I showed them the future and they ignored it

Long-term social, technological and demographic changes can wreck the largest of corporate ships, and firms spend big money on trend-spotters to try to dodge icebergs. So why do they end up hitting so many of them? Martin Hayward thinks he knows the answer.

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Last Updated: 31 Aug 2010

To the casual observer of the world of marketing, it would seem that companies have never been more keen to keep abreast of the many trends that will drive changes in their business in the future. An industry has been spawned to provide a wide spectrum of future-oriented marketing advice, from the 'cool hunters' who hang around with kids to spot latest street trends to the structured analysis of demographic change, industry evolution and trends in consumer spending.

Yet, having played a major part in this industry for the past 10 years - most recently as executive chairman of the Henley Centre - I can see that beyond an outward willingness to embrace the future lies an inherent inability to grasp the implications of our rapidly changing business and consumer environment - and even an active resistance to doing so.

Given that so much of what is to come is now signposted well in advance, it is inexcusable that we're continually caught out by changes in the world around us. Consider the 'surprises' that have wrongfooted some of Britain's major industries and companies recently...

- A diet consisting mainly of fat, sugar and salt is bad for our children.

- Bank customers prefer to talk to human beings face-to-face in a branch.

- Impulsive and top-up shopping has become more popular as the population urbanises and households shrink.

- Financial services salespeople working on commission have not generally had the customer's best interests at heart when selling products that mature in 25 years' time.

- The advent of low-cost airlines has altered leisure and holiday behaviours.

- European populations have been ageing demographically.

None of these issues should have surprised any business, as they have all been precisely pointed out by trend analysts. Yet all have been cited as reasons for commercial underperformance and consumer dissatisfaction.

It's just as possible to predict some of the 'surprises' that have yet to hit the headlines...

- Consumers cannot continue to spend more than they earn every year (the same applies to governments).

- Unnecessary packaging will have to be reduced as materials become more scarce and expensive, and waste sites fill up.

- Accelerating rates of staff turnover and continuing outsourcing of call centres abroad will diminish customer satisfaction.

- Continuing pressure to reduce costs will lead to declining quality of food and goods.

The executives of organisations vulnerable to these situations are not unaware of the mismatch between their own activities and the changing environment around them. I know this because I have been briefing them on the importance of such trends for many years. So why do they find it so hard to respond to such obvious signals of change?

In my experience, there are a number of reasons. We can divide them into three categories: Structural, Ineptitudinal and Cynical. Taking each in turn...

STRUCTURAL It's clear that many companies are not structured in a way that allows them to respond to change. No communication channel is present to enable messages about change to affect their activities or strategies. One hopeful response a few years ago was the wholesale redefinition of market research departments as insight departments, but often this has been a change in name only, with little impact on reaction to the outside world.

The data or insight that is gathered in increasing volumes, containing the nuggets crucial to understanding the future, does not make it beyond the administrative levels of most companies. Given that 'vision' and 'mission' are so crucial to corporate strategy, it seems surprising that so few boards embrace their own insight knowledge in a serious way. How many companies do you know with explicit board-level insight responsibilities?

Even if crucial trend information and insights make it beyond the research department, it's a challenge for companies to know how to respond to such signals. The structure of most organisations affords little permission for change. There is no page in the instruction manual of most firms to deal with the need to respond either consistently or rapidly and aggressively to strong external stimuli. This in-built inertia might be likened to the slowly boiled frog metaphor: chuck a frog into boiling water and it will try to jump out; put it into cold water and heat it up, and it may not notice the changes going on around it. Several of our high street favourites have been reaching boil-ing point for some time, apparently unawares.

Customer feedback - complaint or praise - and staff surveys are other areas of rich insight that are frequently not taken seriously. Why bother to spend thousands on gathering consumer insight if these obvious and powerful sources of actionable data are not exploited?

INEPTITUDINAL Despite their best intentions and public positions, many organisations and individuals betray a worrying inability to compute and distil the implications of trends from what is presented to them. A huge volume of data crosses the desk of most executives today, but this seems to lead to paralysis and obfuscation rather than greater clarity of thought.

The more they see, the less they understand. The sheer scale of many organisations makes it so much harder for anyone to grasp the whole picture and to assess what is truly important.

In an age when the corporate mantra is to get closer to customers (see p3 of almost every annual report), it seems ironic that the scale and consequent anonymity of so many companies continues to grow.

CYNICAL Perhaps the most worrying reason for companies to ignore obvious signals of the future lies in the cynical self-interests of their officers. In an environment where marketing directors are said to enjoy an average tenure of only 18 months, and the average employee in the UK has been in eight different jobs by the age of 32, who cares about the long term?

Add to this a business culture where you get rewarded handsomely even if you fail (eg, Equitable Life directors and Roger Holmes et al at Marks & Spencer) and we can surmise that there are few incentives to take risks, change the status quo or plan for the long term. In this environment, understanding future trends is of interest but no urgency, as few actually plan to be around to deal with the consequences.

Our business world, I surmise, is riddled with short-term expediency, whether deliberate or not. Many factors paralyse the ability of a company to evolve, and these need to be confronted if longevity is to be an organisation's ambition. The key issues are not an awareness of the need to respond to change or a lack of insight into the changes themselves, but the short-termism of most performance measures.

The biggest challenge lies with the City.

Despite the sophisticated cashflow analyses behind share valuations, there's an unhealthy preoccupation with share price growth in the short term at the expense of real returns through dividends in the long term. Few CEOs have the appetite or are given the time required to take a short-term hit in order to preserve the long-term health of their businesses.

It would be interesting to know whether the fast food industry would be in a more profitable and popular state today if it had been braver in reducing salt and fat and had persevered with salads and fruits since the first trends began to highlight these issues many years ago. Today, several high street banks boast about investing in their branch networks and the importance of face-to-face contact for sales growth. Any of their customers could have told them this, and indeed were telling them, many years ago.

Are we really surprised that consumer trust and respect for the financial services industry, the food industry, the oil industry, the media and politicians are so fragile when they have so clearly not responded to the signals we've been sending about their behaviour and products?

Are we really shocked that relationships between customers and companies are so super- ficial when we have disinvested in front-line staff, preferring an alternative of transient low-paid staff and distant call centres?

Your customers are already learning the new short-term rules of engagement.

Loyalty is rapidly becoming a thing of the past, as customers learn to be as short-term and expedient as the companies they deal with. The next generation is being brought up to switch brands and suppliers at the drop of a hat, and this will alter the dynamics of all businesses, taking away the inertia of core business that has allowed trends to be ignored.

For long-term corporate health, a longer-term perspective in thinking and action is imperative. The signals and trends highlighting what you need to do are available; you just have to act on them. We owe it to our shareholders and customers to lift our heads and aim for more than short-term (personal) success.

Martin Hayward, a former head of the Henley Centre, is a consultant on future consumer and marketing trends.

E-mail: mrhayward@btinternet.com

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