It’s everywhere you look
Magnus Lindkvist explains why everything you know is wrong, and how businesses should be – but aren’t – preparing for a vastly different world. Jo Bowman writes.
For someone whose reputation now rests on his ability to help businesses gear up for the future, Magnus Lindkvist’s start in trendspotting seems curiously haphazard. In an unhappy relationship and disillusioned with the film industry he had hoped to work in, the business graduate took out a subscription to Harvard Business Review on a whim one day in 2001. “I don’t know why I did it, I certainly couldn’t afford it,” he recalls. “But I found I wanted to share the contents of this magazine with other people, so I started something that I called rather pretentiously ‘intellectual Mondays’.”
Beer and sandwiches – and the promise of discussion on weighty issues – attracted a growing following of enthusiasts. Lindkvist was immediately struck by the strength of demand for an understanding of how the future might look and decided to stake his own future on the business of trendspotting for commerce. He’s now writing his third book on the subject, is in high demand as a speaker, and runs the Stockholm-based agency Pattern Recognition.
“Trendspotting is actually a pretty rigorous discipline,” he says. “You’re trying to track behaviours. Even economic statistics reflect some kind of underlying behaviour and you want to track that over time. I think the long-term tracking of shifts is what gives me enjoyment and what tends to create insights.”
Fashion to phenomenon
Not all trends are equal, in longevity or impact. “If you walk in a city street, what people are wearing and what they talk about and what’s in their shopping bags, what they’re going home to watch on TV, are all microtrends,” Lindkvist says. “They’re short term, faddish, fashion things that are here today and if not gone tomorrow, then certainly gone in about five years.” Take a step back, Lindkvist says, and look at the storefronts – which shops have closed, which are doing well – these patterns represent macrotrends that run for slightly longer, say seven to 10 years. Take a slightly more distant view and look at the shape of the city itself – which buildings are new, how many churches have been turned into discos, how many mosques or student housing blocks have been built – and you start to see bigger societal changes, what Lindkvist calls megatrends.
“At the end (of the scale), something we can’t see on a city street no matter how far back we go, are things I call gigatrends – long-term shifts in how we live and work, and the thing about them is we take so many of them for granted.” These trends are evolving so gradually that most people don’t notice change happening at all – things like the way men and women relate to one another, or how we think about work or marriage. “If you spend a lot of time reading magazines and newspapers, you’re going to think the world is driven by these short-term events – volcanic ash, terrorism, things like that,” Lindkvist says. “But the most impactful things are these slow-moving gigatrends that change your life a percent of a percent every day. Over 20, 30 or 50 years, everything will be quite drastically different.”
A business based on an insight into a microtrend might well come up with the next Croc sandals or the hit mobile phone model of the year, but for long-term success it’s the megatrends and gigatrends that really matter,” he says. “IKEA, for instance, succeeds because it’s built on a megatrend – the growth worldwide of the middle classes.”
Why everything we do is wrong
Lindkvist challenges individuals and businesses to recognise how much of their world and their expectations of the future are based on a sea of assumptions rather than observations. His first book, Everything We Know is Wrong, is based on the scientifically-derived insight that the more we discover, the more we find that things that we “knew” just aren’t true anymore. “Whether it’s the shape of the earth or the structure of the universe or why people fall ill, what science does is kills off knowledge,” he says. “It gives us new knowledge but it’s also great at destroying old so-called knowledge. That, to me, should also be the basis of futurology, to challenge assumptions and say ‘what do you base those assumptions on?’”
The role of market research in helping businesses track and respond to trends depends less on methodology than in the delivery of the results, Lindkvist says. “The good market researchers that I know are like good songwriters. They’re great at coming up with material, but where many of them fall short is in their ability to communicate their work within organisations. They may come up with a great report or PowerPoint presentation, but nothing else, and many ideas need to be championed; they need to be sung by the right singer to be effective.”
Too often, he says, market researchers make their findings overly number-driven and technical in an attempt to prove intellectual rigour, “instead of using the kind of language and tools that will really make this a groove that people want to dance to”.
