In 2023 we’ve seen seismic shifts in attitude responding to the many mega and macro events around the world.
It’s possible we’ll look back and wonder what all the fuss was about when our worlds have tilted a bit more in 2024.
The adage, if not now, when, used to be a great way of persuading innovation workshops to be bold and creative. The truth is that, whatever walk of life you look at, if not now, when is actually, if not now, soon.
In fact, it’s might be more accurate to say that change will hit you, if not now, it’s already in the wind.
The next decade is so primed to change everything we know about real and virtual relationships, political norms, financial stability, democracy across medical science and so many other fundamental structures that underpin societies, that factors are, actually, too many to count – or even point at.
Just one thing
Looking at these issues from the UK informs a perspective that we, as future-gazers, try to avoid.
Yet, one of the factors that we’ll take into 2024 is that two thirds (+66%) of countries currently recognised as democratic will go to the polls in the same year (UK, EU, US and more).
This is the first time it has happened since anyone started counting in the 1960s. It could be quite a moment.
Left or right?
Forecasts suggest that the UK will swing to a left leaning government.
Other places (US and big chunks of the EU) are heading further to the right than they already are.
Populist leaders have had a good run and some may survive the opportunity to change. Some won’t.
Protectionism is on the rise in the US and UK, amongst others, and history tells us that this rarely ends well but may prevail for a while. It’s hard to unravel a shit show when you first come into power.
Looking out slightly further we see more change-inducing trends to impact us.
Nigeria has a population today around 219 million of which 50% is under 19 years old. 70% is under 30.
The Nigerian population growth curve is set for it to reach 377 million by 2025 and 733 million by 2100.
Think about that; a new +400 million workers under 30 from one country.
If China and India are your sources for products now, start looking for this to affect you.
Nigeria’s population will equal the US as joint third most populous country sometime soon. Those people need food and work. It is possible to think that China and India may find their GDP hard to maintain with this kind of disruption in the world manufacturing order.
What does it matter?
All manner of manufactured goods could be differently sourced with new supply opportunities.
All kinds of manufacturing could be differently located with a different attitude to access to labour.
Some enlightened nations are actively developing inward migration opportunities.
If ‘growth’ is still the driving target behind our, broadly, capitalistic objectives, more people equals more output and it’s possible to see this translating into more success for Nigeria than the UK, for example.
How do you read it?
Maybe now it’s time to think about innovation.
Pivoting to grow
Being honest, if room44 had stayed wedded to its core business at the start of 2019, we probably wouldn’t be here today. When the pandemic shut the UK economy down, we had already opened a new venture that became our growth opportunity for 2020 and 2021. Since then we’ve also added a new ‘artisanal’ product stream to our portfolio and room44 innovation consulting has resurged.
This all came about from a reading of market trends that indicated strong growth in areas that we may not have leant into without an understanding of the probable impact of world events. We were deep into the Brexit transition back in Q1 2020 so ‘change’ was inevitable. All we had to do was take it seriously.
Old business clinging on to old ways
Since Lockdown #1, many thousands of people have seen huge shifts in their work lives. Lay-offs have released people to pursue their own dreams, as well as throwing others into the grip of financial despair. One impact of this is that the UK is doing better than ever at creating new businesses and poorly at letting old ones die naturally.
In Q1 2021 Companies House recorded a record increase in new company incorporations – up by 24%. According to Fathom Consulting, the UK now hosts @4.5 million privately owned companies and more Unicorns (£1bn+ companies) than France, Germany and Sweden combined.
So, the government has made it possible for new business to start, grow and thrive with more bounceback funding, including another £1.5bn available to support start-ups* but the same financial support has also allowed businesses that were struggling to stumble on for longer. Loans, grants and furlough funds have let companies reset. The downside is that some of them should have simply stopped being.
Hope as a strategy
An article by Matthew Lynn in The Saturday Telegraph a few months back argues that old business is clogging up the very system that should help new companies grow (Recovery depends on killing Zombie companies). It’s a good point. SMEs are a tenacious bunch and won’t give up easily, but hanging on and hoping isn’t a strategy.
