Omnichannel commerce | Marketing
Why Foresight Trumps Hindsight When Growing Your Business
November 04, 2015
When driving, it's important to periodically look at your rear-view mirror—but if you don't look forward most of the time, you won't reach your destination. The same is true when driving your business, according to Lana Klein, cofounder/managing partner of management and analytics consultancy 4i. While there are plenty of axioms along the lines of "Those who don't learn from history are destined to repeat it," Klein suggests that more businesses should "take a little bit of a more thoughtful look at where things are going, qualitatively and quantitatively."
Klein and 4i call this "foresight analytics." An example: Seeking a way to ramp up growth, a U.S. manufacturer of baby products confirmed that Hispanics were the fastest-growing demographic. After conducting research into Hispanics' preferences and behaviors when buying baby products, the company reallocated its marketing spend to grow brand affinity with the market, emphasising value (a key driver among the demographic). It also refocused distribution in the Southwest and along the West Coast, where the Hispanic market was strongest and growing fastest.
Summed up like that, the concept seems pretty simple. But for many market sectors, analysing future trends and determining how your company can take advantage of them is a trickier, subtler affair.
That's why Klein says, "Don't start with the data; start with the question." For the baby-products manufacturer, the first question might have been along the lines of "How can we grow sales without introducing a new line of products?" From there, the company might have asked, "Projecting out five years, will the market for baby products be larger or smaller than it is now? Will there be any changes in the socioeconomic, geographic, or demographic breakdown of those customers? Are there demographic, sociographic, or geographic segments that we should be homing in on?"
It's important to know "what is going to drive growth," Klein says. "Will it be future trends, macro trends, micro trends? Before getting the numbers to plan future growth, it's important to at least take a stab at what the market is going to look like, from the standpoint of economics, what the consumer is going to look for."
In another example, a supplier of oral-health products facing stagnant growth and commoditisation found that consumers were expected to spend more on do-it-yourself products that would make their smiles look better, such as at-home whitening kits. In response, the company emphasised the aesthetic benefits of its product line and even brought out a range of professional-strength at-home whitening products.
While large corporations might have employees or even departments dedicated to such forward-thinking analysis, Klein says even smaller businesses can conduct the necessary research. "You might not have the statistical models" that larger organisations have, she admits, but you can still find, relatively easily thanks to the Internet, answers regarding how many people are projected to be in the market five or 10 years from now, how much each person will spend, and what economic and consumer drivers are expected to emerge.
In fact, smaller businesses have several advantages when it comes to implementing the findings of their foresight analytics. Larger companies have more markets, more product categories, more sectors to research, analyse, and understand. What's more, "the complexity of and exposure to macro conditions is infinitely higher for them," Klein says. "If you're a major player, market shifts are going to affect you more. If people don't want to drink carbonated beverages any more, that's a macro driver" and a soft-drinks conglomerate is going to be much more exposed.
Conversely, a smaller company has more room to grow, even in the face of less-than-optimal macro drivers that are beyond its control, simply by focusing on the elements it can control. "You can grow by growing your share: How do I get more distribution, how do I make sure my pricing is right, how do I beat out the competition?" Klein says.
What's more, larger companies are more likely to suffer from political infighting and turf wars. "When you start planning for growth, there needs to be objective thinking," Klein explains. "There will always be a person whose bonus will be affected by the numbers. This is where subjective thinking and political agendas come in. You need to think of a way to overcome political agendas with an objective view. The beauty of doing this objective approach is that it is transparent and can explain why the numbers are what they are."