Executives know they must incorporate social and environmental trends into their strategies,¹ but few act on trends in ways that would allow them to ride the waves successfully. Our experience, backed by recent research, suggests that companies should navigate important trends by first studying their impact on subindustries, segments, categories, and micromarkets. That kind of analysis breaks down megatrends into microtrends that companies can invest in with confidence. When they do, they are applying an approach similar to the one they should use when targeting growth opportunities in any market.²

Indeed, we find that the importance of taking a granular view of where to compete can hardly be overestimated. We compared the global growth rates of industries with those of an international sample of 416 large companies, from 1999 to 2005. We found that we could explain why some companies grew faster than others only by measuring their exposure to subindustries and product categories.

To show what that approach looks like in practice, we analyzed the market impact that an important trend—aging populations in developed economies—will have in Italy, which has one of the world’s most rapidly aging populations, because of low birth rates and a high life...