Rather than simply reacting to shifting trends and changing consumer behaviours, businesses can find ways to get ahead of the game, says STRAT7’s Björn Dufwenberg.
Making predictions is crucial for businesses if they are to avoid being caught off guard by shifting trends, competitor strategies and changing customer behaviours. In fact, 58% of CEOs in a global PwC survey cited changing customer needs and preferences as the biggest challenge to profitability. As the old adage goes, if you’re face to face with a lion, it’s already too late.
Traditionally, this has seen businesses view shifts in market dynamics as challenges to overcome, often underpinned by a focus on the reliability and affordability of products and services. It’s a strategy matched for a particular pace of market change, and one that tends to favour localism.
In today’s interconnected and rapidly changing global marketplace, however, such approaches are no longer sufficient. Businesses must instead view these shifts as opportunities for growth and innovation.
Rather than being defensive and reactive, organisations would be better served by an offensive stance, actively seeking ways to leverage emerging trends and customer preferences to their advantage.
To achieve this requires a radical new approach that combines traditional human-centric methods (such as market research and customer feedback) with innovative tools and technologies (notably, predictive analytics and machine learning) to provide the right foresight.
Although currently underutilised by many businesses, machine learning and predictive analytics enable businesses to identify patterns that would elude a human, leverage unstructured data (such as customer emails and call centre transcripts), detect emerging trends and forecast potential outcomes.
By integrating predictive analytics into their strategic planning processes, companies can assess scenarios and identify potential inflection points in behaviour, cost structures or competitive dynamics. From here, they can then develop multiple plans to capitalise on opportunities and mitigate risks.
Time for a cultural shift
Embracing creative thinking is paramount in this process – to challenge conventional thinking, explore alternative scenarios, and imagine a world that doesn’t yet exist. By combining analytical approaches with creative thinking, businesses can more effectively navigate uncertainty and envision future market landscapes.
It is this sort of thinking, which leverages market inflection points at the perfect moment, that has propelled businesses such as Uber, Amazon and Tesla. They flipped the logic of their categories by better understanding future trends.
Wargaming, as the name suggests, a methodology most typically used in military strategy, is a good analogy for such a process, and we might even consider it as something of a blueprint. By using predictive analytics to simulate different and realistic scenarios and considering the potential outcomes, organisations can effectively anticipate change and make proactive decisions to steer towards the most desirable scenario.
Wargaming allows businesses to stress-test their strategies, identify vulnerabilities and risks, and explore different options. It’s a process that encourages critical thinking, collaboration and flexibility, enabling teams to be better prepared in the context of a rapidly changing business environment.
Furthermore, wargaming promotes collaboration and cross-functional communication within an organisation. It has the power to bring together individuals from different departments and levels of expertise, fostering a collective intelligence that can uncover unique insights and innovative ideas. By breaking down silos and encouraging open dialogue, businesses can leverage the diverse perspectives of their teams to gain a comprehensive understanding of the market landscape.
To successfully implement such a process, organisations will, however, need to invest in the necessary resources and expertise. This may involve employing experts in strategic foresight, scenario planning and gaming methodologies. These specialists can guide teams through the process, ensuring that the exercises are well-designed, relevant, and yield actionable insights.
It is also important for businesses to recognise that scenario planning in this fashion is not a one-time event but an ongoing practice. By their nature, markets are dynamic, and new challenges and opportunities will continue to arise. By regularly revisiting and updating their scenario planning exercises, organisations can stay ahead of the curve and adapt their strategies as needed.
Consumers at the heart of strategy
Customer-centricity also plays a central role in planning for change in relation to anticipating evolving needs and preferences. By using the best available tools to closely monitor and analyse consumer behaviour, businesses gain valuable insights into emerging trends and can adapt their approach accordingly.
By listening to their customers, businesses can identify pain points, uncover unmet needs and predict future demand, enabling them to proactively develop products, services and experiences that resonate with their audience.
The world continues to change, but the businesses that embrace this new approach will be better equipped to navigate its complexities. It is an investment in long-term success and a testament to an organisation’s commitment to innovation and adaptability. And it must be embraced – because the future only belongs to those who are prepared.