Innovation Update October 2010: 2011 TrendsBig Changes Are Underway, Bigger Even than the RecessionIs Your Organization Ready for What’s Next?As 2010 draws to a close, were about to see the normal rash of "trends for 2011" articles andfeatures. Innovaros Insights & Research group has the privilege of addressing the question ofwhat the future holds for our clients every day, and we wanted to share some thoughts aboutthe trends and forces that will shape 2011 and the years beyond.In some cases, these insights come to us from the ongoing trend identification and trackingthat we do for Innovaro Global Lifestyles and Innovaro Technology Foresight, our two ongoing,multi-client research streams. Others are garnered from talking to our clients, our researchnetwork, or simply connecting the dots as we observe changes in consumers, technology, andsociety.And, while the recession has been a challenging time for all of us, we have been heartened tosee that most of our clients have not retreated from their foresight activities during the lastcouple years, when it would have been easy to bury their heads in the sand and focusexclusively on the near-term. Instead, weve seen a great number of firms stoically accept thatbig changes are underway-bigger even than the recession-and work hard to understand wherewere headed and how organizations can thrive.This is really the point of organizational foresight-to take a proactive stance towardunderstanding the future and find the opportunities it holds for your organization.Chris CarboneDirector, Innovaro Insights & ResearchPS - If youd like to share your thoughts about the changes that you anticipate in 2011 orfurther in the future, feel free to contact me directly at firstname.lastname@example.org.Innovaro Insights & ResearchWe provide the insight and intelligence you require, applied to your markets today and into the future soyou have complete confidence in where to put your development focus. From current market researchto predictive intelligence, we help clients find those insights at the intersections affecting theirbusinesses: social, geopolitical, competitive, economic, environmental & technological. For moreinformation, please visit http://www.innovaro.com/ClientServices/InsightsResearch.aspx
Some of What Well Be Watching in 2011The World beyond the BRICsThe BRIC nations (Brazil, Russia, India, and China) have received a great deal of attentionover the last decade for their importance to the future global economy and as hot potentialmarkets for consumer-focused companies. They deserve the attention, but there are also othercountries that are experiencing rapid growth, have expanding middle classes, and that willincreasingly be on the radar of all manner of companies.Five countries in particular catch our eye for the coming few years. They are Mexico,Indonesia, Turkey, South Korea, and Vietnam-which weve taken to calling the "MIST-Vnations." By and large, the MIST-V countries have young populations, solid economic growth,prudent fiscal and debt management policies, and an increasing openness to foreigninvestment and trade. Take Vietnam for instance. With a population of nearly 90 million,Vietnam is more populous than Germany-and heavily weighted toward younger consumers. Itsmedian age is 28, compared to 42 in Western Europe. Poverty rates are falling and per capitaincome is rising, and could more than double over the next decade, as the Vietnameseeconomy grows. And growth is brisk. Vietnams economy grew by an average of 7.5% annuallyin the 10 years that ended in 2007, second only to China among Asian economies, and couldhit 7% for 2010 after slowing during the worst of the recession1.These are the kinds of vitals that companies look for when they want to grow. So expect tokeep hearing about the BRICs, but youll also increasingly see firms tapping into a second tierof emerging markets including the MIST-V countries in 2011 and beyond.Collaborative Consumption Will MainstreamThe global recession reshaped consumer behavior in fundamental ways, and manyeconomists contend that even after economic growth and jobs return, the old days ofunchecked spending and credit purchasing may not. Consumers will likely be more cautiousabout purchasing decisions, large and small, and indeed much of the conversation in 2010centered on consumers being more thoughtful and deliberate with how they spent their money.In the coming year, this idea of mindful consumerism will continue to be front and center, butwe expect the conversation to shift even further. People will increasingly look for ways to getwhat they want-and do so without actually making a purchase.Weve already seen consumers embrace the "rental economy" and there has been anexplosion in the variety of products that people can rent or otherwise gain access to-withouthaving to actually buy them: Zipcar for cars; NetFlix and GameFly for movies and videogames; sites like "Bag Borrow or Steal" for temporary access to designer handbags; NetJets,for private plane timeshare in the luxury class. Consumers like the simplicity, the pay-as-you-1 Garry White, "Vietnam Is a Solid Long-Term Play," Telegraph, December 1, 2009, www.telegraph.co.uk.
