Daily Archives: May 12, 2015

Economic Damnation #10: Mini-Trends vs. Macro-Trends

Trends are the foundation of forecasting, but they are also the foundation of disruption when they change unexpectedly. When it comes to Procurement, the relevant trends may be consumer demand trends, inventory trends, market trends, or any other trend that Supply Management believes will impact its operation. Trends are damming because they are truly can’t live without them, can’t live with them. Sort of.

When it comes to trends, there are two types of trends. Macro-Trends and Mini-Trends. A macro-trend is a large-scale, sustained shift in whatever is being measured. It could be a sustained consumer shift away from landlines to mobile phones as the primary means of voice telecommunication. It could be a sustained shift from overstocked warehouses to just-in-time delivery across retail chains. Or it could be a sustained shift upwards in the value of cotton, rice, coffee, or other staples where demand, and reserves are shrinking.

Mini-trends are emerging trends, often not yet acknowledged by the media or market, that may or may not culminate in large-scale, sustained shifts in the marketplace like their macro-trend counterparts, but are still likely to have a sustained impact over a period of time long enough to be significant and have the potential, in the future, to become, or replace, an existing macro-trend. Good examples of mini-trends that do not culminate in large-scale, sustained shifts are fashion trends – such as bell bottoms, balloon pants, hip huggers, long waistcoats, or any other fashion garment that is here today, gone tomorrow. Examples of mini-trends that became macro-tends are walkmans (that helped the cassette tape industry take off), cell phones (which have migrated from business phone to home phone), and gluten-free food products. Initially, these were all small markets but all are now global.

They are at opposite ends of the trend spectrum and have opposite interpretations to the average, traditional organization. For an average organization, macro-trends can’t be lived without as they provide a foundation for operational planning, associated annual budgets, and monthly reporting. On the other hand, mini-trends can’t be lived with as they disrupt forecasts, shatter plans, and blast budgets to bits. And while mini-trends often provide the greatest opportunity to a non-traditional company that survives by identifying, preparing for, and riding out mini-trends before the competition, for a company of a more traditional mindset they are the gremlins in the supply chain that need to be electrocuted.

For an organization to to truly thrive, it needs to be able to identify, and occasionally capitalize on both — and understand the relationships between them. For example, as pointed out in a soon-to-be-classic SI post that highlighted a great article on the World Future Society site, mega-trends often drive mini-trends just as mini-trends drive future mega-trends. For example, as the aging work force remains more active, there will be a great demand for senior housing where there are nurses and support staff on site, but where the seniors still live relatively independently. Also, there will be more demand for vacation and leisure activities that are not overly strenuous to a senior — like golf, water sports, cruises, etc.

While the authors of Minitrends: How Innovators & Entrepreneurs Discover & Profit from Business & Technology Trends believe the key to success in identifying mini-trends and capitalizing on those that will be beneficial to the company starts with the following strategies:

  • Follow the Money
  • Follow the Leaders
  • Examine Limits
  • Understand Human Nature
  • Watch Demographics
  • Analyze Frustrations
  • Search for Convergence

the doctor believes that it’s not quite this easy. Just identifying a mini-trend is the first step. The next step is to figure out how likely it is to become a significant mega-trend, and, if so, how long that will take. Short-lived mini-trends can often be safely ignored by a company with an appropriate counter-strategy, but mini-trends destined to become mega-trends that will affect or displace a mega-trend the organization is relying on are a disaster waiting to happen until appropriately addressed.

For example, if a clothing company identifies that a mini-trend will be bell-bottom resurgence, they could choose to produce that product, but if they also identify that many of their competitors will be fighting for that market, that a significant number of people will still want straight cut, and only one other company will be promoting that product, they might continue to sell almost as much with no additional investment at a higher profit margin by staying focussed on their core product. But if they detect a large scale migration from nylon and rayon back to cotton in consumer preferences as a coming mega-trend, and most of the company’s line is rayon or nylon based, then there is a need to identify new designs and production houses that will use cotton as soon as possible.

Regardless of your views, where trends are consumed, you are damned with them (especially if they are mini), and damned without them (especially if they are mega) as most of your forecasts and plans depend on them.