1. Innovation Update October 2010: 2011 Trends
Big Changes Are Underway, Bigger Even than the Recession
Is Your Organization Ready for What’s Next?
As 2010 draws to a close, we're about to see the normal rash of "trends for 2011" articles and
features. Innovaro's Insights & Research group has the privilege of addressing the question of
what the future holds for our clients every day, and we wanted to share some thoughts about
the trends and forces that will shape 2011 and the years beyond.
In some cases, these insights come to us from the ongoing trend identification and tracking
that we do for Innovaro Global Lifestyles and Innovaro Technology Foresight, our two ongoing,
multi-client research streams. Others are garnered from talking to our clients, our research
network, or simply connecting the dots as we observe changes in consumers, technology, and
society.
And, while the recession has been a challenging time for all of us, we have been heartened to
see that most of our clients have not retreated from their foresight activities during the last
couple years, when it would have been easy to bury their heads in the sand and focus
exclusively on the near-term. Instead, we've seen a great number of firms stoically accept that
big changes are underway-bigger even than the recession-and work hard to understand where
we're headed and how organizations can thrive.
This is really the point of organizational foresight-to take a proactive stance toward
understanding the future and find the opportunities it holds for your organization.
Chris Carbone
Director, Innovaro Insights & Research
PS - If you'd like to share your thoughts about the changes that you anticipate in 2011 or
further in the future, feel free to contact me directly at chris.carbone@innovaro.com.
Innovaro Insights & Research
We provide the insight and intelligence you require, applied to your markets today and into the future so
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to predictive intelligence, we help clients find those insights at the intersections affecting their
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information, please visit http://www.innovaro.com/ClientServices/InsightsResearch.aspx

2. Some of What We'll Be Watching in 2011
The World beyond the BRICs
The BRIC nations (Brazil, Russia, India, and China) have received a great deal of attention
over the last decade for their importance to the future global economy and as hot potential
markets for consumer-focused companies. They deserve the attention, but there are also other
countries that are experiencing rapid growth, have expanding middle classes, and that will
increasingly be on the radar of all manner of companies.
Five countries in particular catch our eye for the coming few years. They are Mexico,
Indonesia, Turkey, South Korea, and Vietnam-which we've taken to calling the "MIST-V
nations." By and large, the MIST-V countries have young populations, solid economic growth,
prudent fiscal and debt management policies, and an increasing openness to foreign
investment and trade. Take Vietnam for instance. With a population of nearly 90 million,
Vietnam is more populous than Germany-and heavily weighted toward younger consumers. Its
median age is 28, compared to 42 in Western Europe. Poverty rates are falling and per capita
income is rising, and could more than double over the next decade, as the Vietnamese
economy grows. And growth is brisk. Vietnam's economy grew by an average of 7.5% annually
in the 10 years that ended in 2007, second only to China among Asian economies, and could
hit 7% for 2010 after slowing during the worst of the recession1.
These are the kinds of vitals that companies look for when they want to grow. So expect to
keep hearing about the BRICs, but you'll also increasingly see firms tapping into a second tier
of emerging markets including the MIST-V countries in 2011 and beyond.
Collaborative Consumption Will Mainstream
The global recession reshaped consumer behavior in fundamental ways, and many
economists contend that even after economic growth and jobs return, the old days of
unchecked spending and credit purchasing may not. Consumers will likely be more cautious
about purchasing decisions, large and small, and indeed much of the conversation in 2010
centered on consumers being more thoughtful and deliberate with how they spent their money.
In the coming year, this idea of mindful consumerism will continue to be front and center, but
we expect the conversation to shift even further. People will increasingly look for ways to get
what they want-and do so without actually making a purchase.
We've already seen consumers embrace the "rental economy" and there has been an
explosion in the variety of products that people can rent or otherwise gain access to-without
having to actually buy them: Zipcar for cars; NetFlix and GameFly for movies and video
games; sites like "Bag Borrow or Steal" for temporary access to designer handbags; NetJets,
for private plane timeshare in the luxury class. Consumers like the simplicity, the pay-as-you-
1
Garry White, "Vietnam Is a Solid Long-Term Play," Telegraph, December 1, 2009, www.telegraph.co.uk.

