Unlocking New Sources of Growth

Future Perspectives

WPP ATTICUS 2012 GRAND PRIX WINNER

Unlocking new sources of growth

How to find new value in new places

1 Unlocking new sources of growth Future Perspectives New sources are thought pieces which take a concise, of growth future-focused view of important issues to business and Growth and development are an overarching focus marketing strategists. For more information please visit of business. This is true even for businesses that www.thefuturescompany.com/ free-thinking/ are not looking to expand; products and services

The WPP Atticus that have prospered in the past will always start Awards honor original to decline, and business divisions which once published thinking of relevance to marketers seemed perfectly attuned to their markets find everywhere, written by employees of the 200+ that their markets have changed. Inevitably, WPP companies. then, it is a tougher proposition in businesses The Grand Prix is with ambitious growth targets, where the size awarded to the most outstanding submission of the new opportunities needs to outstrip the of all the 10 category winners. losses from the fading markets, and in larger businesses, where opportunities must have

some scale to have an impact on the business.

The climate for growth in the 21st century is also

changing, as resource pressures push up costs,

and businesses are more closely scrutinized amid

changing expectations about their public and

social responsibilities.

© 2012 The Futures Company. Some rights reserved. 2 And, of course, growth is of course, the share price is different groups of consumers. harder to find in difficult likely to be under pressure It often accelerates existing economic conditions, which and investors nervous, or shifts in values. It encourages in turn create difficult market hawkish. The management’s technological innovation. conditions. The result is often freedom to operate becomes Recession is also a coiled a vicious circle: sales fall, and increasingly constrained, and spring, because recovery does as a result, margins fall. To its choices narrow. come, sometimes helped by restore margins, the company public investment or public cuts its cost base, through Although such responses intervention. Businesses can closures and redundancies. seem rational, history tells help by how they choose to But the intended effects of us that it is better in hard innovate. One of the things these actions take time to times to actively seek out we learn from the 1930s is work through, and there are opportunities for growth. that business has the power often unintended effects Recession is never uniform, to create new dynamics as well, such as the loss of and it always creates the of economic, social and corporate knowledge, which potential for disruptive shifts technological change, to reduces the resilience of the in the structure of markets reshape people’s views of the business. In the meantime, and the relative income of present and of the future.

A prolonged period of Unlocking new sources of quite quickly. In the United economic stagnation, the growth, therefore, explores the States, for example, the kind currently experienced following sources of growth: financial crisis has created by the United States and a new group of the “working much of Europe, is also a sign ■■ New markets: people— old,” who are still earning that the prevailing business mostly in emerging and spending. and economic models (and markets—who have sometimes social models) are reasonable amounts of ■■ Emerging technologies: broken, and that new models disposable income for new technologies have will have to be built. New the first time. This group long been identified as models often run hand in hand includes the “emerging a source of new growth. with changes in values. middle classes” in these Some foresee a boom markets. Here, we go in technology-based The purpose of this Future beyond the conventional opportunities in the coming Perspective, Unlocking new wisdom; the opportunities years. But the trick is sources of growth, is to focus in these markets are more always in the timing, for on where such sources of complex—and perhaps technology-led innovation growth are likely to be found, less immediate—than is can take decades to reach and how businesses can generally believed. the market. There are identify them in a structured techniques to help to get and methodical manner. ■■ Changing values: shifting the timing right. social values and behaviors create new market spaces. ■■ New business models: the Changes in the way we combination of changing work have, for example, values and changing led to a boom in the high technology platforms can street (or main street) café create opportunities for and, combined with health new business models, concerns, created a multi- which take value from billion-dollar market in existing players. Famously, pre-packaged salad. iTunes has captured value that used to belong to high ■■ Shifting money: within street/main street music richer markets, money retailers. Mobile and cell moves between different technology makes possible consumers, sometimes the pay-per-use car market.

In the following pages, we will together, they create new explore each of these in turn, synergies on which the alert together with some of the tools business can build. needed to identify them. If there is one message here, it is This is to be welcomed, since that focusing on a single area such opportunities are more (betting, say, on technology likely to be both substantial or emerging markets) is not and sustained. But it also often a successful strategy. means that it is valuable, in Instead, the new sources doing such work, to take a of growth that are likely broader, more holistic view of to prove most durable are your operating environment those where multiple trends and to look deliberately combine. A change in values, for growth platforms that for example, aligns with a are supported by multiple change in economic structure, dimensions of change. perhaps, while a technology platform has matured to create a new distribution platform or a different way of servicing the market. Taken

5 Unlocking new sources of growth New Markets

Wherever you turn, you learn world GDP swelling from a The message appears obvious: the conventional wisdom about little under 30% to more than Go East! growth: that new markets—the 40%. Latin America, which, emerging markets of Asia and like Asia, had its financial crisis Not so fast. We are in the Latin America, and beyond earlier, is growing at speed as middle of a long shift back that, Africa—are the future well. In breathless style, the towards Asia, as we discussed source of growth. The numbers consultancy McKinsey reports, in our Future Perspectives presented to support this case “The rapidly growing ranks of report The World in 2020, are sizeable. And when the middle-class consumers span published last year. In 1800, economic trends are combined a dozen emerging nations, Asia had a share of the world with demographics and not just the fast-growing BRIC economy that matched its urbanization, it is not surprising countries, and include almost population share of 60%. It that the world is now looking two billion people, spending a still has a 60% share of world to the south and southeast. total of $6.9 trillion annually. population, but its share of But this is a more complicated Our research suggests global income is now around story than it appears. that this figure will rise to half of that, because of the $20 trillion during the next long shadow of 19th and 20th By 2030, it is predicted, Asia’s decade—about twice the century colonialism. economy could be larger current consumption in the than that of the US and the United States.” Jim O’Neill’s European Union combined, book, The Growth Map, is with the region’s share of similarly one-dimensional.

© 2012 The Futures Company. Some rights reserved. 6 But the short-term perspective In other words, the economics ■■ There are increasing is less certain. As the data might appear compelling, internal barriers to economist Tyler Cowen but they need to be read with growth, as we related wrote in the New York Times, care. It is even possible that in the case of China in “There is a more general the recent slowdown seen our Future Perspective, worry that the grouping of across the BRIC countries is a China’s Challenges, earlier disparate giants known as sign of a trend, not just a blip. this year. These include the BRIC nations—Brazil, environmental factors Russia, India and China—has, ■■ The economic projections such as water and air for some reason, lost much of the future growth of pollution, poor logistics of its previous momentum ... emerging economies tend and infrastructure, and In the past, many countries to be over-reliant on past inadequate institutional engaged in catch-up growth economic performance as frameworks. Corruption is have suddenly slowed and hit a guide to future economic also a barrier to growth. plateaus, although economists outcomes. But arithmetic do not have firmly established alone dictates that as ■■ The economic effect theories as to when and why low-income countries caused by the move from this happened.” become middle-income rural to urban areas is all countries, their growth but over. United Nations According to Michael Spence inevitably slows down. As research suggests that and Sandile Hlatshwayo, noted above, some middle- future urban growth in “The evidence we have from income countries never emerging economies will the postwar history suggests make the transition to high- come from migration that the majority of countries income, for reasons that are from other cities and entering the middle-income still poorly understood. internal growth. transition have slowed significantly or even stalled. ■■ The high growth rates In general, economists’ growth Of the sustained high-growth seen in China and India models, usually based on cases in the postwar period have been significantly the work of Robert Barro (thirteen, soon to be fifteen, dependent on buoyant (see panel) tend to look at with the addition of India global export markets—and each economy in isolation, and Vietnam), only five have growth has slowed in the rather than as part of the maintained high growth rates face of sluggish European overall international system, through the middle-income and North American meaning they ignore or transition and proceeded economies. A shift to a underplay the effect of global toward advanced country more internally focused constraints on growth, such as income levels of $20,000 per consumer-led economy resource shortages or energy capita or above.” might remedy this, but the prices being pushed up by transition itself would have competition for oil. the effect of slowing growth as the economy adjusted.

