Does Macro matter? Linking macro trends to strategy
We’re a few days away from a pivotal election in the USA, geopolitical tensions remain fraught, strikes at companies such as Boeing and ports pose questions as to future supply shocks, and a persisting economic overhang means demand pressure remain a concern. But the bigger question, and a frequent one I get from leadership teams, is does macro even matter? When developing a strategy, how much, if at all, do macro trends matter?
Great question. The answer, yes, but it’s complicated. Here’s why.
The first, and a repeated message, is our brains are not trained to view changing trends as positive. When we speak of the unknown future, we tend to frame this as negative, a risk to be catered for or protected against. This view is unhelpful for viewing trends for their potential growth opportunities. Uncertainty, and the trends that it contains, is simply a series of future events which may or may not occur. Whether or not these trends are good or bad depends on what we’re trying to achieve and how we’re set up.
Second, many of us struggle to link trends to strategy. Most strategies start with a PEST analysis and maybe a 5 Forces, so we can call ourselves ‘strategic,’ and then a few slides later we see a list of goals.
Unfortunately, most of the time these priorities don’t link to the earlier trends. Linear planning tools, template-based strategy with artificial time pressure, an unhelpful belief we cannot incorporate trends we cannot address, and execution templates that insist on being ‘on track’ are the culprits. A combo of these causes us to declare strategic priorities that have known themes (people, profit, process) and clear metrics. Great for predictability but not for outsized growth opportunities.
Third, we don’t like to get stuff wrong, and when we incorporate trends into strategy and act on beliefs, we are likely to get a few beliefs wrong, which means we need to change some priorities as we learn. Adapting and adjusting is a great thing, but our business processes do not celebrate changing strategy, only keeping it on track. The best strategies adapt as we learn how these trends evolve and are on track only based on the current situation.
All said, macro matters, as in these macro trends (realized and still unrealized) are the set of breakthrough growth opportunities. The movement of social and political trends often spur market growth more than the technology trend that opened the markets, so being on top of the changing environment is strategic advantage. So we need to get great at incorporating macro it into our strategy, appropriately. Here’s a few ways to start:
Articulate your beliefs: Listing trends is a familiar process, and these trends matter, as they are related to our strategic choices. The problem with this list is anyone can do it. Where we can differ - and where a potential advantage lies – is in debating and building an understanding of how these may play out, what we believe, and what that means. As a team, articulate your beliefs: where do you see macro conditions, regulation, consumer sentiment, or industry consolidation going over the next two to five years? Are you aligned on beliefs or are there ones with severe disagreement, if so, these need to be accelerated for more watching and testing.
Look for kickers and killers: When making strategic decisions, we tend to default to one question: What could happen? This traps us into prediction mode, but more critically it frames us to consider only the downside. Predicting problems is forming an infinite set of things that may or may not occur and may or may not be relevant. So as a team stop asking ‘what could happen?’ Instead, there are two critical questions: What could break us? (a killer) and What could make us? (a kicker).
Don’t just Act for results, you can also shape: When executing strategy, we have multiple stances at any time. We can wait, or we can act. When we act, we often limit ourselves to only acting for results, but we have other choices. We can act to shape, and we can act to learn. Purposeful shaping actions can include influencing regulation or legislation, employing land grabs, or implementing other high growth strategies. Of the action stances, this shaping the environment is the boldest move and can lead to enormous market power.
And you can also act to learn: The most underused - and underappreciated - stance, but the most employed stance by Thrive companies, is Acting to Learn. It involves experimentation, limited participation, or observing the mistakes of others to improve on their early offerings. Acting to learn is explicit action taken not to get immediate results but to learn about the environment so you can drive results in the future. In times of high uncertainty, companies that learn the fastest relative to their peers gain a competitive advantage, and leaning in to learn on trends is the way to do so.
Link your beliefs, test your beliefs: Aligning on beliefs is not about set it and forget it: you need to actively test these beliefs as you execute. Build a belief tracker and as you execute your strategy be constantly testing your key beliefs and assumptions in the market. As you learn more, bring these insights into your execution. And as beliefs are disproven, pause or de-resource those related initiatives.
Chapters two, four, and ten will guide of the SRT book will help you do the above (as will our new product launch of a Belief Tracker for SRT, available in 2025, send a note to register interest)
And big macro trends are shaping our industries. This month I spoke to Melanie Mingas of the CX network on the future of customer experience and how shifting dynamics and increasing use of AI are changing this, which you can read here. I also spoke to Michael LeBlanc of The Voice of Retail Podcast on which macro trends retailers should consider, and how that shifting landscape impacts strategy, which you can listen to here. Jim Beach and I went into all things macro, from Taylor Swift to our favorite British princes (spoiler alert, we sat on the fence) and how startup entrepreneurs should consider macro, which you can listen to here. And Kaihan Krippendorff and I went into the updated role of Chief Strategy Officers and dealing with macro changes on the excellent Outthinkers Podcast, which the latest is here.
Building strategic capability and developing a robust strategy means bringing macro trends into account, appropriately. Knowing which of these leads to big strategic beliefs, and of these beliefs how they are linked to your top priorities, is key. Executing while testing your priorities (parallel pathing) and making constant micro adjustments are the true agility. And finally, avoid falling into the classic entrepreneur trap of jumping from a trend to an immediate implication: articulating and acting - while testing - beliefs is the differentiator.