Building a new vision based on new market dynamics, seeing a less-than-obvious opportunity and then acting on the vision is what will help old business survive. If you have any doubt, look at the current crop of start-ups – looking at things differently is exactly what they have done.
What is innovation?
If you’re a follower of Clayton Christensen, you’ll recognise the definition of disruptive innovation as being “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”
In the context of re-imagining a business’s potential in order to survive, maybe a less ambitious definition is appropriate. How about something like – taking ideas that work in other places that we can make work here.
Business development asks you to grow your business. Innovation asks you to offer your customers something different than they can get today to satisfy a need differently, or to meet a new need entirely. This isn’t innovation in its truest sense but, if the process demands that a failing business changes what it does for the survival of the company and gives their customers something newly valuable to buy, let’s give it the benefit of the doubt.
If you’ve relied on government funding to get you through a tough patch and are worrying about how to cover the wage bill now that furlough funding is over, now is a really good time to think about a change in direction.
As the saying goes, the best time to plant a tree was twenty years ago. The next best time is today. If you’re an established business who wants to talk to an agency that has done exactly that, drop us a line.
Future thinking. Future proofing. It’s what we do.
From A to Z
Who takes decision-making responsibility?
Make ROI the driver
Innovation is doing new things
Inevitably, the events of the last three months have disrupted business and personal planning. Unprecedented circumstances have that effect.
Just before the world went into COVID-19-enforced lockdown, the UK was fixated on Brexit and guess what? It hasn’t gone away.
Other major global challenges (climate change, deforestation, plastic waste, air pollution (it’s returning)) are still out there too, but let’s, just for the sake of planning our short-term futures, have another look at Brexit.
Debt, grants and furlough
Since March, the UK has generated vast amounts of debt. Businesses are drawing on government support in the form of grants, loans and/or furlough funding, and also delaying paying rent and VAT. Hold that thought.
In June, the UK enters a critical period of negotiation over its future relationship with the EU.
If, by the end of June, we don’t reach an accord over matters such as fishing and an agreement over trade borders with Ireland, there may not be an agricultural policy deal, or any deal. Despite the UK government talking up its prospects of success, EU member states aren’t likely to agree a set of terms for the UK that are better than they can get themselves. This is part of the problem.
With no outline deal in place, we are heading for a no-deal exit that will come into effect on 1st January 2021: about the time when personal tax bills will be imminent; three months before business rents could be a full year overdue; and a couple of months before delayed VAT payments must be settled. That’s a lot of cash due to flow from businesses into the Government’s coffers within the space of a few weeks.
To an innovation agency that tells business to plan for the long-term, it’s clear that planning for even the next nine months, without the benefit of a certain trading relationship with our closest overseas markets and supply chains, will be problematic.
The signs are that 2021 also has the potential for new lockdowns, if COVID mutates into COVID-21. Restricted access to the workplace through enforced social distancing, app-led movement controls, face-recognition surveillance and zero return from banked cash will all still feature large.
We’re anticipating at least another year of disruption, uncertainty and risk of infection, and so, at room44, we’ll maintain a pragmatic approach of seeking new opportunities through the application of consumer-facing innovative practices.
Normal has moved on
If your business had a problem maintaining its supply chain when COVID first hit, or if you had to shut down your branch of a national chain, you probably understand the trust that previously brought customers to your door has now been diluted. Those small operators you didn’t worry much about before have been working away to fill the vacuum while you were away, and they’ve made gains in market share. It may only be local in your eyes, but it’s enough to keep them going.
Local is the new trusted brand equity
Lots of companies have pivoted into service models where their product can be delivered to consumers through new distribution methods. Even more, though, are waiting for the ‘new normal’ to float back into view, hoping that it looks a lot like the ‘old normal’.