7 Unlocking new sources of growth Overall then, while we expect sustained growth depends growth to continue, it will on finding ways to ensure Growth in be at a lower rate than in food supplies to the whole recent decades. Businesses population. emerging looking for sources of growth in emerging markets need to Their third caveat is the most markets will take a more granular look at important: that the richest either be the opportunities. countries in 2010, per capita, will still be the richest in “green” and One of the most interesting 2050. The gap with poorer sustainable, assessments of the next countries should narrow, growth opportunities in the but it won’t close. “Even with or it won’t emerging markets has been another 40 years of superior happen at all done by the economists growth, China’s real per-capita Willem Buiter and Ebrahim GDP in 2050 will barely be Rahbari of Citigroup. They 50% of that of the US.” For used a number of indicators new sources of growth, the based on the economic challenge—for the next decade development literature to and for several to come—will identify the 11 countries that be to find those sources of were likely to grow most growth in the slower growing quickly over the next 40 years. richer markets. China and India are on the list, and so are Indonesia and Vietnam, but there are also some surprises. They include two African countries—Nigeria and Egypt—along with Iraq Barro models and Bangladesh. Buiter and Rahbari believe that these Most economic projections for economies can achieve countries are based on the work sustained per-capita growth of of the macro-economist Robert five percent (at PPP exchange Barro. Based on data from 1960 rates) to 2050. to 1985, this uses the starting level of GDP per capita (since But they also have three it is easier for poorer countries important caveats. This growth to grow faster than it is for won’t be achieved without richer ones) and assumptions improvements in resource about demographic trends, efficiency; as they say, “the the quality of human capital growth we are predicting and economic governance, to will either be “green” and project a country’s likely rate of Robert Barro Image source: http:// sustainable, or it won’t happen economic growth over time. econwikis-mborg.wikispaces. at all.” The second is that com/Robert+Barro

■■ Make sure that your economics analysis pays attention to uncertainties caused by non- economic factors such as institutional and environmental constraints.

■■ Take a more granular view of emerging markets and the opportunities within them—the emerging middle class in São Paulo is different from that in Senegal.

■■ Look beyond the BRIC model. Investing mainly in emerging markets in search of growth is a one- horse bet which will leave you stranded if the horse falters.

9 Unlocking new sources of growth New Markets (continued) China’s tourism boom The Chinese tourism sector is a good focusing on Mandarin-speaking staff, example of how growth in specific sectors culture training and food. Starwood Hotels of the emerging economies can outstrip and Resorts’ “Personalized Travel” program national averages. With government made its debut in July 2011, offering support, the number of trips made Chinese tea, congee breakfast and internally in China each year almost Mandarin travel guides, while the Hilton doubled between 2005 and 2010. Huanying (Hilton Welcome) was introduced in August 2011 in response to the growing The boom is bringing new income to some number of Chinese tourists staying at of China’s most beautiful areas—such as Hilton hotels abroad. Participating hotels Shannan prefecture in Tibet, Jiuzaighou promise to provide a Mandarin speaker National Park in Sichuan province, and the at the front desk, congee and Chinese coastal towns of Hainan Island. The tourism utensils at breakfast, and room amenities boom is also creating new industries. The such as Chinese tea and slippers and China Ski Association expects the number Mandarin TV channels. of domestic skiers to reach 20 million by 2014, up fourfold from 2005. Retailers are following suit, recognizing that shopping is an integral part of the Internal tourist numbers will continue Chinese travel experience. Many brands to increase as a result of substantial are 25% to 30% cheaper in Europe and the investment in transport infrastructure US than at home. Selfridges department and rapid growth in the budget hotel store in London recently started to sector. China Lodging Group, for example, accept Chinese UnionPay cards, while launched its first Han Ting Hotel in 2005. Burberry is employing more Mandarin By 2010, it had a network of 438 hotels in speakers to cope with demand from 65 cities. As disposable income and leisure Chinese tourists. The upmarket London time increase tourism is becoming a more store Harrods, meanwhile, introduced desirable activity, while online bookings are 75 Chinese UnionPay terminals in its also increasing quickly. London and British airport stores in 2010, Outbound tourism is also increasing and has 70 Mandarin-speaking staff. The rapidly, offering opportunities for store estimates that Chinese shoppers companies willing to meet the service spent an average of US$5,700 on each challenge. According to a 2010 survey visit to Harrods during the first quarter carried out by the Boston Consulting of 2011. More generally, the World Luxury Group, 95% of Chinese tourists claim they Association estimates that Chinese are “poorly served on both the domestic consumers accounted for more than 60% and the international front.” Any effort that of Europe’s luxury goods sales in 2011. is made to meet their needs when abroad Similar trends are now being seen in the is likely to exceed expectations. US. There is an obvious point here: Chinese tourists abroad are typically high-end International hotel companies have started luxury consumers, which can help such to address this gap. In April 2011, French- businesses fill gaps created by declining owned Accor launched its China Optimum spend by consumers from richer markets. Service Standards initiative in Australia, (TR)

Deep social change takes Typically, these more rapid So, for example, many of the time. We can sketch such changes occur as a result trends that sit behind the changes out over decades of the slower, longer change post-crisis idea of “considered and generations; the rise meeting a trend that is consumption” have been of individualism with the traveling more quickly, such evident in the data for several Boomer generation and their as an economic change, a shift years. In the UK, for example, European equivalents, the in technology, or sometimes, most indices of physical soixante-huitards; the rise of a sustained campaign by an consumption have been working women, not just in NGO or by a government. The declining since 2002. In the rich markets but increasingly sharp changes in social values US, meat consumption has in the majority of countries; which lead to new sources of fallen six percent since 2007, slow changes in behaviors growth can also be accelerated and car mileage started to prompted by environmental by regulation or public policy. plateau in 2004 and has concern, such as recycling. These “fast changes” make been lower since 2007. In the longer change visible, but Australia, peak car use was Such changes can set the when we look back at the data, in 2004. The financial crisis, context for the more rapid the direction of travel has however, has accelerated changes that open up typically been visible already to these trends and made them innovation opportunities. those who chose to look. more visible.

