How do you differentiate real growth over shutdown fueled spikes for toilet paper and booze? Which markets are set to grow post-shutdown? Which growth trends are set to be accelerated and which unseen new market opportunities are currently being birthed?
The immediate aftermath
The business climate post lockdown will be one of caution and uncertainty, consumer spending will be on essentials, corporates will probably stick to operating expense spending, while money and credit will be very tight or selective. Disrupted global supply chains will result in shortages in certain stocks and will see increased government spending to both manage the crisis and to stimulate the economy.
We need to look past pivoting hype stories and the spikes in demand for toilet paper, facemasks and Zoom to understand where the real growth will come from post lockdown.
We’re not looking for growth fuelled by knee jerk reactions, but genuine long term demand trends.
These three questions have helped me to triangulate the growth markets. The lists provided are not exhaustive but hopefully substantive to illustrate the thought process.
1) Which growth trends will be accelerated post lockdown?
It's important to look at what is already growing as a trend and see if the experience of COVID-19 will dampen or accelerate it.
In the Slide above, I have listed 5 key trends at various levels of maturity, namely Digital Retail, Future of Work, Health & Wellness, Education & Learning, and Regional vs Global Supply Chain.
Under these key trends, there are sub-trends and categories that will be boosted/accelerated after our lockdown experiences.
For example, for Digital Retail, Convenience Consumption (Frictionless & Fast experiences) and Sustainable Consumption (Recycle, reuse, cheaper) categories will be heightened given our experiences in lockdown and leaning towards essentials spend.
Under the Future of Work trend, I think everyone will agree that the Extended Digital Enterprise and redefining workspaces, workforce, and types of work itself will be examined critically after our experience.
The ones that will stick around and grow will be those that are reinforced by a few key trends and at the same time accelerated after our lockdown experiences.
I have highlighted some categories that will be accelerated with the color dots indicating the few supporting key trends in the slide above.
(Read "The future of Retail in the US" Feb 2020, "10 Future Retail trends and Forecast for 2020", "Emerging trends shaping the Future of Work, Workforce and Workplace" and "Future of Work:10 Key Trends for the Next 10 years" for more details.)
2) Is the market showing Real Growth with a secondary wave of supporting products and services?
One of the key characteristics of a growth market is that you see the evolution of the supporting services and products that bolster the expansion and extension of the new market.
For example (see slide above), the Digital Retail trend is reasonably mature and you can see that it is at its second wave of further acceleration and transforming the traditional retail industry. The first wave could be identified with solutions such as last-mile logistics of delivery, Mobile Commerce, and digital payments.
The emerging second wave is the need for Identify verification for secured consumption, data-driven personalised experience, and flexible and cheaper cross border payments.
Real Market Growth has a Primary and Secondary wave that expands and deepens the market that eventually builds a market ecosystem.
Another Example (see slide) is the Future of work trend which is also a bit more mature, with the category of Extended Digital Enterprise, you see the first wave of business applications on cloud, co-working spaces and outsourced business services.
The next wave, which will be interesting to watch post lockdown is the Secured Remote Work from home, Cloud Security, and true Agile Workforce of on-demand staffing.
Interestingly enough, these growth areas are evidenced in my next point.
3) Where is the Money going?
We all know that there will be an economic contraction of varying depth and width. Depending on the country, the amount of money circulating will contract and the speed of the circulated cash will dramatically be reduced.
In gauging growth markets, I say, let's see where the funding and money are going and check if it's in alignment with the accelerated categories. I checked this month's April 2020 startup funding on Techcrunch, and the specific startups that are being funded are exactly on these few key trends that I have highlighted. (See the below slide for more details) - with the exact second waves type of startups for Digital Retail and Future of Work being funded.
The Education & Learning and the Reshoring Trend (Regional vs Global Supply chain) is less matured and probably in the first wave and even pre-wave - yet we still see one startup being funded in each trend this month alone.
The funding of Edtech is growing and will grow 14x in next decade. It has been at a slower growth trend given the fragmented market and slower decision-making process of public entities. However, I am sure after this lockdown, more transformation will follow to question the traditional model of learning for Schools, Workforce and Personal learning.
The Reshoring trend has gained momentum during this crisis amid supply shortages. With the spotlight on global supply chain vulnerabilities and with anti-globalisation sentiments arising from this experience, it will help kick start real reshoring efforts supported by government assistance.
I’m not surprised to see just in Feb 2020 alone, $1.19Bn was invested into industrial and field robots. Robotics and automation are keys to address the cost and quality issue for manufacturing in high-cost economies.
However, I see this trend at the beginning, as the entanglements and varied factors to make it commercially viable depend on the cost of technologies, availability of skilled labour and the final contribution to the product pricing, which needs to be commercially acceptable to customers. Whether this trend reaches tipping point will depend on the multiple stakeholders and how trade tariffs and other tech and labour costs play out in the next few years.
(Read "The top 5 tech trends that will disrupt Education in 2020" Jan 2020, "8 Education trends that matters to student" , "Workforce and Learning Trends 2020", "Future of Learning: Top 5 trends for 2020", "Top 11 learning trends in 2019", "Reshoring at record levels, is it enough?" Jan 2020 and "The future of global Manufacturing" Mar 2020 for more details)
Knowing where to place your bets will be key to thrive
This is the approach I’ll be taking to determine where Real Growth lies, and will be redesigning my business strategies accordingly - to align with longer-term growth trends that are relevant to specific companies and their markets.
It’s critical you also realign your business’ strategic priorities - to reposition the company for the impending New World Economic Order, post lockdown.
A lot of key factors are still unfolding, the agility to reassess and understand which lever to refocus on will be key to successful adaptation.
Everyone has limited resources and capacity, but the ones who know where to place their bets and take proactive action will stand to gain and thrive through the post COVID-19 economy.
This is a Series, and I will be writing more about how different Mid-Market companies will need to REIMAGINE and REDESIGN their business to thrive.
(This analysis started with a piece of work my Gravitas Impact coaching community was working on, and I would like to thank these coaches for their discussion. Jean-Guy LeBlanc, Randy Gardiner, Glen Dall, Julius Cardoza, Brad Giles, and Leigh Paulden. Andrew Thompson for editorial support!)
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