As disrupted businesses cut back or close, there are people new to the jobs market and they too are trying to generate income by starting up a micro-business locally. Local is becoming the new trusted brand equity, further disrupting established business in a virtuous circle
Normal has moved on. Don’t wait for a return to business as it was – start working on a new plan. Tomorrow has always been different from today. Your tomorrow may be unrecognisable.
Future thinking. Future proofing. It’s what we do.
Plan for normality and keep a focus on the future, whenever and whatever that might be. The highly unusual situation we’re in isn’t forever.
It’d be foolish to underestimate the effect that COVID-19 is having and will continue to have on our day-to-day lives, but if we can keep some sense of perspective, we may hold onto the belief that it isn’t for ever. Panicking about what we cannot control is detrimental not only to our mental health, but also to our potential for recovery from this situation – be it physical, social or financial.
It’s hard to write this and not appear dismissive of what’s happening and what’s to come. I’m not. I don’t know anyone who is. The situation is frightening and changing so rapidly that news is old as soon as it’s out.
But we must believe that it isn’t for ever.
It’s for now and it’s for some time to come, but room44’s strategy is always to look forward, look up and look out to a different horizon. The journey may be bumpy but the destination is up to you.
If you’ve been in business for a while and have overhead and COE to think about, if you’ve just taken on a loan, or if you’re starting out and need money to subsist, you have the same bottom line.
However speculative, hospitality, events and entertainment organisers are rebooking dates for September and October. We all need to believe to survive and these guys are planning for a more definite medium term.
Even in ‘normal’ circumstances, businesses today can’t easily predict demand for their services. room44 has an order book but it never extends beyond six months, and our eBike business is still a fledgling enterprise. We feel your pain.
Focus on your future.
What we can all do, though, is plan for the day when our situation has stabilised again. By keeping a focus on what we would like to happen, we can press pause on thinking about what can’t be controlled. In itself, this offers stress relief and other psychological benefits. Here’s a blog that might strike a chord – When the long term is the hardest thing to focus on, that’s when it’s most important to retain that focus.
Focus on what you want.
Yesterday, Paul Freedman posted a video about the Stockdale Paradox, which says that in challenging times we all need to believe the situation is temporary, even while dealing with it. As Jack Reacher would put it, hope for the best and plan for the worst.
The last time I found myself in a position where things were going badly wrong, a close friend asked what my plan was. While I was looking around for someone to bail me out, the answer had to come from me. Work it out and execute the plan.
Be kind and stay healthy.
My plan has always included writing to promote my business. If you’ve read to this point, thank you and I hope it helps.
If a chat would help some more, let’s do that. Here’s my diary. Book some time, no charge. Be kind and stay healthy.
Future thinking. Future proofing. It’s what we do.
Our passive drift towards a world where sensors, monitors and machine learning pose a real challenge to innovating companies.
Trust is a testimonial
The signals from our research on future trends tell us that commerce for new brands is going to get tougher. While shopping for consumer products is easier in many ways than it was a few years ago, it’s still a complex operation. We can all research online, visit stores and compare prices across media to get the best deal. You may resist a visit to the shops if you’re buying clothes, but Apple says that 80% of people who buy online have been into store first.
We read seller recommendations and take notice of peer testimonials. This might be the single thing that influences our final buying decision. Without buyer endorsements, we have learnt not to trust brand promises and to be wary of positioning statements that promise too much.
Trust is what everyone else does
So, we don’t trust things until someone else validates our decision. As James Clear says in his book, Atomic Habits, “we’d rather be wrong with others than right by ourselves” and this describes the problem facing innovators today.
Unless shoppers make independent judgements, we will all end up making the same decision and the biggest promoter will win out.
The industry that has evolved around these issues makes our lives harder still. We’ve all received advertising from brands who don’t mind where their address list came from. Scraped data is big business. Similarly, our passive drift towards a world where sensors, monitors, facial recognition, sat nav and machine learning push us into actions, is a real issue for innovating companies.
