Market performance: Thriving business momentum!
Frederic Hoffmann (PCC, MA, MBA)
Make sense ! Performant Organizations - Enthusiastic Agile Transformation Expert - Professional Coaching - Project Management
A study of strategy performance (1/4): Market Performance
<<Previous: Momentum Investing <<
As a matter of fact, Momentum is a tool used to predict future trends, by taking into account the human biases of perceptions and emotions. This makes Momentum interesting to study from a business point of view; businesses are being run by people, organization are made of people and customers are also bodies of flesh and blood after all.
More over other aspects tend to give credit to this approach, e.g. brand recognition, fad effects, buzz, imitation, or resistance to change are mostly driven by human perceptions and emotions.
Market Performance:
This actually makes sense to many, intuitively we would make the assumption that on a fast growing, thus a highly attractive market, more and more actors are willing to enter while Momentum raises. On the contrary, you see consolidation, economies of scale and barriers to entry blooming on low Momentum markets. Use of Momentum is a powerful analytical tool, allowing business managers and strategists to go a step beyond intuition and actually analyze trends over different periods of time and adapt business strategy accordingly.
Please also consider using Momentum analysis and compare measures over different periods of time.
Trends could be showing very different figures on different terms and it’s then important to know the specificities of the market and industry a business is targeting to find out the more relevant trend analysis. For well-established and slow moving markets, long-term trends may be more relevant than short-term; on the opposite, fast-paced and quick moving markets are likely to be definitely more short- to middle-term sensitive. This understanding will significantly impact the strategy design process.
Please be very specific when identifying the data for the market you’re doing the calculations for. For example, over the past 40 years, the Information Technology market has been growing significantly in both volume and value, however when designing a strategy to enter the information technology market, a company should rather consider defining and analyzing precisely the submarket that is being targeted.
Frédéric specialized in initiating and developing new activities within organizations, leading organizational change and innovation.
Read more from Frederic:
- Career: are student jobs really unimportant for high profile professionals?