Domain trends: opportunities or weapons of mass destruction?

During Covid times, certain companies characterized as “work from home stocks” like Peloton and Zoom have seen their stock prices skyrocket.

Zoom and Peloton were great products before Covid. But now, due to factors totally beyond their control, they’re big winners. Others, such as hotels and airlines, are losers.

However, when the Pfizer vaccine was announced in mid-November 2020, Peloton and Zoom and other tech stocks immediately cratered, and airline and hotel stocks went up. What was an opportunity suddenly became a nopportunity.

This is an example of the influence of the domain environment on opportunities. Suddenly Peloton has gone from being a “growth” stock to a nopportunity. If people are finally freed from their homes, who’s going to want an exercise bike rather than the great outdoors?

People are going to start travelling and going back to the gym. People are going to reduce their use of Zoom and start travelling on planes and staying in hotels.

Because the domain sits outside the market, domain factors – like Covid – can have a giant higher-level influence. That’s because the domain literally encircles the entire market.  

Covid is the ultimate domain factor, as it has influenced virtually every business in the entire world. Usually, a domain factor may only influence a few industries. For example, 5G is a domain factor that will mainly influence industries in the telecom ecosystem.

There are four segments to your opportunity environment: mission, model, market, and domain. At mission and model level, you have virtually full control, if you choose to exercise it – which many companies fail to do. With market, you have less control, while at the domain level you have virtually no control.

There’s often a fallacy of control when it comes to domain factors. If I’m a Peloton doing my planning, I’m thinking we can get a bigger adaption rate, we create a community, we have the best technology, we have the ecosystem so people will tell their friends, and so on.

But Peloton’s management may not realize that perhaps 80% of their growth in 2020 had nothing to do with these controllable factors. The growth was mainly due to domain factors completely outside of their control. You’ve got to be smart enough to capitalize when those domain changes occur.

But latching on to domain trends can be the biggest opportunities. For example, 5G is a giant domain trend. Who can harvest opportunities from the emergence of 5G? Right now, gaming is an industry with only about 200 million users globally 4G hasn’t been fast enough to handle most games.

With the introduction of 5G, the number of people who can do gaming globally will grow by at least 10x because they’ll be able to do it on their phones without using an expensive console.

Who will this domain trend benefit? Obviously, the companies that make gaming software. But other companies in the gaming ecosystem will also benefit.

What are the domain trends in your industry? Make sure you’re aware of them. They can either be weapons of mass destruction or huge opportunities for you to harvest.