11 Unlocking new sources of growth If we take the UK juice market its own premium-plus juice “A Good Man” in the 1990s, for example, brand. Without getting into a In our work researching an the category was dominated discussion here of whether innovation opportunity in the by assumptions about value this is just the expansion of a Russian market, we identified and convenience that had niche within a category, these a huge change in people’s created a series of “me too” changes created a growth values towards integrity, offers, based on driving price opportunity by changing honesty and how success is down, often at the expense of consumer perceptions of being defined. Perhaps this quality. This was heading in the benefits and the value of was not a surprise, given exactly the opposite direction the category. the present political context, of many food trends, which but it was notable how were about quality and far this had extended into authenticity. Tropicana, in people’s everyday attitudes. response, created an offer As a result, we developed a that emphasized the raw NGOs often brand philosophy for a new materials. The Innocent articulate product—since launched— brand later played off under the theme of “codes concerns about health, changes in of a good man,” capturing and leveraged the effective social values the zeitgeist of the Russian public health campaign emerging middle class. (YK) about “five [pieces of fruit or vegetables] a day” to launch

© 2012 The Futures Company. Some rights reserved. 12 The extent to which Innocent ■■ New formats and auto company perspective, had to disrupt industry formulations, such it should be more alarming expectations to deliver its gel-textured formulas, that Millennials also seem proposition was later recalled and innovations such as less interested in cars. by one of its founders, magnetic polish and nail There are emerging signs Richard Reed: polish strips. that Millennials are the first generation in 50 years for “If I was a manufacturer, Understanding how values are whom cars do not afford I would have done it shaping categories can also social status, which for their differently, I would have used help to get an early warning generation comes more fruit concentrate, not just of how consumers may be from ownership of squeezed fruit; I would have moving against a category. technology devices. added sugar; if I worked in logistics, I would have done it Again, as we relate in our differently; I would have added Future Perspectives report on preservatives; if it was done How to Sustain Sustainability?, another way, it wouldn’t be the a combination of shifting social same thing.” values and pressure from NGOs created a decisive shift Sometimes second-order away from the bottled water changes are more dramatic. category in richer markets in Coming to the present, in the early 2000s. the United States the beauty category has shown dramatic One of the lessons from growth since the financial monitoring social values is how crisis, particularly in the nail often NGOs articulate changes category. This is sometimes in these, through political or described as the “lipstick awareness campaigns. They effect,” but Euromonitor’s represent an important sign Irina Barbalova identified a of an intensification of a set more complex interaction of values within a particular between trends: group of consumers.

■■ The consumer perception— One example we use with post-recession—of a clients to show the dangers “luxury” experience at a of bringing your own relatively affordable price assumptions to a market is from an auto company ■■ A stronger preoccupation executive: “In all our research with nail art and with Millennials, we find customization, inspired that they still really want by fashion shows and to own CDs.” Millennials, of promoted by celebrities course, don’t care much for such as Rihanna and Adele compact discs, but from the

13 Unlocking new sources of growth In our Sustainability report, Many of the trends that contribute we describe how the chocolate category was to the post-crisis idea of “considerate disrupted by Cadbury’s consumption” have been visible in decision to source all of its cocoa through Fair Trade the data for years channels. The strategic decision was based on its long association with Green & Black’s, where it had moved from being a minority investor to full ownership over a number of years. But the signs of the social change had been seen already: in the growth of Fair Trade and the Rainforest Alliance, in the increasing visibility of Fair Trade products in stores with an ethical profile, and in the impact of activist campaigns such as Jubilee 2000 and Make Poverty History.

© 2012 The Futures Company. Some rights reserved. 14 What to do ■■ When values change, the rules of the category often change as well, as seen in the way Cadbury’s disrupted the chocolate category through Fair Trade sourcing. This can be game-changing. There are risks as well as opportunities when values change.

■■ Make sure that you have a clear view of the long- term underlying changes in values in your markets (they vary from market to market). Consumer data on attitudes and values help, such as those in our Global MONITOR service.

■■ Identify potential tipping points by asking how shifts in values might interact with the other sources of growth, such as technology or economic change.

■■ Test the values assumptions that lie beneath your views of your sector (and those of your competitors). There are often positioning and innovation opportunities here.

■■ When you see a potential opportunity, but are unsure of its likely scale, speed of change, or impact, take an “option” in it by investing in a smaller entrepreneurial player to build learning, capability and positioning.

15 Unlocking new sources of growth Shifting Money

The growth category of In the Future of the eurozone, Shifting Money is different we wrote about how, in the from New Markets in that it medium-term, the economic refers to consumer change shifts needed to stabilize within markets rather than the eurozone and resolve between them, and typically the euro crisis could create in richer markets rather than significant changes in earnings emerging ones. Recessions between different groups of are spiky (see panel); there is workers and non-workers, and dynamism even in slow-growth between different categories. markets. Yet in our experience, In Quickening the pace, we such opportunities are under- discussed how in the US analyzed by businesses. older people are working for Slow-growth economies and longer, some out of choice, recessions can often create some out of necessity. Either disruptions within national way, the losers are younger economies, as we related in people who are unable to our recent Future Perspectives enter the workforce as a result, reports The Future of the and the outcome is a shift in eurozone and Quickening consumption patterns. the pace. Spiky business Recessions are spiky. Downturns hurt a lot of people, but not everybody, because down economies are not all down. Instead, they are peaks and valleys—more valleys than peaks, of course, but not a flatland of stagnation. Finding the peaks to climb is the way to thrive, rather than just survive, during a recession.

The world is not flat. Discontinuities characterize everything, and it is in inefficiencies and breaks in the general pattern where exceptions can always be found. Recessions are notoriously selective in the industries they punish. Not every market is hard-hit in a recession; not all consumers lose jobs or income. Additionally, some sectors recover faster than others.

During the global recession that began in 2008, Apple, Facebook, Restoration Hardware, Hyundai and McDonald’s, just to mention a few, racked up record performances, notwithstanding the fact that discretionary consumer spending in the US dropped a record 6.9%, the fastest decline since the 1930s. The well-worn list of innovative new companies that were launched successfully during downturns is proof aplenty that real breakthroughs always find a market no matter what.

Whether times are good or bad, the challenge for business strategists is exactly the same—find peaks to climb. (JWS)

© 2012 The Futures Company. Some rights reserved. 16 It is worth unraveling the aftermath of the crisis. dynamics of such situations to The case for this is understand why they represent explained in the eurozone new sources of growth. The Future Perspective. full story on Italy is told in the Future Perspective on the Such consumers will have eurozone, but it is worth a different spending patterns, little development here, partly in clothes, in household because conventional views of (specifically kitchen) items, the Italian economy currently in personal care products, project forward the declines of and in the type of foodstuffs the past few years, rather than they buy. There are some considering the prospects of significant points here: disruptive change. ■■ Because these consumers The story, in brief, runs like are in developed this: economies, production facilities and distribution ■■ As the euro crisis is channels are already in resolved, whether by place. The companies debt reduction or by best placed to benefit are restructuring of the typically already present in economy, it will re-balance these markets. Europe’s economies. ■■ These are familiar ■■ If the Italian economy is products and familiar to be more competitive services: once you identify (as it needs to be for the the economic shift, it is euro crisis to be resolved) relatively straightforward it needs to be more to understand and respond productive. to changing demand patterns, although first ■■ One of the few ways to movers are still likely to see do this is to increase an advantage. participation rates by women in the workforce, ■■ The sums of money which are very low by involved can be substantial. European standards. Calculations by The Futures Company’s market ■■ As a result, non-working analysis and investment women will get drawn into team on the size of the workforce due to the the Italian opportunity likely rate of expansion of suggest—on conservative those economies in the assumptions—that it is

