Following trends to higher earnings

Following trends to higher earnings
By Stan Rosenzweig copyright 2004, all rights reserved.

Here are two ways to spot marketing trends that can lead you to new financial opportunities and three lessons you can apply:
Trend spotter #1: Read 10 year and 20 year old books about trends. Learn from history. History repeats itself.
Trend spotter #2: Read the newspapers.
In 1982, in his bestseller Megatrends, John Naisbitt showed himself as a student of history by quoting an even earlier management consultant, Mary Parker Follett, who, in 1904, identified a key concept in determining trends and market directions. She created "the law of the situation", a concept used today to reinvent businesses faced with key strengths in an eroding market.
Had railroads recognized the law of the situation and understood that they were really in the transportation business, said
Naisbitt, they might have survived the migration of shipping from rail to trucks, even to air. Naisbitt calls railroads the great lesson for business, but there are clearer lessons for the information age. Take telephony. I think the great lesson for us all comes not from railroads, but from telecommunications; specifically, from Western Union.
Most of us know of Alexander G. Bell's historic telephone utterance on March 10, 1876, "Watson! Quick! Get your tail in here." But do you know the other important, but less than famous quote? It seems that only one short year later, Gardiner Greene Hubbard, Bell's future father-in-law and financial partner, offered the whole shebang to Western Union Telegraph Company? As you know, Western Union was as strong and powerful back then as they come, just like the railroads.
According to Sidney H. Aronson, contributor to "The Social Impact of The Telephone", MIT Press, 1977 (another oldie, but goodie, history), Hubbard was turned down cold by Western Union's president William Orton with the words, "What use could this company make of an electrical toy?" Now that's a quote worth remembering.
Don't be too hard on old Orton, though. He wasn't exactly asleep at the switch. Western Union was very successful under Orton. They were the virtual Microsoft of the 19th century.
In fact, by the time Bell and Hubbard had happened along, Western
Union had wired up the whole country and already had developed a new technology to carry written facsimiles of messages (fax).
This, evidently, was for those who wouldn't learn Morse code and wanted a graphical user Windows-like interface.
Undeterred, Bell went on the lecture circuit talking up his concept for a great information superhighway of the time, that could be used by just about anyone without too much training.
Naisbitt was right about the railroad and several other things, but he got it wrong a few times, too. He predicted a high-tech backlash, fueled by the need for people to be together, a concept he called "high touch". "People will want to be with people", he said and he predicted that home offices, electronic shopping and teleconferencing would not succeed.
Naisbitt predicted a move from institutional help to self-help, which, of course, if that had happened, would have eliminated much of the entitlements that destroy our federal budget and would scotch the need for a national health care policy.
In fairness, Naisbitt taught how to learn about trends from the newspapers, which is right on. Consider the new trend in wealth redistribution that takes from willing donors and gives to formerly downtrodden minorities. No, I am not referring to Congressmen and first ladies who trade on inside information. I speak of gambling casinos on Indian reservations.
I recently read that gambling is considered by Indians to be "the new buffalo economy". Almost 100 tribes no longer resort to welfare and some tribes are earning and paying tribe members almost half a million dollars a year each in distributed profits.
This newly formed capital, Forbes editors would be happy to learn, is being reinvested in an explosion of entrepreneurship, much like the nouveau-wealth of the '80's we learned to appreciate from the Japanese and the Saudis.
Now, what lessons can you learn from these two little morality plays to help your build your business?
Lesson 1: Never forget Mary Parker Follett's "The Law of The
Situation" and keep rethinking what business you should be in.
Remember that what may be the conventional wisdom one day is nothing more than dinosaur poop the next. If change is the one constant, you should be constantly on the lookout for the next trend to change to. More importantly, be attuned to what you should be changing from.
General Electric got out of the toaster business and into financial services, entertainment and defense. Good move! Xerox became an office management company and Phillip Morris learned to feed the nation. These guys are very successful and make money.
Are these changes by accident? No way.
Lesson 2: Don't look to Naisbitt, Orton, or even me, to determine your trends for you. Experts don't have a corner on the crystal ball market. You have to do that yourself if you want to win.
Lesson 3: Don't shrink from a good marketing push because it's never been done before. If you have a new concept, don't look at what people do now. Consider what your new product will do to earn people more money, make us healthier, or reinvent the pleasures of life. Then put a price on it.
Look at all of the first-time ideas that made it big when there were no statistics to tell them that it couldn't be done: personal copy machines, fax, wire funds transfer, cosmetic surgery, no-fat desserts, higher-fat ice cream, color monitors, 900 number pillow-talk, undirty VHS movie rentals, voice mail, flavorless pizza, alcohol-free beer, CD-ROM, car rentals...the list is endless.