What Drives Your Long Term Business Success? – Study Macro Trends to Find Out
Strategists analyze macro trends looking for what will drive growth in their business.
A marco trend has a long life, a result of many forces in your community that you cannot manipulate. Like a river, you go with the current or exhaust yourself fighting it. Usually, as a strategic planning team formulates a strategy, they lump trends into areas of analysis in their external environment – their market and community – to identify opportunities and threats. These are:
- Demographics – population groups, life spans, family composition, disposable incomes
- Economics – capital, business processes, productivity, work patterns, management
- Environment – raw resources, ecosystems, transportation channels, habitat
- Government – world events, politics, laws, public and economic policy, regulation
- Society – lifestyles, values, religion, leisure, culture, education, public-health
- Technology – innovations, scientific discoveries, economies of scale
A trend may fall under several of these areas, but as a strategic planning facilitator, I resist the temptation to put it under two or more, since you can overstate its importance. I want the business strategists to methodically think through how the market will change their business.
A “driver” is a trend in the community, as it builds momentum, that will trigger an opportunity or threaten for your business. For example, in 2009 the recession has spurred Walmart’s sales as consumers search for bargains. The sub-prime and derivatives mess has devastated home builders.
We can estimate demographic trends well into the future while politics seems to evolve along the election cycle. Economics – the business cycle our focus – is data rich but prone to short term surprises. Technology trends are identified from industry associations as the best firms innovate and create the standards so their products will have an advantage in the market.
The question is do have an in depth understanding of what “drives” your business?