17 Unlocking new sources of growth worth around €45 billion per year, or more than Valuing the feminization of the 2.5% of Italian GDP (see panel). Italian labor force Only 46% of Italian women are in paid work, which makes As well as specific category them significantly under-represented in their labor market in opportunities, there are comparison to other European countries. Given the possible also category patterns that changes outlined in our report on the future of the euro and tend to repeat. Some of that the eurozone, the need for more Italian women to work will €45 billion will be spent on increase. Using similar markets across Europe for guidance, convenience products and we can mature the Italian market to 59%, or the same level services, some on premium, as France. This increase means almost two and a half million and some on treating and women entering the labor force. That is of course only half the rewarding. There are likely to story; the question is about the economic impact of this. be new opportunities in the leisure sector as well. Currently the mean female working income in Italy is €30,000, but most of these new jobs will skew to the lower end of This type of scale is not the income range. From published analysis, we took 60% unusual. In their analysis of the of this, or €18,000, to be a reasonable estimate for average so-called “silver economy”— income level of the new entrants. The resulting increase to the older consumers and spending power of Italian woman is just under €45bn, or circa workers—Accenture/Oxford 2.8% of current GDP. (DT) Economics calculated that this could create five million jobs and raise 2020 US GDP levels above current trajectories by 2.2%.

© 2012 The Futures Company. Some rights reserved. 18 What to do ■■ Growth opportunities like this unfold in two stages—there are first-order and second- order effects, as with the nail beauty example above. Often the second-order effects are more interesting, certainly at a category level.

■■ Understand how economic trends are interacting with social trends, since this can be a key source of uncertainty, and therefore of new market spaces and new opportunities.

■■ Assess the total opportunity represented by the size of the change, to work out the scale of the potential. The box analyzing the potential size of the impact on the Italian economy of more women entering the labor market, developed by The Futures Company’s market analysis and investment team, is an example.

■■ Identify the impact of the change on existing categories—and whether it will create new ones.

■■ Don’t invent a new portfolio and strategy. Build from your existing portfolio and strategy, adapting what’s required to capture the new source of growth with your current strengths and assets.

19 Unlocking new sources of growth New Technologies

New technologies are a familiar of S-curve analysis, Theodore whether laptops and and well-researched source Modus, describes these as portables or tablets, took of growth; indeed, some “Spring, Summer, Fall and advantage of the patterns of economists have argued that Winter,” which is a useful way to use and behavior that had they are the only sources remember S-curve evolution. already been established by of growth. This is a tougher The speed at which it does this is the PC, and merely extended question, however, from the largely a function of two things; this. Again, uptake of these perspective of a business, devices was far faster. because the timescales on i. The extent to which the Analysis by The Futures which new technologies move new technology is already Company suggests that even into the mainstream are sitting on an existing the very fastest “pioneer” unpredictable and often slow. technology platform; technologies will reach only Technology evolution can take seven percent penetration in decades rather than the few ii. The extent to which it fits their first five years, whereas years of a typical corporate within existing social and “follower” technologies, innovation cycle. economic practice. which sit on the platform created by the “pioneers,” can A second problem is that So, to take an example, the reach 50% penetration in the methods such as Technology initial development of the same timeframe. Road Mapping, which internet was slow (it took more businesses use to seek to than a quarter of a century In other words, if you are address this issue, tend to to get to 10% penetration looking at technology-based be determinist. They portray in leading markets), but the opportunities for growth technology as creating World Wide Web—which piggy- over a timescale of less applications which consumers backed existing internet use— than a decade, it will come then adopt, rather than seeing took off much more rapidly. only through “follower” the emergence of new products Similarly, personal computers technologies which are and applications as an interplay were slow to diffuse into the already being deployed by lead between social and consumer market, but later versions, users. This means that these trends and technologies.

In practice, all technologies follow an S-curved pattern of Short-term opportunities for diffusion, first developing slowly growth based on technologies come with small numbers of users, then accelerating as they reach only from “follower” technologies the early majority, continuing which are already in the hands of an upwards trajectory as they work through the late majority, lead users. then slowing again as they reach peak penetration. The doyen

Large flatscreen displays

Early majority: Tablet devices IMPLEMENT Touchscreen interfaces

Electronic paper display Early adopters: PILOT Augmented reality

3D TV Technologies

Innovators: Ultra high pixel density displays RESEARCH OLED displays

Flexible screens Pre-market: Holographic imaging MONITOR Visual retinal displays Touchable holographs

Sample S-curve to analyze emerging screen technologies. Source: The Futures Company opportunities can be identified ■■ Relative advantage Although the research through appropriate future- (compared with what the that sits behind this facing research techniques. user already does) work has stood the test of time, insights such as ■■ Compatibility (consistency There are also some classic these are under-utilized in with values, experience tools to help businesses helping develop new brand and current practice of analyze the likely speed of propositions. But evidently users) uptake of an innovation. this checklist can be used Everett Rogers is known ■■ Simplicity (levels of both to assess the likely rate mostly for his work on the perception of ease of use) of uptake of an innovation— diffusion curve and the and therefore how fast it will ■■ Trialability (the degree to two-step flow, but within his move along the S-curve—and which an innovation can research are some important as a tool to improve the be tried out) insights. In particular, chances of success. most of the success of an ■■ Observability (the degree innovation can be ascribed to to which the results of its performance against five an innovation, or the consumer-facing factors: innovation itself, are visible to others).

21 Unlocking new sources of growth Spotting the moment may slow or accelerate its community—was launched continuing growth. in San Francisco in 1985 (and The classic problem for still survives). Usenet provided businesses is identifying As it continues on its trajectory a whole range of community the right moment at which up the S-curve, the technology and shared-interest groups on to invest. S-curve analysis starts to touch the mainstream the internet before the Web is valuable here. In short, by market, although levels of developed, while communities closer monitoring and analysis take-up are still modest, and such as Geocities, Tripod, and of the “Spring and Summer” its protagonists and promoters Theglobe.com emerged in the phases of the S-curve, it is are likely to be small- or 1990s, but battled with the possible to track technologies medium-sized businesses poor online tools and interfaces through a number of phases, with modest sales. At this then available. until they arrive at the moment point, the right response is a when they are about to reach feasibility study, to understand market readiness. The S-curve the potential and impact of analysis means that businesses implementation. are not taken by surprise. This means that by the time the As technologies move up technology or application starts The classic the curve, tracking enables to reach the early majority— the business to respond by typically at around 8 to 10% problem for changing its behavior. At the penetration—the business is businesses is earliest stages of the “Spring” well placed to act. By way of phase, it is clearly a long way a reminder, significant new knowing when from market, and monitoring technologies can take decades to invest in will be enough. Technologies to reach this threshold. In the can get stuck here for years; United States and the United a technology some never escape from it. Kingdom, both lead markets, opportunity. Over-commitment is unwise. it took more than 25 years for domestic internet access to S-curve analysis As and when it moves into the reach this level. means that second half of the “Spring‘ curve, it is moving to the There are some exceptions: business is point where it will start to be people routinely point to the not taken by a candidate for future change, speed at which Facebook has but is not yet at the point emerged as a dominant social surprise where it will have a business media platform. But the use of impact within the next tools to analyze the take-up of innovation cycle. At this point, technologies would also have the correct response is a identified that there would be “deep dive” into the far more rapid development technology, to understand of products and services in more clearly the contexts the social media space. The of use and the factors that Well–the world’s first online

■■ Make sure that you understand the S-curve for your sector, in terms of the different technologies that you will be using and those that your consumers will be using.