go feeling, and the avoidance of the attendant issues and costs of ownership, e.g., carinsurance premiums and repairs costs are a thing of the past for Zipcar users.The next iteration that were starting to see is "collaborative consumption," where peopleconnect with their peers online to get what they want and need-often eliminating the need for apurchase at a traditional retail outlet. Consider these examples: Since it was launched in 2003, Freecycle.org has been quietly growing. It now has thousands of local groups in 85 countries now, where members can give away (and get) free stuff. Members get the satisfaction of knowing their unused "stuff" is going to a good home, and the variety of things people give away through the network is amazing- everything from baby clothes to appliances and unopened foodstuffs. Neighborgoods.net is a nation-wide online community in the US that facilitates peer-to- peer sharing of virtually anything, and is intended to operate at the neighborhood level. If I need a digital video camera for my upcoming vacation, I can look at the "inventory" of the people in my network and find out whos willing to lend me one. I can also create my own list of items that Id be willing to lend (or rent) to people. Why wouldnt I want my friends to have access to that tent and camp stove I only use 3 weekends a year?While they wont be a clean substitute for all purchases, well see social sites like Freecycleand NeighborGoods increasingly help willing lenders, renters, and sharers bypass traditionalconsumer markets and facilitate collaborative consumption. And if you think all this "sharing"seems a little too quaint for the corporate world, witness the launch of BMW on Demandprogram, announced on October 22 nd. Billed as a "mobility service" it gives drivers flexibleaccess to all the carmakers current models on an hourly basis, and is being piloted first atBMW Welt in Munich.EVs Will (Finally) Emerge as a Real OptionAfter decades as little more than the butt of jokes, electric vehicles (EVs) are poised to returnas a real mobility option in 2011 and consumers seem ready to respond. A combination ofcontextual factors and improvements in the technology should ease their adoption in the US.Because of price volatility, the national security implications of oil dependence and catalyzingevents like the BP oil spill have made people more acutely aware than ever about the need forinnovation in transportation. And finally, the driving range of most of the EVs released in 2011show a real improvement in the technology. The Nissan Leaf is expected to have a 100-milerange, and the BYD e6 cross-over wagon claims 200+ miles. This will largely erase the "rangeanxiety" that have long soured consumers on these cars.Throughout 2011, as many as 8-10 EVs-with a range of price tags-should hit the market,everything from the BMW Concept ActiveE to the Nissan Leaf, Ford Focus Electric, and ChevyVolt. And while the ramp-up will be slow at first, 2011 will be remembered as the year that theaverage consumer gained access to affordable and practical EVs. And things could be even
more dramatic overseas. The Chinese government has let its automakers know it wants themto have 500,000 electric cars on the road by the close of 2011. It may take 3-4 years for USautomakers to hit those levels of penetration2.The next and longer-term challenge: decarbonizing electrical generation so that EVs can fulfilltheir low-carbon promise.Almost three-quarters (74%) of Americans believe that by 2050, "most of our energy will comefrom sources other than coal, oil, and gas," and 54% anticipate that gasoline-poweredautomobiles will no longer be in production, according to a June 2010 Pew Research Centerpoll3.Relocalization Will ContinueWe have watched in recent years the trend toward "relocalization"-where we see a focus onsupporting local and regional economic activity rather than, in an unquestioning way, deferringto large-scale, global solutions. Local food is probably the most cited example of this, andclearly its been a big trend in recent years, but its not the only area of economic activity that isgetting relocalized.There is a growing interest in repatriating manufacturing and technical jobs that werepreviously sent overseas, usually as a way to mitigate the potential supply chain, qualityassurance, or other risks associated with having too much production capacity in far offemerging markets. GEs Jeffery Immelt was even quoted in early 2010 as saying, "In someareas, we have outsourced too much. We plan to insource capabilities like aviation-component manufacturing and software development."4Consumers are getting in on this trend too, and theres been a real resurgence in the "buylocal" idea - which began pre-recession but really took off in the last 2 or 3 years as peoplerefocused on helping their neighbors, friends, and Main Street economy by shopping locally.In 2006 there were some 41 cities or regions in the US that had "buy local" campaigns orgroups. By February 2010 that number had jumped to 130 cities, representing some 30,000businesses5.Were not saying that the globalized economic system is going away, but instead it willincreasingly be complemented by efforts to inject more resilience into supply chains and createmore vibrant local economies.2 "Gaming the Electric Car Chase," Foreign Policy, November 2010,www.foreignpolicy.com/articles/2010/10/11/gaming_the_electric_car_chase.3 Andrew Kohut et al., Life in 2050: Amazing Science, Familiar Threats, Pew Research Center for the People &the Press, June 22, 2010, http://people-press.org.4 http://www.thestreet.com/story/10669235/ge-insourcing-shows-manufacturing-trend.html5 Kimberly Weisul, "Consumers Buy Into Buy Local," Businessweek.com, February 18, 2010,www.businessweek.com/magazine/content/10_09/b4168057813351.htm?chan=magazine%20channel_whats%20next.