ARE YOU PAYING TOO HIGH A PRICE FOR THE FUTURE?

How’s your company shaping up to ride the whirlwind? Is your market intelligence the best it could be? Are you positioned for the next big thing? Perhaps it’s time you got some professionals in to process the numbers, analyse the trends and tell you what your customers want next. Or perhaps not.

Once upon a time you had a marketing department to come up with the best way to shift the goods. On to the street went the market researchers armed with their psychology degrees and customer questionnaires. Back came the information about target groups and client needs and your product range got tailored accordingly. When the downturn arrived and sales returns were the bottom line, what you really needed was some hard technical data. The market research got a little more finely tuned and in came the PEST analysis* with its demographics and social profiling.

Downsizing and outsourcing became flavour of the month and so you offloaded your market analysts to cut costs. You hired some business consultants instead to size up the market, look the business over and revamp your approach. But the experts’ prescriptions for the future were based on even shakier evidence than before. The trends they predicted failed to materialise most of the time, and the ones that did were often too vague to be of much practical use.

In the stock market some do things differently. Databases full of company figures tell them what sold well and when and at what volume. Charts and averages indicate if the stock is still going up or is about to fall. Even here though, with the search for investor momentum and statistically significant change, market advice is still anchored in simple psychological assumptions about which way investors will jump in a crisis.

Can past figures, either from the markets or consumers, really predict future trends more accurately than the laws of probability? Warren Buffet, an experienced investor and currently the world’s richest man, doesn’t think so. If this was the case, he says, librarians would all be billionaires.

With the explosion in information and ever cheaper and more accessible technology to monitor it, many companies think they are just as well-equipped to do the trend-watching themselves. The smart movers already scan the stock market news, read the blogs, network with the competition or just get out there with the consumers themselves. Set up a working group to discuss developments, brainstorm reactions and distribute the ideas on a regular basis and you’re on your way to having your own in-house trend locator. Soon you’ll have a flow of information as useful as any provided by a firm of consultants. And at a considerable saving.

Perhaps trend spotting begins at home.

1. The key idea of paragraph 2 is the following:

A The economic downturn proved an indicator of inaccuracy and thus invalidity of the employed measures of economic trends analysis.

B Demographics and social profiling coupled with technological innovations facilitated the process of sizing up the market.

C The information about target groups and client needs is of utmost importance for economic predictions.

2. How far does past market or consumer behaviour indicate future trends, according to the article?

A Not at all.
B No better than haphazardly.
C Very strongly.

3. What was the ultimate effect of introducing downsizing and outsourcing into working practices?

A Downsizing and outsourcing brought forth more inaccurate and circumstantial economic prognosis.

B Downsizing and outsourcing allowed companies to economize by firing in-house analysts and applying to contractual ones on demand.

C Downsizing and outsourcing enabled analysts to size up a particular sector of the economy comprehensively.

4. What is the major problem with market advice?

A Market advice is very difficult to adapt to stock markets.

B Market advice is strongly contingent on the approaches and tools employed.

C It is in essence too probabilistic to give reliable evidence for companies to be able to further tailor their policies to the market demand efficiently.

5. Where does the author of the article suggest turning for advice if you want to find out about future trends in a particular sector of the economy?

A An experienced investor.
B An independent analyst.
C Your own company resources.

8. Listen to a business studies lecturer talking about the history of outsourcing in the United States and put these points in the order they are mentioned.

a) aircraft manufacturers

b) electronic goods companies

c) foreign carmakers

d) sports shoe manufacturers

e) US carmakers

9. In a rapidly changing world marked by fierce global competition, companies need to embrace innovation in order to survive. But investing in innovation can be costly and CEOs are often afraid of taking any risk that might threaten their profit margins. So how can companies create the conditions for innovation to take place whilst maintaining their productivity? The article examines this crucial issue facing companies today.

Innovation: “the barometer of a company’s vitality and value”

This was the conclusion of a recently published report entitled Innovate on the Run: The competing demands of modern leadership that surveyed nearly 900 company leaders and more than 1,000 employees resident in the US and UK. The survey was carried out by Blessing White, a company with operations covering North America, Europe and Asia-Pacific, who describe their mission as “reinventing leadership and the meaning of work”.

But what is innovation? David Neeleman, former CEO at JetBlue, sums it up as “trying to figure out a way to do something better than it’s ever been done before”. Innovation can also be categorised in terms of scale: the report talks about “big I” for breakthrough inventions and “small i” for incremental or every day improvements.

While the vast majority of company leaders who were interviewed agreed that innovation is everybody’s business, that every employee should play a part in it, a common concern was how to get the balance right. For example, Google has directed employees to spend 60% of their time on the job, 30% being helpful to others, and 10% to “thinking”.

Interestingly, the survey indicated a big gap between leaders’ good intentions and their ability to put them into practice. Only 26% of employees interviewed said that they were regularly encouraged by their manager to look for new solutions or to take risks. One reason given for this was that a company’s drive for productivity often competes with creating the time and space necessary for people to be creative. Another reason was that leaders fear to make costly mistakes. A Marketing Director at Microsoft said, “We’re less willing to take risks than we used to be… There’s more to lose.” However, as the American inventor Thomas Edison pointed out, innovation cannot happen unless you are willing to experiment, “I did not fail,” he said, “I just found 10,000 ways that did not work”.

So how can the gap between good intentions and effective practice be closed? Perhaps most important, according to Blessing White, is to eliminate cultural barriers such as the blind drive for productivity or fear of failure. “Organisational culture”, they say, “like the air you breathe, touches all employees”. Inspiring leaders, such as Bill Gates, who find ways to involve all employees in their company’s mission, get results. Fluid two-way communication between managers and employees can help keep innovation in line with productivity. Employees who are constantly updated on customers’ needs know where to devote their brainpower and regular feedback keeps them on the right track.

Nobody doubts that maintaining productivity whilst fomenting innovation is a challenge, but according to this report, if a company does manage to achieve the balance, it will be a sure indication of its health and competitiveness.

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