■■ Scan regularly for changes in the position of technologies on the S-curve, to make sure you know how quickly it could affect your business. Some technologies will move up the S-curve faster than others. Some will fall off the curve completely.

■■ Test your assumptions about technology change against your social assumptions—about social attitudes, economic change, the rate of institutional change and so on.

■■ Analyze emerging technologies against current consumer behaviors to see how strongly future technologies perform on Everett Rogers’ five success factors. You can also use this framework to improve the design of your innovations.

23 Unlocking new sources of growth Future Industries

Spotting the next big thing is a tricky art. Organizational ecologists—who study the conditions under which organizations emerge, grow and die—have a term for the way in which organizations risk a growing mismatch with their external environment. They call it “the liability of obsolescence.” Conversely, organizations that anticipate change actively in their external environment are more likely both to adapt effectively and to identify new potential sources of growth.

The management theorist Peter Drucker first identified seven areas of change in the external environment that could be systematically monitored for innovation opportunities. He devised them in the 1980s, and they remain a useful guide. You will certainly recognize in them many of the ways in which organizations (and consultancies) structure their processes to identify new sources of growth.

The unexpected: The “brilliant accidents” based on chance events, such as the discovery of penicillin

© 2012 The Futures Company. Some rights reserved. 24 that led to the development of antibiotics. They cannot be Growth opportunities come from forecast, and they are difficult to engineer or mass-produce many places and it is poor strategy (although brainstorming was to place your business bets too invented to try to do this). narrowly Incongruities: The gaps between what your customers want and what you think they want. These are close created opportunities for New knowledge: Advances to the classic notion of the entrepreneurial airlines with in science and technology “unmet consumer need,” and innovative business models can open up the opportunity they are the domain of much such as Ryanair. for innovation, such as the traditional observational basic research into algorithms research. For example, Demographics: This is an for ranking the importance “People always obvious one. Changes in of Web pages that led to trip over their shoelaces. the overall demographic the development of Google. That means they need make-up of the population We can track and forecast shorter shoelaces.” create opportunities for new this, and gain a good sense products and services, such of what’s coming next, as Process needs: as cosmetics with “anti-aging” described earlier in this Improvements in internal benefits to target an increasing Future Perspective. processes that allow a job population of older consumers. to be done more efficiently or with better outcomes, Changes in perception: for example the invention of Changes in assumptions, just-in-time logistics, or the attitudes and beliefs, such Agile (iterative, collaborative) as the changing perceptions software development of nutrition as part of health movement. that created opportunity for the development of “vitamin Industry and market waters” towards the end of change: New industries the 1990s. These are hard to and new markets created track (people don’t tell you by exogenous changes in reliably how their attitudes the market structure, often and beliefs are changing), driven by changes in the but can be identified regulatory environment. For through a combination of example, the deregulation longitudinal quantitative of the European airline tracking and observational industry in the late 1980s qualitative research.

25 Unlocking new sources of growth It is clear from this list that By way of an example, 1. Lighting everywhere growth opportunities come here are three industries from many places, and it is we think offer long-term therefore poor strategy to bet growth potential that can be on only one of these areas of identified only by looking at change. This is why any futures a combinations of factors. project we do starts with a These particular examples thorough process of scanning are taken from workshops for the drivers of change in the where we were exploring wider environment, including possible long-term sources the operating environment. of economic growth for a Most innovations, whether particular set of industries, vitamin water or internet but the process is repeatable search engines, emerge for any industry. A recurring in response to multiple thread throughout this report changes across these has been the importance different areas. of thinking about new sources of growth in terms of Suddenly, low-energy lighting, The most valuable futures interactions, connections and based on organic LEDs work seeks to consider the synergies between trends and that are lower-cost, more interaction between trends market changes—rather than efficient, and can be printed and their combined impact. narrowly pursuing the same on or wrapped around large Yet lists about “the next big opportunities as everyone else. surfaces are likely to change thing” or “industries of the Thinking more expansively the category, and others. next decade” often seem about the interaction between Lighting can be integrated to be devised by looking social values, technologies, into clothing, furniture and at Drucker’s sources of institutional changes and even packaging. innovation separately. As a economics throws up some result, the growth spaces that more unusual opportunities. While the technology, or “new turn up repeatedly on such knowledge” is important, one lists—a growing retirement of the reasons why this will and pension planning industry grow as an opportunity will for an older population, be the “industry or market or growth in a new area change” of pressure to remove such as nanotechnology or existing higher-energy lighting sustainability—are credible, from the market through a but usually too broad to enable combination of regulation and the opportunity space to be institutionally encouraged defined sufficiently. behavior change.

Finally, as part of a long-term trend in which developed

© 2012 The Futures Company. Some rights reserved. 26 economies have shown 2. Urban mining a greater preference for spending money on experiences rather than accumulating possessions, new forms of lighting that facilitate rich sensorial interactions with everyday objects—be it a t-shirt, a domestic interior or a cereal pack—will become more highly valued.

Change drivers: New knowledge: Development of OLEDs and plastic electronics More than half of humanity (61%) and tin (11%). Industry and market now lives in cities. The world’s There is already evidence change: Investment and population will grow by that consumer values are regulation to encourage around 600 million by the changing towards greater smart energy usage end of the decade: most of reuse and recycling of those will live in cities, mostly materials: by 2020 it Changes in perception: in Asia. Rather than being a may be the case that you Shifting desire for constraint, urbanization could are regarded as socially experiences over material help solve many pressing responsible only if your phone possessions problems. One of these is or tablet is made from 50% the need to find new sources recycled materials. of materials, such as rare metals used in electronics. Change drivers: Demographics: Urbanization As resource scarcity becomes and the development of sharper, so incentives megacities will grow for developing technologies and business Process needs: models for the recovery, Development of processes reuse, repair and recycling of and technologies for reuse these materials from urban and recycling of raw materials waste streams. Already, Japan’s urban mines exceed Changes in perception: 10% of world reserves of Growing awareness of need to many metals, including gold reuse and recycle materials (16%), silver (22%), indium

27 Unlocking new sources of growth 3. In-home patient care

Over the past century reduce healthcare costs we have seen what while providing less labor- demographers have called intensive ways to care for the “rectangularization of the elderly. One example: the the survival curve”: as more substitution of traditional people in developed countries in-patient care models with a live longer, a larger proportion hybrid model that combines survive into their 70s, 80s and health visits with remote 90s, pushing the conventional monitoring and aftercare. In “survival curve” outwards. this context, domestic robots could act both as in-home We have also witnessed a helpers and monitors. steady rise in the cost of healthcare over the past 30 Change drivers: years, something which will Demographics: Aging be felt acutely in the coming population years by governments juggling with tax revenues Industry and market change: and public expenditure. Long-term squeeze on Pressure to reduce healthcare healthcare budgets expenditures will create large incentives to implement New knowledge: technologies that can help Advances in robotics and remote monitoring systems

© 2012 The Futures Company. Some rights reserved. 28 “The market a company dominates today is likely to change substantially over the next ten years. There’s no such thing as “sustaining” leadership: it must be regenerated again and again.”