Getting businesses to dance is the next challenge; actionable insights require action. “I try to make all that I talk and write about tangible, insightful and inspirational in a way that someone will say ‘we should try it’,” Lindkvist says. “Then I find that getting around to doing things is actually the ultimate obstacle. Of course, very often, running a company is all about prioritisation, what resources should be allocated where, which means that if you do one thing and put a lot of resources into it and it fails, there’s pain and punishment, and you become even less inclined to try new things again.” He encourages programmes of frequent, inexpensive experimentation that allow for cheap failures. “Too few companies experiment or have an experimental mindset. The holy grail of this industry lies in how you get yourself and others to try new things.”
Ketchup, and other business indicators
Think of a bottle of ketchup , Lindkvist says: sometimes, you have to bang the bottom a few times before what you really want starts coming out. Look at the Finnish games company behind the phenomenally successful Angry Birds mobile app. This was their 52nd game; the first 51 barely registered a blip internationally, then they had a hit. Think of Nespresso, too, he says: it was sold at a loss for 15 years before demand for quality home coffee and cool kitchen gadgets came together to make Nespresso a success Twitter barely had any users for the first couple of years, and then we all know what happened.
So how does a business know whether their new idea is ahead of its time and will eventually be a hit, or is simply a dud? The answer is that in many cases, neither of those is true. “It’s not binary,” Lindkvist says, pointing out that Nokia’s move into touch-screen phones in 2004 seemed to have no ready market, yet the iPhone came along shortly afterwards, and was rather better received. “It’s never either just a weird idea, or a weird idea that will work. You don’t really know what you’re looking at or what the potential will be.”
Beyond emerging economies and the shift away from a carbon-based economy, what are the gigatrends businesses should be monitoring now? Lindkvist says the rise of entrepreneurship will change the way businesses employ people and the way people work together. This is significant because so many structures – taxation, health insurance – are built around the idea of employment. “If you can’t employ someone but only work with them, what will things look like? Where will new ideas come from? Will you have departments for that or should you be picking people off the street and saying ‘I like your ideas’?”
The increasing complexity of the world is leading to increasingly narrow specialisation of skills, which is already having an impact on people’s employability, Lindkvist says. Aircraft mechanics who 20 years ago could tackle a handful of planes now work only on a specific model in a specific series. “I say to young people, assume that your dream job hasn’t been invented yet. Assume that when you think of the most narrow thing you could ever be, like a Twitter correspondent, assume that even that narrow profession will be 50 other professions.” Another slow-moving but immensely powerful force is the shift towards automation, and the question of how much of it we will be willing to accept. “We’ve already taken quite sophisticated human functions like recommending music and answering questions, stockbroking and so on, and automated them. The big question is how far can this go? Is there something that’s uniquely human? Are we in fact facing a job catastrophe where billions will be unemployed because what they did, whether it’s transport or writing books or music, is done by machine? The further ahead you look, the more open-minded you have to be.”
Expect the unexpected
Trends can be tracked, but how can a business be prepared for something out of left field? “We can predict,” Lindkvist insists. “We know that generally, every five or seven years, we’ll face severe business cycle difficulties, whether that’s depression or a fairly mild recession. The problem is that many companies are driven by short-term appetites, so in a recession they can’t ever foresee themselves being saturated again, and in the upturn they can never see themselves being hungry again.”
Companies would be better off if they made strategic planning an ongoing process, with a system for recognising important market signals, rather than having annual strategy meetings. “They might say ‘this quarter we’re doing very well, but over the last 10 years this is what the figures look like’ and orient themselves to that. They’d be able to do more things.” He suggests a radar-style system for tracking trends, something that’s done constantly, in real time, where possible, or at the very least every month or two, so businesses can change course long before an iceberg is looming. “See what’s happening, ask ‘what’s worth dipping our toes in, what’s worth getting seriously into business with, and what should be ignored?’. Most companies don’t do that at all; they leave it for strategic meetings once every five years.”
Magnus Lindkvist is founder of the agency Pattern Recognition. The company is based in Stockholm, Sweden, and employs 15 people, including quantitative analysts and behavioural scientists.