Category: Trendwatching

Have you heard of VUCA, one of the buzzwords in strategy today ?

VUCA is the acronym used to describe the state of our business environment.Not only business, by the way, but also political and societal.

VUCA stands for Volatility, Uncertainty, Complexity, Ambiguity

Volatility

When I started teaching strategy, back in the 80’s, the best of the best tools was the “long term strategic plan”. I’ve seen dozens of such plans: 80-100 pages of details about investments to make, market shares to gain, factories to locate and countries to conquer… All that was based on assumptions that the world 5-10 years down the road would be more or less the same as the present.  Well, we know now that change is the only status quo. Not only that: the way we compete, our customers behaviors, our political and regulatory environment are moving constantly. Business and financial investors don’t like that. That’s why Brexit generated so much volatility on finacial markets too.

Uncertainty

Linked to volatility is the unpredictability of the framework in which our decisions will be executed. Management techniques were always based on assumptions about the future and the use of planning as a major tool of management and control.But , as said above, , change is constant in this volatile world.  We don’t know anything about the future. That’s why “planning, budgeting and control” methods lead to endless discussions in companies today. It just doesn’t work anymore.  So, what can we do ? Strategists talked about scenario planning i.e. generating several scenarios about the future and the probability of occurrence. Good ! But…it doesn’t really help much. Look at Brexit again. Everyone knew that the “leave” decision of voters had a 50% chance of occurrence but  a few hours later the consequences of it were nevertheless still hard to predict.

Complexity

Our world is now so complex that great decision makers are those who can point the key issues in an information jungle.And great executers are those who can keep focus on key actions. Everything became complex: supply chains, customers’ behaviors, big data systems, economic models, financial products,…So the danger is overcomplexification leading to a lack of vision or oversimplification due to a misunderstanding of key issues . Brexit again is a good example. Consequences of this political factor will be economical, commercial, regulatory and…emotional. Moreover, all consequences will link together making the whole a kind of never seen patchwork.

Ambiguity

I believe that one of the main challenges of our times is to accommodate paradoxes. For centuries, mankind was characterized by simple problems that could be dealt with simple solutions. The complexity of today, as mentioned here above, is leading to a gigantic confusion. As most people still reason in terms of dichotomy (good or bad, right or wrong , desirable or not desirable, …) we end up with never ending debates leading to no solution. Today, we must think differently. We should accommodate the extremes. We cannot escape solutions that are wright and wrong, baring consequences that may be good and bad, being finally desirable and undesirable at the same time. This how we should see Brexit. Whatever the vote, there was no “good” solution for all. Now that the vote is done, we will need to manage and negotiate the outcomes intelligently.

To conclude, Brexit is a good example of VUCA. But VUCA is everywhere now. We live and we manage in a global interlinked societal, political and economical environment. What is happening somewhere on the globe bears consequences everywhere else. Let’s be attentive and understand this complexity the best we can.

Be inspired !

I’ve been reading an interesting article published by Euromonitor International called Emerging Markets during Crisis: Business Strategy in Times of Uncertainty and recently written by senior research analyst Fernando CRUZ (https://www.linkedin.com/in/fdocruzalvarez/en).

Although I was not surprised by his research findings, my own experience leads me to think that these trends are really global. You can observe them both in emerging markets and mature markets and they are so strong that they guide consumers’ behaviors not only in periods of instability but also at any time these days.

The five trends spotted by Cruz are:

1. Convenience

Cruz is observing that “…urban life is demanding and frequently involves long travel times between home and work….”. This is only one of the reasons why people always ask for more convenience. The need for convenience is not new. Actually, most inventions came from human beings’s willingness to make life easier. This need is to source in the primary times of humanity. But what is interesting today is that while trying to make life simpler and more convenient, we actually made it more complicated ! The more we invent new solutions to problems, the more we seem to create new problems coming out of complexity. Pressure on life organization in big metropolitan areas is just enormous and hard to manage. It’s not only about commuting, it’s about meals, kids, parents, job, personal life,… My wife regularly tells me: “We should talk organization today” ! And I tend to say: “yes darling, later please” and I’m dreaming of having a robot taking care of all this for me and the family 🙂  So, all new solutions to these organizational problems will be welcome. There is a never ending source of opportunities here that marketers should grasp. The trick is to be the first one or  the most efficient or the cheapest. Choose your formula !