(Gary Hamel and C.K.Prahalad)

29 Unlocking new sources of growth New Business Models

Business models describe the ■■ A technology that has ■■ Business models that ways in which materials and matured to the point advantage suppliers information are transformed where it has achieved significantly compared to into value, for companies reasonable levels their customers and for their customers. of penetration in an Who benefits most from the They are sometimes hard interested consumer current business model? to discern, even by experts. segment In commoditized markets, What are the relevant If most or all of these factors competitors tend to be technologies? (This isn’t can be seen in the sector, competing around the same always obvious.) What are then it suggests it is almost business model. It can take their penetration levels certainly primed for business a new business model to among likely customers model change. It is worth reach new sources of value (actual and potential)? spelling out why this is. Taken and new sources of growth. together, they identify the Seeing through the existing ■■ Signs of “new practices” following issues: assumptions about the market in related sectors or at to make this leap can be hard. the edge of the existing ■■ Is there a deep shift going But when a company does sector on in the underlying change the business model What are leading-edge conditions which shape the in a category, it seems very users, communities of sector or category? obvious with hindsight. Think: interest, and entrepreneurs Walmart in the US retail sector, doing that is different from ■■ Is the sector or category IKEA in furniture retailing; or the mainstream? already being primed for Dell selling PCs or Apple and change by entrepreneurs the music business. ■■ Evidence of pain points in and users? the practice of leading- And it is possible to identify edge users ■■ Do users have sufficient the characteristics of sectors What do leading-edge users motivation to change habits or categories that are ripe find costly, difficult or time- and practices? The cost for business model shift consuming about these of “unlearning” existing before the moment. Typically new practices? behavior is often one of the they combine a number of biggest barriers to change. recognizable factors: ■■ A set of existing institutions, regulations, Taken together, in a ■■ A shift in underlying or business models that systematic way, they make consumer attitudes, are under strain you look at your markets values and behaviors Do industry critics, or and categories through the How are consumers’ experts or analysts, see eyes of others, asking new attitudes, values and problems with the way questions about them, rather behaviors changing? the sector works than bringing your current And why? at present? assumptions to bear.

© 2012 The Futures Company. Some rights reserved. 30 To demonstrate this, in the downloads from the industry as Gnutella had attracted table on the following pages majors is well-known, but is significant numbers of users, we have evaluated a number usually told as a strategy case even though set-up was of innovations against these study. The music industry sometimes quite complex and six criteria—The Futures itself, rightly, is portrayed the whole thing was shrouded Company’s Pressure GaugeSM as being stuck in a failing by the veil of piracy. The tool for gauging the likelihood business model that it was industry itself treated this as of disruption in a category or reluctant to abandon. But a legal issue rather than as a a sector. there is more to the story. clue for innovation. The clues that this was an The way in which iTunes emerging model had been By 2002, enough consumers reshaped the music market clear enough. Napster and were online to make the by capturing the market in other download sites such category viable, and the music

Waiting for the Next Big Thing

In his book Good Strategy Bad Strategy, Richard Rumelt describes interviewing Steve Jobs in 1998, shortly after Jobs had returned to Apple as interim CEO. When he returned, Apple was in a desperate state, only months from bankruptcy. Jobs had since simplified product lines and distribution ruthlessly, to bring costs into line with revenues. But, as Rumelt writes, “His survival strategy for Apple, for all its skill and drama, was not going to propel Apple into the future. At that moment in time, Apple had less than 4 percent of the personal computer market. ... There seemed no way for Apple to do more than just hang on to a tiny niche.”

When Rumelt met Jobs in the summer of 1998, he rehearsed the industry view of Apple’s predicament: that it was locked out of the dominant computing standard of the time, the “Wintel” system that connected the Microsoft operating system and Intel’s chips. Jobs listened.

“He did not attack my argument,” recalls Rumelt in the book. “He didn’t agree with it, either. He just smiled and said, “I am going to wait for the next big thing”.”

Although this is a story from the technology sector, it is not unique to it. Windows of opportunity emerge in all sectors. The trick is in spotting such changes early enough to act on them, and acting on them late enough that they have real market value.

As it happened, Rumelt had just come off an assignment in which he had interviewed the leaders of Europe’s electronics and telecoms companies on their market strategies. Generally, his interviewees were able to describe the successful strategy of their leading competitor. “The standard story was that ... a “window of opportunity” had opened—and the current leader had been the first one to leap through that window and take advantage of it.” But when they turned to their own strategies, identifying such windows of opportunity was invariably missing from the stories they told him.

31 Unlocking new sources of growth The Futures Company’s Pressure GaugeSM The six questions which identify whether your category is set for disruption

iTunes ■■ Downloading content ■■ PC penetration reaches ■■ Rise of online ■■ Some technical expertise ■■ Record companies suing ■■ CDs an expensive “bulk becoming widespread 20 to 25% in leading downloading start-ups required customers packaged” product among particular markets (e.g., Napster, Gnutella) ■■ Complexity (fragmented ■■ Aging customer base groups ■■ Emergence of ■■ Rise of branded file- marketplace) ■■ More sharing and broadband sharing businesses ■■ Threat of prosecution, even remixing of content for legitimate users ■■ A shift in interest from the album to the song

Innocent ■■ Authenticity, well-being, ■■ Cost-effective ■■ Juice bars established ■■ Costly and time-consuming ■■ Decline in differentiation, ■■ Concentrates designed to desire for healthier production technology in New York to produce home-made declining margins in sector maximize for the suppliers options in non-alcoholic ■■ Rise of the organic food smoothies the benefits of their supply drinks markets, growth movement, farmers’ chains and logistics in premium food markets categories

Nespresso ■■ Rise of coffee house ■■ Falling cost of ■■ Professionalization ■■ A complex and fragmented ■■ Declining market for ■■ High margins on take-away culture equipment used in of the (affluent) home consumer experience “traditional” in-home instant coffee ■■ Connoisseurship professional catering ■■ Either high-cost equipment, coffee or “ordinary” filter coffee

Zipcar ■■ Past the point of “peak ■■ Increasing internet ■■ Development of small ■■ Underlying desire for ■■ Increasing costs of car ■■ Finance lock-in to car car,” driving in decline, access non-profit car-sharing personal transport ownership, especially purchase especially among young ■■ High levels of mobile/ schemes across Europe ■■ But borrowing cars restricted “ancillary” costs such as people in cities cell phone access and parts of the US by circles of friends and fuel, parking, taxation and ■■ Attitudes to cars and ■■ Development of remote ■■ Bicycle-sharing relatives, rigidities of insurance car ownership are access technology schemes such as Velib insurance market, etc. changing in Paris ■■ Shift towards access rather than ownership. ■■ Increase in pro- environmental attitudes

When exploring this with a client, much of the necessary expertise is already within the Source: The Futures Company business, but spread across different departments or divisions. But it is also useful to get an external perspective to ensure that the business is not missing things that are clearer to outsiders than to insiders.

