Megatrends: Tailwinds for Growth in a Low-Growth Environment

Megatrends: Tailwinds for Growth in a Low-Growth Environment

          
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Megatrends: Tailwinds for Growth in a Low-Growth Environment

Management in a Two-Speed Economy, Innovation & Growth
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    It’s time to grow again. During the last prolonged bear market, from 1966 to 1982, almost all of the 20 companies that most strongly outperformed their industry peers on the basis of total shareholder return did so through growth in sales rather than EBIT or dividends. However, sales growth in the current environment is harder to achieve than ever, so tailwinds are critical. They get you to your destination faster while saving on fuel. And what tailwinds are to transport, megatrends are to business. In fact, megatrends are more predictable and reliable, enabling executives to anticipate their impact and develop strategies for seizing the advantage.

    Megatrends are major trends with the power to reshape the landscape of economic opportunity and risk—think urbanization or the rise of online communities. They can take decades to gather strength, and then they suddenly burst forth to rearrange the competitive environment. But because of the long buildup before takeoff, companies often underestimate the power of megatrends or assume that they have already accounted for them in their plans. This complacency can be dangerous—and the danger is compounded by the ways in which megatrends can shift over time, often as a result of interactions with other trends. It takes a concerted effort to avoid complacency, to track down megatrend opportunities, and to position your organization to benefit.

    The ability to spot a megatrend and its effect on markets usually requires mental if not physical distance from the trenches of day-to-day business. Companies that “get” megatrends are like expert hikers who, if lost in the woods, climb to the highest hill for a better perspective on where they are, where they need to go, and how the weather is shifting. In a similar way, tracking a megatrend requires a high-level view across topics, sectors, industries, and regions to gain perspective and find a clear path to growth through rough terrain. Too often, managers are caught up in fighting short-term battles—blinded by what they think they already know and too distracted by the demands of a challenging economy to give the issue of long-term growth the focus it deserves.

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