I’m told there’s a saying on Wall Street that goes, “The trend is your friend.” I’m not a banker nor an asset manager, so I can’t vouch for its validity in that context.
However, I think that, in a recession, this concept has a lot of value in terms of managing one’s career or business.
Most life, career, and business plans operate on the premise of continuing the underlying status quo.
We all assume that the sun will rise tomorrow, my mobile phone will work, and gravity will still be true on Earth.
Generally speaking, this turns out to actually be true 99.99% of the time.
However, it’s the 0.01% of the time when something in the world has changed significantly where this kind of default thinking can get you into trouble.
To survive, and even thrive, in today’s environment, it’s vitally important to notice and respond quickly to major changes in trends — in particular, changes in customer demand.
Now, you may not like the change in the trend, but to deny it is extremely costly.
You can choose to go “with” the change in market demand or go “against” it. As painful as it might be to adapt to major shifts in market demand, it’s the only sustainable path forward.
You can go “against” a change in market demand that you don’t like only up until the point where you run out of cash.
Let me provide a few examples.
Here in Seattle, we are sheltering in place. Nonessential businesses are closed.
So, what do you do if you’re in a non-essential business and want to keep running?
Well, one option is to convert your business into an essential one.
Here’s one example.
The company Outdoor Research sells well-made gear for hiking and camping. As you might imagine, when most of the major outdoor recreational areas are closed and everyone is staying indoors, you don’t exactly need to buy a new rain jacket.
The company has converted its manufacturing facility into one that makes surgical masks. They know how to work with fabric. They know how to sew. They know how to produce a large volume of fabric-based goods.
Normally, people wear their clothing to protect themselves from the weather and to prevent loss of life.
Now, people are going to wear their fabric-based goods to also prevent loss of life.
They’re adapting to the trend.
I received a message just now from someone who works in the airline and cruise ship industries. She asked when things will return to “normal.”
This is the wrong kind of thinking because it presupposes what used to be true is “correct” and what is true now is “incorrect.”
Instead, it’s useful to think of what’s going on now as the “new normal.”
Given that mindset, what do you do if you run an airline or a cruise ship business?
One option is to shut everything down and hope things go back to “normal” before you run out of cash. It’s certainly one strategy.
The other is to say, “Okay, what I normally sell is no longer in demand. What is still selling? What problems do people have now that they don’t have a good solution for?”
I don’t know those industries well, but there are a few areas I would explore.
Passenger air traffic is way down. I’m curious if the same is true of cargo.
I hear so many stories about manufacturers with a global network of suppliers unable to get critical parts for things like ventilators. I hear stories of ports in China backlogged with cargo ships that are slow to move goods across entire oceans.
I have no idea if any of this is true, but you’d better believe that if I ran an airline, I would be looking into it. The hypothesis is to take passenger planes and use them (or perhaps reconfigure them) to haul cargo if the demand for rapid cargo transport is high.
If I ran a cruise ship company, I would be thinking, “What are my assets? I have boats that can be easily relocated. I have thousands of beds. I have the ability to feed thousands of people. Who needs these core capabilities? Can we adapt to that market demand?”
As crazy as it sounds (and I fully acknowledge that it sounds a little crazy), I would explore the possibility of converting to a low-severity hospital ship. A week ago, New York State was short 90,000 hospital beds. A large cruise ship has 5,000 to 10,000 beds and can be relocated. So, the hypothesis would be to explore the technical feasibility and market interest in providing a mobile hospital facility to various governments.
Another option would be to explore using the ships to provide housing to hospital workers who wish to live separately from their family to avoid the risk of infecting them. I see a lot of demand for that.
Now, none of these hypotheses are perfect. All are problematic (not to mention even a bit ironic).
However, the trend has changed.
If you’re not looking at how to go with the trend, then you risk having the trend go against you.
Here are a few other trend changes I’ve noticed:
- Dine-in restaurants are out, food delivery is in (relatively speaking)
- Food service is out, groceries are in (relatively speaking)
- In-person grocery shopping is out, grocery delivery is in (relatively speaking)
- Luxury goods are out, survival-oriented goods are in
- Outside-the-home entertainment is out, in-home entertainment is in
- Baked goods at a coffee shop are out, baking at home is in (Flour and baking yeast are hard to find in some markets.)
The other reason to find the trend is to market your existing goods or services with a new marketing message that piggybacks off the trend.
For example, one trend is how many people are buying and stockpiling toilet paper.
On the one hand, this makes absolutely no sense — COVID-19 isn’t a digestion-oriented disease, the supply chain of toilet paper isn’t in jeopardy. However, it doesn’t matter if a trend makes sense to you. It only matters if it’s true.
The truth is that people are buying a lot of toilet paper.
Now, if I ran a company manufacturing bidets, I would be marketing them as a way to “never ‘need’ toilet paper ever again.”
Let everyone else fight over the last roll of toilet paper. With a bidet, you can go a lifetime without any toilet paper if you have to. Not bad for just $60.
My point in all this is to prompt you to think about what trends you see in your industry. What are customers still buying and why? What headaches do they have that they still can’t solve?
Have you made the trend your “friend”?
It’s worth thinking about.