BCG Henderson Institute

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Identifying the next big thing is often treated as an exercise in analyzing trends. But that’s misleading. By the time a trend is established, any opportunities it presents have most likely already been captured by competitors. And although a company may need to reflect trends in its business plans, that can be more a matter of catching up with rivals than of gaining a competitive edge.

To take advantage of emerging trends, companies must identify them when they are embryonic—not purely speculative, but not yet named or widely known. At that stage the signs will be merely anomalies: weak signals that are in some way surprising but not entirely clear in scope or import. Most anomalies don’t become meaningful trends, of course, but some do—and the businesses that identify and interpret them early will steal a march on the competition. Instagram’s founders, for example, focused their initially multifunctional social networking app, originally called Burbn, on image sharing after they noticed an unusual amount of activity around that feature.

In this article we present a process for spotting anomalies that have the potential to drive a business, but it’s more than mechanical: Anomaly-driven strategy requires being open to unexpected ideas that may overturn long-held assumptions. Only if you are willing to look at your business from the outside in, question your existing models, and embrace ambiguity will you be able to identify the diamonds hiding in the data. Let’s look at what that process involves.

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