Trust in technology
Wearable technology is a relatively easy thing to spot. Phones, watches and tablets are part of the fabric of everyday life. As we use them, our behaviours are captured by some of the biggest data harvesters the world has ever seen: Facebook, Google, Amazon, Apple to name only the big few. These data-centric platforms have one objective: to advertise to you. Every feed you access is sending you adverts that respond to your search activity. You are being inexorably nudged towards a buying decision. You are sensing little acts of influence every minute of every day that you spend on a device.
Trust is a nudge in the right direction
If you are a brand and aren’t nudging your customer towards you, you are being nudged out of the market. If you’re a new brand, you have choices: stay local and grow organically, trade local and get ‘found’, or secure investment and dilute. It’s a tough one.
But all is not lost. Consumer inbuilt scepticism allows for some push-back. Why is your most frequently seen advert in your feed? Where does that email come from that reminds you it’s your friend’s birthday? Who knows that your car lease is due for renewal?
Our filters for advertising are as highly tuned today as they were when all we had to worry about were leaflets through the door and posters on the bus. But the volume of media we consume (estimated at @300,000 words per day, the same length as an average novel) makes it hard to resist buying something just to satisfy the pressure.
So, how do new brands break into a market?
There are many answers but the truth is, it’s going to take time. Tenacity, energy, creativity and bloody-mindedness will help. There are a lucky few who may gallop through this cycle and X Factor-esque quick wins may happen. Pragmatically, though, the best advice might come from the most unexpected philosopher of our time, Jack Reacher: “Hope for the best, plan for the worst.”
Play the long game and build customer trust over awareness. Target trust over availability. In fact, target trust as your marketing collateral. It’s where ‘organic’ growth comes from and it doesn’t rely on digital endorsement, peer approval or huge media spend.
Future thinking. Future-proofing. It’s what we do.
Not being able to anticipate change is a common problem in companies where financial and sales targets rule.
It’s really easy for the CFO to kill an idea, a conjecture or to argue a trend because the data won’t support a forecast. It can’t. Data is historical. But that’s why the CFO doesn’t work in New Product Development or Innovation.
Convert your CFO from an Analyst to a Visionary
You can help them with this. Ask them what they’ve learnt anytime in the last five years. What they do differently now that they didn’t do in 2015/ 16/ 17.
Remind them of the new piece of ‘efficiency’ software they invested in, of the new reporting system (Xero, Sage…), of the project management platform (Trello, Slack, Asana…) or of the savings that come from a Lean initiative.
All of these ideas were new, untried, unproven and a risk, once. Now they’re normal, standard, common practise.
You’ve got a fuzzy front end
Looking back we have absolute clarity. Looking forward, it’s harder for us all to see the same opportunity. The future is a bit fuzzy. The answer is to know what you will be doing because you have applied a process that uses logic, creativity, analysis and imagination.
room44 has a test for this. It’s called our CRiTT Test. We compare ideas across four metrics and the ratings make it obvious which ones can be delivered now, next and later.
Instant ROI from an innovation project that can be run in a day.
Let’s have a chat about how this can be a part of your plan for 2019/20. Book time here or e-mail me on email@example.com
[button link=”https://room44.co.uk/innovation-strategy/critt-test/” type=”big” color=”red”] Innovation concept test[/button]
For more on this subject, read this blog called ‘What is the life expectancy of your company?‘
To stay relevant to your customers over the next couple of years you’ll need to be aware of mega trends: the very biggest macro factors.
Mega trends are those irreversible, slow-to-grow changes that we tend not to recognise as quickly as we might. It’s a bit like seeing a child (puppy, kitten) after a period of time: you notice their growth much more than if you see them every day.
Who do mega trends affect?
Mega trends affect us all. They offer opportunity and threat to business in equal measure. The opportunities presented by mega trends are visible to companies who actively look for ideas to grow. The threats that mega trends present are also clear to companies looking for ideas to grow. The message is this – if you’re not looking at trends, you aren’t seeing either growth opportunity or risk of disruption.
