

1. Change in competition
2. Government/regulation
3. Pricing volatility
4. Variable client demand
5. Political threat

Note: Terrorism, and pandemic, ranked very low.

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Base: Survey of 500 financial executives in North America and Europe (including CFOs and treasurers) who work for companies with at least US$500 million or more in annual revenue.

Source: “Managing Business Risk Through 2009 and Beyond,” FM Global, a property and casualty insurer, Johnston, R.I., May 2007

Related: What CFOs worry about