2. Indulgence

Cruz defines an indulgent purchase as “acquiring something to be enjoyed as a special pleasure but that is normally understood as wrong or unhealthy“.  Junk food and sugar-sweet products but also alcohol and tobacco or any relaxing drugs are of course unhealthy but we see an emerging trend of “healthy indulgence” definitely coming out these days. More convenience may help you manage life problems but it doesn’t bring happiness. And happiness is a key value in our post-modern times. We need to feel good for ourselves. The “slow food” movement, originated in Italy a few years ago is a nice refuge value for some of us. Food is always re-comforting, it brings the ones we love together, it’s a way to relax. Some will pair this with wine tasting, some others will develop their talents as cooks. There is a huge market there ! But all activities linked to “a better self” like sport, yoga, meditation, nature hiking,… are multiplying. Everyday, new ideas are emerging leading to micro markets. Be creative, there are opportunities for years in this area !

3. Transparency

In his research report, Cruz gives the example of how people choose their tourism products: “Driven by the advantages of the online channel, sales of tourism products via the internet have grown rapidly in recent years, as this channel provides information, transparency and comparability”. For sure this is not limited to tourism. We look for transparency when preparing a buying decision but we also want transparency on how brands and suppliers are managing their supply chains. What materials went into the products we buy ? Were they manufactured in ethical social conditions ? Do they respect the environment ? And I could post here an infinite number of information that customers and citizens want to know. A number of companies don’t know how to answer this particular need but some innovative guys in the Silicon valley launched startups who detail their cost and margin calculations to anyone. Wow ! What a change in culture. My fellow marketers, don’t be afraid of transparency: go for it and fit the need !

4. Nostalgia

It was so good in the past ! Life was easier, we didn’t have so many problems, we were so happy, bla bla bla… We forget our parents’ hard times and if we would travel back in the past, 30-40 years ago, we would come back as quickly as we went ! Actually, we want to keep the best of these fantasized times. Some products we were already using as kids, some brands our mothers already used, some “feel good” images of the past… I supervised my first final thesis about “nostalgia marketing” about 10 years ago. It was very new. Now, it’s very trendy ! Want an internet radio with a design of the 1950’s ? A vinyl record that you can digitalize on a smart record player ? Dress like Humphrey Bogaert ? Everything is possible. The trick is to combine heritage with technology or fashion. Look at Burberry or  The Mini Cooper. You get the best of both world. Dare to be old. Team with a baby boomer to know how life was in the 60’s, then imagine new “old products” or relaunch forgotten brands !

5. Status

Being a very old human need, status always evolved as do cultures and societies.  Cruz again recalls the evidence that “status triggers a set of emotions, such as pride, satisfaction or superiority. Frequently, consumers buy objects to reflect these emotions and communicate them to other people“. We need to please, to be appreciated, to feel recognized as valuable by people around us and, if we can’t make it to the top, we need to compensate. Brands, fashion and product design, also customer care are some marketing tools helping us to feel important. And what is most interesting today is the link with a strange paradox. We want to be perceived as “different” but we continue to copy others.  There is a huge opportunity here for those marketers and entrepreneurs who can reconcile both of these needs of their target markets. Customization, one to one marketing, micro-niches are the answer. For example, in a number of emerging markets, “buying foreign brands” is a status symbol. But consumers who do that don’t feel so unique. So, it you offer a unique creative foreign brand only available in limited volume, you double the status effect ! Think of it !

Finding niche markets is not a problem if you watch smartly how trends evolve. All behaviors we observe tend to show us the way. Be immersed in the society. Look, hear and smell markets !

Be inspired !

And…thanks to Fernando CRUZ for leading me to reflect about all this !