Here in the UK many brands, especially SMEs, are wrapped up in Brexit, and it’s become really easy not to look too far into the future. While Brexit is definitely a macro factor, it’s also been difficult to plan for.
True mega trends are usually easier to read than Brexit, and definitely more likely to open up an opportunity. These are some mega trends you might like to take a look at…
The sharing economy – this may be a hard one to get to grips with if you sell consumer products. As things are developing, your newest customers are making fewer capital purchases – but there are two sides to this.
If you sell sofas, you can rent out sofas. If you sell bikes, hire out bikes. The transition to a subscription model is not hard unless you just don’t see the need.
Personal Mobility – while governments around the world are pumping billions into the electrification of cars, there is an undercurrent of radical change that still has a long way to go.
Not only are cars and other vehicles subject to changes in fuel systems, with all the knock-on impact that will have on the automotive supply chain, but even this emerging market is under pressure from the sharing economy. This trend is going to run and run, and electricity won’t be the only fuel solution explored. This blog talks about this more:
Emotional intelligence – Human Resource departments are great at building systems to recruit team members who ‘fit’ with each other.
They have known for decades that IQ isn’t the only measure of probable effectiveness. Emotional Quotient (EQ) is now better understood and it’s being managed and exploited. EQ describes the way you monitor your emotions and the emotions of your colleagues, as well as how customers react in response to your brand messages. EQ extends through your recruitment, staff management and how you are able to manage consumer loyalty.
To build a sustainable brand position, your launch planning must be part of the innovation process and persona development at the earliest possible time.
The room44 Innovation Process takes EQ into account. Let’s talk about this complex part of your plan. You can book some time here to talk.
Ages of population – here’s how the ages of the various generations are described.
Your customer personas need to anticipate how the ages of your shoppers are shifting. It’s thought that 75% of the workforce in 2025 could be Millennials.
People who sit in Gen Z and Alpha will live well beyond 100 and have plenty of time for several discrete careers. What does this mean? Well, one theory is that Gen Zs are already approaching an age when their first business sectors are changing enough that they need to retrain.
Law – the legal systems we abide by have been developed over hundreds of years. Prevailing laws are the compound product of ideas and reactions to societal developments that have taken place over time.
History tells us that legislators are slow to evolve laws to meet a new situation, and yet the forecasted rate of change in many areas of our lives means that the legal system must accelerate to keep up. Laws rely on precedent to direct us, but technology is applying pressure here. Financial management, online business, digital fraud, autonomous vehicles, geographic and geo-fenced boundaries, artificial and human intelligence are a few examples of the areas where the law is evolving, but may need to anticipate what’s coming rather than react to what has happened.
These mega trends are just some of those that sit on the horizon. They’re already in play and will cascade to affect your customers’ choices, your brand positioning and your relationship with your buyers.
room44 watches trends, builds systems for our clients to watch for themselves and trains teams to innovate by being aware and informed about the way their markets are changing – before the change arrives.
We can help with that. Call us to find out more: +44 208 144 9800 or click through to see how our outside insight service works. Don’t worry, there isn’t another form to fill in.
Future thinking. Future-proofing. It’s what we do.
While the media (and all of us) continue to hazard guesses about what March 29th will bring, this week has brought more news of businesses leaving the UK to base production abroad. We’ve had Monocle Monday and Honda Tuesday. What next?
Monocle Magazine #Monoclemagazine the newsy/ lifestyle/ trend reporting magazine that has been, until now, printed in the UK announces that it is moving printing to Germany “to ensure there are no hiccups in delivery and quality”.
#Honda announces it’s closing a factory in Swindon – devastating, not only for its employees, but also the thousands working in the Honda supply chain around the UK.
The Labour Party #LabourParty goes into a flat spin with Monday Mutineers, and responds by pleading for by-elections to paper over the cracks.
These are effects brought on by mounting uncertainty. When a problem shifts from ‘chronic’ to ‘acute’, our defence mechanisms mobilise and decisions are made that may prove not to be best-judged.
