Taking A ‘Long Range’ View to Adapt to Market Transformations

By Andrew Burgess, Chief Scientist, AkzoNobel

We live in an era when technology and society are evolving faster than the ability of many organizations to adapt. Whether it’s iPods replacing walkmans, e-readers edging out books, or digital downloads sending CDs packing, the pace of change is relentless. As Leon C. Megginson once said in paraphrasing Charles Darwin’s Origin of the Species, “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”

Analyzing trends
The world is changing at a rapid rate. Climate change is impacting ecosystems and economies around the world; resources are being depleted; an increasingly urbanized population is growing; new economic powers are emerging and new technologies are continually being developed.
   Global mega-trends such as these are driving major transformations in our society. Businesses need to think about how these trends are impacting their customers, not just today, but tomorrow. They need to think in a structured way about the future, to challenge their assumptions about the world, and to navigate risk and seize opportunity.
   Lower-level trends, for example in technology, can have more specific impacts. It is vitally important to be aware of these signals which can often be found in the academic world. Recent history is littered with examples of companies such as HMV, Blockbuster and Kodak that failed to spot these and adapt accordingly.
   When looking for these signs, it is important to look beyond the scope of your own industry. At AkzoNobel, we are aware of developments occurring in other industries that can influence our own. For example, we know that LED lighting systems now have the capability to change color at the press of a button. This presents both a threat and an opportunity for a paint manufacturer such as AkzoNobel. It is a threat because it might negate the need for different colored paints but it is also an opportunity as wall coatings will need to be developed in such a way as to optimize the interaction between the lighting systems and the surface. 
   Organizations are often open to adapting to these trends if there’s a case made for it and a path outlined to do it in a safe and business-driven way. In practice however decision makers do not necessarily focus enough on the way their customers’ expectations are changing or the manner in which their market is transforming. When they are finally ready to react, it’s typically a technology-first rather than a people-first initiative. Without understanding behavior, expectations, and patterns, technology is often the right answer but at the wrong time.

Scenarios
Scenarios are plausible, coherent and challenging descriptions of possible future worlds. At AkzoNobel we use them to investigate the impacts of global trends, to help develop more resilient strategies, and to innovate sustainable products, services and processes.
   Once such scenario that we have investigated is the development of so-called “mega-cities”. In these cities, we anticipate that people’s sense of individuality will become increasingly important. As they move into these mega-cities, they will be faced with the spectre of becoming a faceless individual in a sea of 75 million others. In this world the personalization of possessions will become much more important to people. Already we are witnessing early signals of this trend in many consumer product areas. Coca-Cola recently launched a new campaign that allows fans to “Share a Coke," personalized with the name of a friend. And last year Jaguar Land Rover launched a dedicated bespoke engineering division aimed at allowing customers to individually tailor their cars. This trend could provide substantial opportunities for a company like AkzoNobel that specializes in color and it is important that we are ready to capitalize on these through our product portfolio.
   In these mega-cities we also know that tackling the spread of disease will be important. For a coatings company such as AkzoNobel, this is significant. As such we are investigating techniques that can interrupt the spread of disease through the development of anti-bacterial and insect-repellent coatings.

Visions
According to the World Business Council for Sustainable Development’s (WBCSD) Vision 2050 report some of the changes that we should expect by 2050 include; a world population of 9 billion; 95% of new building stock to use zero net energy; universal access to low carbon transport; and landfill becoming obsolete in industrial processes.
   At AkzoNobel the ‘Vision 2050’ report is used to inform our long-term innovation strategy and to help us identify changes in the market. In our buildings and infrastructure customer segment, the growing demand for buildings with lower energy costs forms a driver for us to develop more sustainable products, be that in their manufacture, their application, their capabilities or their lifecycle. This includes powder coatings that can be cured at lower temperatures and liquid paints that release fewer solvents, as well as coatings that need little or no maintenance or can reflect heat.
   The same applies to our transportation segment, where the need for reduced energy drives our focus on shifting to new, lighter materials. Resource scarcity is a key driver in our consumer goods and industrial segments, gearing our innovation activities towards eco-efficiency, using waste as a resource rather than simply as a disposal problem and improving resource efficiency in the value chain (with customers, consumers and in the end-of-life phase).

Predicting the future
Of course the further into the future you look, the riskier this type of thinking becomes. If you look back at futurologists in history, they are nearly always wrong. But this should not stop us ‘imagineering’ what the future might look like and taking measures to start moving our way towards that. 
   Ultimately, the ability to adapt successfully to changing circumstances requires long-term thinking. Without this, businesses will always miss the threats and opportunities presented by major technological, economic and societal changes.