Attitudes and behaviors: Technology: New practices: Pain points: Institutions under strain: Business models: How are values, attitudes What are the relevant What are leading-edge What do leading-edge Do people see problems with Who benefits from the current and behaviors changing? technologies? users doing? consumers find difficult? the way the sector works? business model? iTunes ■■ Downloading content ■■ PC penetration reaches ■■ Rise of online ■■ Some technical expertise ■■ Record companies suing ■■ CDs an expensive “bulk becoming widespread 20 to 25% in leading downloading start-ups required customers packaged” product among particular markets (e.g., Napster, Gnutella) ■■ Complexity (fragmented ■■ Aging customer base groups ■■ Emergence of ■■ Rise of branded file- marketplace) ■■ More sharing and broadband sharing businesses ■■ Threat of prosecution, even remixing of content for legitimate users ■■ A shift in interest from the album to the song

33 Unlocking new sources of growth (Continued from page 31) industry’s legal fights with of the British New Musical disputed: evidence of a consumers had ensured Express put it in 2000, “Do willingness to pay tended to that—for some—there you really care if Sony gets be filtered through existing was a stigma, if not actual their cut? Thought not.” views. Simply put, the major liability, to downloading players in the music industry music without paying for it. At the same time, though, thought consumers were This battle had alienated there was evidence that lying. Only Apple saw it as the music industry from its consumers would be willing an indicator of a market customers. As the editor to pay, although this was opportunity, partly because it was looking at the music Deeper patterns of change industry from the outside. If you need to look further below the surface to get a deeper analysis of potential market change, there are recurring There were some deeper patterns of business model change that can be explored shifts too. The LP had been a through deep dives. technology innovation before it was a cultural innovation, ■■ Prior emergence of model in B2B sector: Does the new and the industry had enjoyed model already exist in the professional or business-to- fat margins as consumers business sector? The Zipcar notion of renting or leasing moved from LPs to CDs. a service was already well-established in the business- to-business sector. Ryder transformed the US logistics But even at the time, those sector in this way. margins disguised an aging ■■ Evidence of experimentation: Have entrepreneurs tried customer base and a deeper (and failed) to launch such models? Failure is often seen cultural shift. In 1999, in as a reason not to test a new business model. But the a short column about the detailed story usually shows the entrepreneur has got Rio MP3 player, the music most of the proposition right—and a successful entrepreneur and founder innovator will be able to correct their mistakes or improve of Factory Records, Tony on their timing. Wilson, had written that “for ■■ Technological change: Has a core technology seen the music industry, the future a rapid decline in price or a significant increase in is upon us and one juicy and performance? The former Intel boss Andy Grove had radical part of it is taking us a rule of thumb that every time costs or performance straight back to the past.” changed by an order of magnitude (i.e., a factor of 10), The past he referred to was a disruptive change would follow in the market. In other world before the invention of sectors, it may take a smaller fall in costs. Solar PV is the “record album” when the going through this type of transition at present. popular music business was ■■ Parallel patterns of change: Is the sector following a driven by the song (by the 45, familiar pattern of change? Researchers using the TRIZ the 78, the cylinder, and the model, based on analysis of hundreds of thousands song-sheet, going backwards of patents, suggest—simplifying a complex approach in time). hugely—that products (and services) tend to move over time from rigid to modular to programmable to autonomous.

New sources of growth: end-to-end process

Where is the opportunity in How can you tell change is coming What can you do about it? your category or industry? in your category or industry? Defining and exploring New sources of growth New business models the opportunity

New markets

Pressure New money Gauge Innovation tool to opportunities assess New technologies disruption

New values

Supporting analysis Primary qualitative and deepens insight into quantitative research “Seven sources links between values, and modelling to explore of innovation” technology and business and assess size and as checklist models in your category speed of opportunity

Source: The Futures Company

If there has been a theme to this report, it is that looking To find new sources of growth, for new sources of growth is a structured process that you need to be systematic–and requires you to look beyond the boundaries of your to look beyond the boundaries of existing business to your your business wider operating environment, to make the connections between what you find, and then to understand the opportunities this creates for At one end of the funnel, a particularly, helps to you. The diagram above gives structured scan of issues identify the wrinkles in a sense of how this works helps build a picture of the landscape where in practice. the landscape, and more opportunities might lie.

35 Unlocking new sources of growth The second phase looks at Finally, this connects with a It is also possible to use the those opportunities through more typical phase in which Pressure Gauge tool to wind- a lens that allows you to you define and explore the tunnel innovation ideas that assess how large they are, opportunity, using primary are already in your pipeline. and how imminent they might research and modeling to be, using the Pressure Gauge assess softer and harder model and other tools. aspects of the opportunity.

Source: Jake Goretzki – www.grtzk.com

© 2012 The Futures Company. Some rights reserved. 36 What to do ■■ Develop a 360-degree view of your business environment, scanning it and monitoring it for change in a holistic way—rather than compartmentalizing change in silos (such as consumer, economics, supply chain, risk analysis, etc.).

■■ Take a future-facing view of how social values, technologies, applications, along with systems, infrastructure and regulation are likely to change as your category develops, and how these are likely to interact. There are a number of well- known futures methods designed for this purpose.

■■ Identify and talk to your consumers who are most open to change, and understand how their attitudes, behaviors and motivations are changing. As we discovered in our Cultural Frequencies analysis, these are not just your younger consumers.

■■ Identify the pain points in your consumers’ product or service journeys—not just to point- of-sale but in their “whole life” journey, including use, maintenance, management and replacement of the product or service.

■■ Understand the changes in your supply chain and cost base—are competitors likely to borrow innovations from other sectors and disrupt yours?

■■ Locate the next “window of opportunity” in your sector. Make sure that you are able to identify your opportunity spaces before your competitors do.

37 Unlocking new sources of growth Conclusion

The co-founder and former your business landscape today, and started a new one Chief Executive of Intel, Andy change at the same time. tomorrow, what would it be Grove, tells a story about doing?” As they went round walking into the office of his To take advantage of growth the table, it became clear chairman, Gordon Moore opportunities, though, you that one business unit of (of Moore’s Law fame), and do need to think like an their company, their services asking him, “If we got kicked outsider, to step outside unit, was an unpolished out and the board brought in of the received wisdom gem, doing valuable work a new CEO, what do you think of your colleagues and that people were paying a he would do?” It wasn’t an your competitors and premium for in a part of the idle question. Intel was losing look differently at your category that was growing money at the time because marketplace. As this Future rapidly in size and complexity. prices on its main product Perspective shows, that can The heritage of the main had been undercut by its mean looking at it through business had obscured this. Japanese competitors. Moore the eyes of consumers spelled out the likely strategy (and not just your existing There are always new sources of a successor. After a while, customers), or of lead users, of growth out there. They can Grove recalls, he said to who may be reinventing your be identified in a systematic Moore, “Why shouldn’t you and products and how they are and organized manner. And— I walk out the door and come used without your being fully almost always—you can back and do it ourselves?” aware of it, or of a start-up, or approach them successfully of a new entrant from another as long as you approach It’s a famous story, and it is sector. The trick is to spot the them carefully. Commit not coincidence that Grove’s waves and swells that look enough resources to create autobiography, where he as if they are going to build a platform. Learn about the relates this, is called Only enough to take you all the capabilities required. Then the Paranoid Survive. Grove way to the beach. assess the full potential. and Moore killed their own Unlike Andy Grove, you product—indeed, their We were once working with won’t need to bet the whole biggest product—before it a board to help them apply business. But you will gain killed them. the outcomes of a scenarios a fresh perspective on what project to the future of their you do and, along the way, Most new sources of growth business. The company had where your business can find require less courage than just lost a large long-term new sources of growth. this; they don’t require you contract from their biggest to kill your main product. customer, and the mood But they do require you to was somber. After we had be alert to shifts in sources looked at the scenarios, of value, shifts which often the chairman turned to his come about when several colleagues and asked, factors in different parts of “If we each left this business