3. go feeling, and the avoidance of the attendant issues and costs of ownership, e.g., car
insurance premiums and repairs costs are a thing of the past for Zipcar users.
The next iteration that we're starting to see is "collaborative consumption," where people
connect with their peers online to get what they want and need-often eliminating the need for a
purchase at a traditional retail outlet. Consider these examples:
Since it was launched in 2003, Freecycle.org has been quietly growing. It now has
thousands of local groups in 85 countries now, where members can give away (and get)
free stuff. Members get the satisfaction of knowing their unused "stuff" is going to a
good home, and the variety of things people give away through the network is amazing-
everything from baby clothes to appliances and unopened foodstuffs.
Neighborgoods.net is a nation-wide online community in the US that facilitates peer-to-
peer sharing of virtually anything, and is intended to operate at the neighborhood level.
If I need a digital video camera for my upcoming vacation, I can look at the "inventory"
of the people in my network and find out who's willing to lend me one. I can also create
my own list of items that I'd be willing to lend (or rent) to people. Why wouldn't I want my
friends to have access to that tent and camp stove I only use 3 weekends a year?
While they won't be a clean substitute for all purchases, we'll see social sites like Freecycle
and NeighborGoods increasingly help willing lenders, renters, and sharers bypass traditional
consumer markets and facilitate collaborative consumption. And if you think all this "sharing"
seems a little too quaint for the corporate world, witness the launch of BMW on Demand
program, announced on October 22 nd. Billed as a "mobility service" it gives drivers flexible
access to all the carmakers' current models on an hourly basis, and is being piloted first at
BMW Welt in Munich.
EVs Will (Finally) Emerge as a Real Option
After decades as little more than the butt of jokes, electric vehicles (EVs) are poised to return
as a real mobility option in 2011 and consumers seem ready to respond. A combination of
contextual factors and improvements in the technology should ease their adoption in the US.
Because of price volatility, the national security implications of oil dependence and catalyzing
events like the BP oil spill have made people more acutely aware than ever about the need for
innovation in transportation. And finally, the driving range of most of the EVs released in 2011
show a real improvement in the technology. The Nissan Leaf is expected to have a 100-mile
range, and the BYD e6 cross-over wagon claims 200+ miles. This will largely erase the "range
anxiety" that have long soured consumers on these cars.
Throughout 2011, as many as 8-10 EVs-with a range of price tags-should hit the market,
everything from the BMW Concept ActiveE to the Nissan Leaf, Ford Focus Electric, and Chevy
Volt. And while the ramp-up will be slow at first, 2011 will be remembered as the year that the
average consumer gained access to affordable and practical EVs. And things could be even

4. more dramatic overseas. The Chinese government has let its automakers know it wants them
to have 500,000 electric cars on the road by the close of 2011. It may take 3-4 years for US
automakers to hit those levels of penetration2.
The next and longer-term challenge: decarbonizing electrical generation so that EVs can fulfill
their low-carbon promise.
Almost three-quarters (74%) of Americans believe that by 2050, "most of our energy will come
from sources other than coal, oil, and gas," and 54% anticipate that gasoline-powered
automobiles will no longer be in production, according to a June 2010 Pew Research Center
poll3.
Relocalization Will Continue
We have watched in recent years the trend toward "relocalization"-where we see a focus on
supporting local and regional economic activity rather than, in an unquestioning way, deferring
to large-scale, global solutions. Local food is probably the most cited example of this, and
clearly it's been a big trend in recent years, but it's not the only area of economic activity that is
getting relocalized.
There is a growing interest in repatriating manufacturing and technical jobs that were
previously sent overseas, usually as a way to mitigate the potential supply chain, quality
assurance, or other risks associated with having too much production capacity in far off
emerging markets. GE's Jeffery Immelt was even quoted in early 2010 as saying, "In some
areas, we have outsourced too much. We plan to 'insource' capabilities like aviation-
component manufacturing and software development."4
Consumers are getting in on this trend too, and there's been a real resurgence in the "buy
local" idea - which began pre-recession but really took off in the last 2 or 3 years as people
refocused on helping their neighbors, friends, and Main Street economy by shopping locally.
In 2006 there were some 41 cities or regions in the US that had "buy local" campaigns or
groups. By February 2010 that number had jumped to 130 cities, representing some 30,000
businesses5.
We're not saying that the globalized economic system is going away, but instead it will
increasingly be complemented by efforts to inject more resilience into supply chains and create
more vibrant local economies.
2
"Gaming the Electric Car Chase," Foreign Policy, November 2010,
www.foreignpolicy.com/articles/2010/10/11/gaming_the_electric_car_chase.
3
Andrew Kohut et al., Life in 2050: Amazing Science, Familiar Threats, Pew Research Center for the People &
the Press, June 22, 2010, http://people-press.org.
4
http://www.thestreet.com/story/10669235/ge-insourcing-shows-manufacturing-trend.html
5
Kimberly Weisul, "Consumers Buy Into Buy Local," Businessweek.com, February 18, 2010,
www.businessweek.com/magazine/content/10_09/b4168057813351.htm?chan=magazine%20channel_what's%2
0next.

5. And while not everyone agrees, some studies show that money spent at locally-owned
businesses is re-circulated at greater levels than money spent at chain stores, helping build
stronger local economies. True or not, this perception and other factors such as the desire to
reduce risk will intensify localization in 2011.
Strategos, a global leader in innovation and growth strategies, is the strategic services
division of Innovaro.
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