Although we have had nearly three years to plan for the Brexit scenarios, it’s only now, when the impact of the move is still so unclear, that many businesses are acting.
As Courier Media #CourierWeekly said today: “We are living in uncertain times. In the UK, trying to understand what Brexit will look like is impossible (even politicians don’t know). So what’s the current reality for small businesses operating in the unknown?”
This is the question room44 is here to help with. Thursday is a great day to start seeing it differently.
With five weeks to go before the clocks go forward (in the UK) and Brexit happens, you do still have time to see your prospects differently.
Innovation (even invention) can happen regardless of Brexit. Treat the macro impact on the trading environment right, and we can show you how to turn it into a positive feature of your development plans.
Another word from #courierweekly. This time from top UK chef Shamil Thakrar: “We’ve spent an awful lot of time thinking about this [Brexit]. This time would be better spent improving the proposition for customers – [instead] our mental focus is on damage limitation.’
Make this Thursday DESIGN THINKING THURSDAY.
Click here to download our guide to Seeing it Differently – How to sell innovation into your own business.
Once you see the potential room44 holds, get in touch. There is no time to waste.
Why do companies seem great while the founder is in place and then gradually wither to nothing?
My dad started his jewellery retail business in the late 1960s. He grew it to three shops and planned for his family to succeed him. Then the 1970s came along. Petrol was in short supply. The three-day week hit. Power cuts were a regular feature on high streets and the UK hit a recession. Trade was not so buoyant, but the business kept its head above water.
By the mid-eighties, though, my dad’s shops were in trouble. The market for luxury goods was waning and he didn’t have a successor yet. The systems he’d built into his business relied upon him being there – to anyone else, they were impenetrable.
Shoppers in the jewellery market looked around for cheap alternatives. While Dad held on to his Rolex and Bulova concessions, Timex did new things with LED digital watches and shoppers drifted to lower cost products. After all, a watch didn’t get more accurate the more you spent, especially since electronics were now more reliable than mechanicals.
Empires sprouted out of ‘low cost’. What eventually killed off many traditional high street jewellers – including my dad – wasn’t a recession or a digital watch, but the insurgent response.
Even after Gerald Ratner reduced his multi-million-pound jewellery business to rubble with a single remark about how his products were so cheap – ‘because it’s total crap’ – the market still needed watches and wedding rings. What Dad didn’t do was see the trend and respond to consumer signals. He stuck to his established ways, failed to prepare for a time when they were out of date, and eventually went under.
How does this relate to today?
Let’s have a quick look at another industry that is important to the UK today: automotive.
The UK Government says within twenty years we’ll have seen the last signs of the current petro-chemical-based car industry. The recognisable car-making supply chain in the UK is founded on mining, smelting, rolling, beating and pressing. Now we’re seeing electric vehicles start to dominate. New cars are getting lighter, using less metal, and new construction methods. Process like laminating, injecting, bonding and moulding. If legislation isn’t sending a wake-up call to the component end of this market, the language of the new market should.
The SME’s lament: the language of change.
Too often, the generation that built a business doesn’t acknowledge when it needs to change radically. More and more SMEs (and others too) are seeing their markets change so quickly that there isn’t time to enjoy a ‘career’. Established SMEs are used to believing that what mum or dad started, the kids can take over. Not necessarily so.
Today, the average lifecycle of a business is around eighteen years, while careers last over thirty. Because demand and technology change markets so quickly, and old habits die hard, what worked even five years ago, can’t be relied upon to work now.
There’s an adage that says:
- The first generation builds it.
- The second generation keeps it.
- The third generation loses it.
This is really unfair on the third generation. The probability is that the first and second generations just don’t set the third up for success by changing soon enough.
If you see any of this in yourself, get in touch. The best time to have made an essential decision may have been twenty years ago. But the next best time is today.
Download our guide to selling innovation into your own business, ‘Seeing it differently’, here.
Future thinking. Future-proofing. It’s what we do.