Business Trends
Top Business Trends of 2010: Wharton Experts Weigh In
From anticipated slow growth to renewed attention on the customer, 2010 will bring changes to the way executives do business across organizations and industries. Wharton professors offer insider perspectives, whether from research, consulting, writing, or teaching.
Opportunities in Innovation
Companies have often defined their strategies in terms of how they are differentiated from their competitors in the minds of consumers. Increasingly, however, strategic thinking is focused on how the companies are uniquely relevant to their customers.
Patti Williams, Associate Professor of Marketing; Faculty member, Essentials of Marketing
Professor of Marketing George Day sees a continued impact on innovation. "Leaders in many industries are more careful with their R&D budgets. They aren't necessarily dialing back on innovation, but they're focused more on productivity and speed to market. What I’m seeing is an emphasis on safer “small i” innovations rather than “BIG I” projects that push the firm into adjacent markets and new technologies. Incremental growth, such as with product line extensions, is being favored over breakthrough technology and other high-risk/high-return ventures.
But that means 2010 is a great time to take advantage — to use innovation as a way to get a jump on your competition. If you're going to do that, though, with budgets still under pressure, you're going to need a better way to measure the effectiveness of your R&D efforts. No one is satisfied anymore with simply gauging outcomes. There is a real need for diagnostic measures for the process itself, not just the end result.
Day continues, "Larger companies with a global presence are also benefitting from open networks. Often, the innovation in these companies is stunted by their inability to 'know what they know.' They might look outside their organization for a solution or idea, when what they need is already present within the organization. I'm seeing companies like Cisco and IBM use internal social networking to share knowledge, with great results. Social networking is more popularly thought of as a dramatic trend in marketing, but its place in innovation is just being mapped out. More organizations can learn from this relatively new application and, even with constricted R&D budgets, take on their competitors with a focus on innovation from within. "
Becoming More Relevant to the Consumer
Associate Professor of Marketing Patti Williams sees attention being directed from the competitor to the consumer. "Companies have often defined their strategies in terms of how they are differentiated from their competitors in the minds of consumers. Increasingly, however, strategic thinking is focused on how the companies are uniquely relevant to their customers. The customer, as opposed to the competitor, is front and center — the attributes of a product or service are not as important as how that product or service fits into a customer's life.
"This is a trend that has been coming for a while, but it will build in 2010. You see it in a variety of ways. Wal-Mart for example, still offers low prices, but has recognized that they are a means to an end. Low prices are relevant to consumers because they mean real goals can be accomplished less expensively. So you see Wal-Mart ads focused on, for example, lower prices for board games which enable parents to buy more games to play with their children."
Williams continues, "A focus on relevance brings with it a broader range of touchpoints that marketers have to understand and manage. It's not just about delivering the right attributes at the moment of purchase; it's also about helping consumers search for the right products, dispose of the products, or spread word of mouth about the products. Companies have to think about how everything — themselves, their products, their messages — is relevant to consumers across all these aspects. The consumption experience as a whole must be addressed. We'll continue to see this trend take stronger hold in the coming year."
Meeting Slow Growth Head-on
"Fallout from the worldwide economic crisis will continue to challenge many companies," notes Mauro Guillén, Dr. Felix Zandman Professor in International Management. "If they haven't done it already, now is the time for executives to rethink how they run their businesses. Incentives, brand, and pricing must all be reconsidered.
"The dangers of stirring demand by giving in to downward pricing pressure are being felt more strongly. Consumers are negotiating and comparing prices, and more importantly, they're waiting. They know it's a buyers' market. This is especially true in Japan right now, with disastrous effects on their economy. As consumers around the globe hesitate, there is a possibility that the deflation today in Tokyo could happen in Europe and the United States."
Professor Guillén projects, "Companies should get ready for a few years of very slow growth. European and American economies are losing ground to other economies, and companies must prepare for this shift. This is the new reality. There is a fundamental reshaping of the global economy. Those organizations that understand it and make decisions based on this new reality will position themselves for better outcomes. They can either come to terms with the situation or face some harsh consequences."
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