By Carolin Durst, Michael Durst, and Matthias Saffer
Change is the new normal. Evolving markets, new demands, standards, and values, as well as ever shorter product life cycles, require a high level of adaptability on the part of the companies. Companies who can quickly identify changes and even weak signals in their environment and react to them before the competition does will gain a decisive competitive edge (Pillkahn, 2007). However, given the complexity and the fast pace of their market environment, companies are in many cases no longer able to understand it in sufficient detail. Taking the information overload into account, it is becoming increasingly difficult to actually identify important changes. As a consequence, companies are forced to react with short-term solutions rather than act with foresight in their ecosystem. (See also: Why you should care about Trend, Technology, and Startup Scouting)
We cannot predict the future, but from the companies’ perspective, however, it is essential to identify, interpret, understand and react to the corresponding signals or disruptions in their environment at an early stage. To sum it up, it is important to know when, where and how which trend will materialize.
A trend is an observable change or development towards something new or different. In order to understand the impact of a trend on the business environment, companies must determine the strength of change and its timing. So-called “weak signals” are the first signs of change. According to Ansoff (1975), there are different stages of signals. The signal strength grows the more we know about the context from which it emerged. In this context, weak signals refer to the simple observation of discontinuities or changes. You notice something, but you don’t know what it means and where it comes from. Once you understand the forces that led to the change, its evolution over time and the direction of the change, the weak signal grows stronger resulting in an observable trend. Hypes, by contrast, are collective and often spontaneous fads that disappear after a short period of time.
The “Iceberg Model” by Buck et al. (1998) follows a similar logic. In this model, trends are merely the visible peak of a much larger underlying value pyramid. This very graphic illustration shows that trends are the result of hidden value shifts caused by new – often unconsciously emerging – needs, fears, motives or feelings (Buck et al., 1998; Horx, 2010; Liebl & Hermann, 1996).
More precisely, the difference between weak signals, hypes and trends is how much you know about the size of and the forces acting on the iceberg below the waterline. If the invisible part of the iceberg is very small, it is more likely to be a hype that will vanish quickly. By observing a trend with a solid foundation and understanding the forces that led to its creation, we can a) assess whether and for how long the trend will last and b) understand why we are observing this trend.
Linking this approach with the trend hierarchy – consisting of mega, macro and micro trends – will give a differentiated picture of the iceberg model.
A fad or hype is thus the observation of an iceberg tip without the foundation or observation of a trend without an underlying hierarchy. This observation is of a limited duration and therefore has no significance for the corporate strategy. If, however, we can frequently observe new microtrends emanating from a higher-level macrotrend, and if this macrotrend is based on an existing megatrend, we can rightfully assume that these trends will mutually reinforce one another. This can possibly change markets and business models permanently.
Megatrends, macrotrends, and microtrends
Being able to identify changes and assess their relevance for a company, you need a systematic approach in the framework of holistic trend management. The goal is to identify, describe, and rate trends. Furthermore, companies need to document the trend knowledge and derive strategic fields of innovation for corporate innovation management.
Trend management process (following Durst et al., 2010 and Köpernik, 2009)
Understanding trends and their characteristics forms the basis for a trend management that is ‘fit for evolution”, thereby in turn laying the foundation for targeted growth and innovation. One of the key tasks of trend management is the structured documentation of trend knowledge. Because without a continuous documentation it is not possible to save and update trend knowledge and make it available for corporate innovation management.
Existing literature shows that the concepts used for trend management are already established. The picture is more differentiated when looking at the trend management process. In the phases “definition of information sources”, “trend research and identification” and “trend rating”, the literature available already offers a sound set of methods. More frequently, approaches and methods identified for trend description or documentation together with trend visualization and communication are drawn from practice. Furthermore, best practices show that a dedicated trend management software accelerates the trend management process, integrates the individual phases and offers a problem-solving potential for many identified weak points.
For a detailed description of the individual phases of trend management, you can download our whitepaper: “Weak Signals, Hypes or Trends – Identifying Innovation Potentials and Securing Competitive Advantages”.