Should Megatrends Influence Innovation Strategy?
When I run strategy seminars, I usually do a session on long-run trends in the macroenvironment. While firms can’t usually influence macro-trends such as interest rates, demographics and legislation, changes and trends can open up strategic opportunities and threats. While some of these can be predicted with a degree of certainty, such as an aging population in Europe, others are harder to estimate (oil prices for example).
I don’t put a lot of faith in predictions regarding these trends. Our psychology means that we have a tendency to extrapolate from the past to predict the future and this means that we continually miss discontinuous change. Some of the famous predictions about the future of technology are part of business folklore:
“I think there is a world market for about five computers” – (Thomas Watson, IBM President, 1958)
There may not be much value in trying to make accurate predictions but I believe that scenario thinking through possibilities is a good way envisage which business opportunities might be worth exploring and learning about. I’ve written before about ‘real options‘ strategy and this is a very good way to use real options when confronted with uncertainty in long-term futures.
There are many books on the future of economies and society but one report that I have been using lately in my seminars is by Australia’s premier public science and technology organizations, the CSIRO. It’s not an organization that’s well known outside Australia, but wireless LAN, the molecular science behind flu drugs like Tamiflu and Relenza, and GC Mass Spectrometry are all CSIRO technologies. CSIRO is also behind cutting edge areas such as services science- something that will become a big deal in service-based economies in the future.
In compiling the report, the CSIRO sought advice from its staff across its many divisions and the result was five major trends that will define the future of technology and the way that people live. While I had given some thought to some of these trends, there were others that struck me as being new and important. You can download the full report here.
In various posts I’ve considered limited resources, particularly with consequences for energy innovation and some ideas for managing innovation in the context of an aging workforce. However, CSIRO megatrends hold other possibilities for innovation.
Digitization of everyday aspects of life is already having a big impact on how I live and work. Today I scheduled my travel to work based on information updates from an iPhone app and my family were going to the museum rather than the park because of rain that showed up on the weather radar app. As bandwidth and computing power increases, I am really looking forward to the demise of the lecture as the basis for university education.
Mobility will provide opportunities for services innovation. A while ago I gave a talk to a banking conference about the way that the lifelong relationship with a bank branch will be a thing of the past. New services will be needed to follow workers around the world and help them transition into new jobs in different countries. Some companies are already making a business out of catering for a mobile workforce in the Australian mining industry.
One of the most interesting trends what the report identifies as ‘a personal touch’ with the customization of goods and services. Think about how the geolocator is such a part of customization of so many smart phone apps. Someone also told me recently that there are over 100 permutations of the Fiat 500 in terms of features and colours. In the education business we are just starting to understand how the higher education business model will be completely reinvented by technology to focus more on a personal learning experience and less upon mass content delivery via lectures and textbooks.
Overall, the CSIRO has created a thought-provoking list of megatrends. What else would you add to the list? Over to you….
John Steen is a Lecturer in Innovation Management in the University of Queensland Business School. He blogs about innovation at the Innovation Leadership Network.
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