© 2012 The Futures Company. Some rights reserved. 38 Endnotes New Markets Changing Values New Technologies Page 6 Page 11 Page 21 O’Neill, J., 2011. The Growth Map: “So, for example, many of the “Everett Rogers is known mostly for Economic Opportunity in the BRICs and trends that sit behind…”: Goodall, his work on the diffusion curve…”: Beyond. 1st ed. Portfolio Penguin. C., 2012. Carbon Commentary. Everett M. Rogers, 2003. Diffusion of Page 7 [ONLINE] Available at: http://www. Innovations, 5th Edition. Free Press. carboncommentary.com/wp-content/ Page 24 “There is a more general worry…”: uploads/2011/10/Peak_Stuff_17.10.11. 2012. Economic View - Forget Europe. pdf. [Accessed 01 May 12]. Future Industries Worry About India. - NYTimes.com. “In the US, meat consumption has fallen “The management theorist Peter [ONLINE] Available at:http://www. Drucker…”: Drucker F, Peter. 1993. nytimes.com/2012/05/06/business/ six percent since 2007”: Larsen, J,. 2012. Earth Policy Institute. [ONLINE] Innovation and Entrepreneurship. 1st economic-view-forget-europe-worry- Edition. Collins. about-india.htm. [Accessed 6 May Available at: http://www.earth-policy. 2012]. org/plan_b_updates/2012/update102. [Accessed 13 May 12]. “The evidence we have from the New Business Models “car mileage started to plateau in postwar history suggests…”: Spence, Page 34 M., Hlatshwayo, S., March 2012. The 2004 and has been lower since 2007.”: Evolving Structure of the American 2012. Peak car - Wikipedia, the free “As the editor of the British New Economy and the Employment encyclopedia. [ONLINE] Available at: Musical Express put it…”: Sutherland, Challenge. Center for Geo-economic http://en.wikipedia.org/wiki/Peak_car. Steve. 2000. New Musical Express. 10 Studies, Working Paper 12. [Accessed 03 May 2012]. June 2000. Page 8 Page 13 “In 1999, in a short column about the Rio MP3 player…”: 2012. I want my MP, “One of the most interesting “If I was a manufacturer, I would have done it differently…”: 2007. Research Technology guardian.co.uk. [ONLINE] assessments of the next growth Available at: http://www.guardian. opportunities…”: Buiter , W., Rahbari, interview with Richard Reed, The Futures Company/Henley Centre. co.uk/technology/1999/may/06/ E., April 2011. Global growth generators: onlinesupplement13. [Accessed 23 Moving beyond emerging markets and “New formats and formulations, Jan 2012]. BRICs. CEPR, Policy Insight No. 55. such gel-textured formulas…”: 2012. “Ryder transformed the US logistics ‘Barro models’: Barro, Robert J., 1837. Nail Polish Brings New Affordable Luxury - Analyst Insight from sector in this way.”: Richard Normann, Economic Growth in a Cross Section 2001. Reframing Business: When of Countries. The Quarterly Journal Euromonitor International. [ONLINE] Available at:http://blog.euromonitor. the Map Changes the Landscape. 1st of Economics, Volume 106, Issue 2, Edition. Wiley. 407-443. com/2012/04/nail-polish-brings-new- affordable-luxury.html. [Accessed 09 Page 10 May 2012]. China’s tourism boom “95% of Chinese tourists claim…”: Shifting Money Vincent, L., Youchi, K., Justin, F., Waldemar, J., Hubert, H., March., 2011. Page 16 Taking Off: Travel and Tourism in China “Either way, the losers are younger and Beyond. Boston Consulting Group. people…”: 2012. Brand Growth And “Chinese shoppers spent an average of Changing Demographics : Branding US$5,700 on each visit to Harrods…”: Strategy Insider. [ONLINE] Available 2012. Harrods cashes in on Chinese at:http://www.brandingstrategyinsider. terminals - FT.com. [ONLINE] com/2012/02/brand-growth-and- Available at:http://www.ft.com/ changing-demographics-.html. cms/s/0/4839c09c-830c-11e0-85a4- [Accessed 01 April 2012]. 00144feabdc0.html#axzz1vnIkJUAZ. Page 18 [Accessed 20 May 2012]. ‘Valuing the Feminization of the Italian “60% of Europe’s luxury goods sales labor force’ in 2011.”: 2012. Chinese Tourists to Sources: Penetration of women in the the Rescue - NYTimes.com. [ONLINE] labour force: Euromonitor; Italian mean Available at:http://rendezvous.blogs. income: OECD; Gender Gap for Italian nytimes.com/2012/02/03/chinese- income: Picchio, M., Mussida, C., 2011. tourists-to-the-rescue/. [Accessed 03 Gender Wage Gap: A Semi-Parametric Feb 2012]. Approach with Sample Selection “Similar trends are now being seen Correction. Institute for the Study of in the US.”: 2012. American Brands Labor, [Online]. Discussion Paper No. Seek Favor With Wealthy Chinese 4783. Available at:http://ftp.iza.org/ Tourists - NYTimes.com. [ONLINE] dp4783.pdf [Accessed 11 April 2012]. Available at:http://www.nytimes. com/2012/04/15/business/global/ american-brands-seek-favor-with- wealthy-chinese-tourists.html. [Accessed 20 April 2012].

39 Unlocking new sources of growth About The Futures Company

The Futures Company is an award-winning, global strategic insight and innovation consultancy. Unparalleled global expertise in foresight and futures enables The Futures Company to unlock new sources of growth through consultancy, global insight and a range of subscription solutions.

The Futures Company was formed through the integration of The Henley Centre, HeadlightVision, Yankelovich and most recently, TRU.

The Futures Company is a Kantar company within WPP with teams in Europe, North America, Latin America and Asia.

Unlocking new sources of growth was written by Andrew Curry. Additional contributions from Andy Stubbings, J. Walker Smith, David Teague, Yannis Kavounis, and Tom Richardson. We are grateful to Jake Goretzki for permission to use his cartoon. Design was by Julie Binchet.

Mark Inskip, Global CEO T: +44 (0)20 7955 1818 [email protected] www.thefuturescompany.com www. twitter.com/futuresco www.facebook.com/futuresco http://www.linkedin.com/company/the-futures-company