Everybody is looking for radical change, not incremental improvements.
Brands still haven’t realized this: They focus on minor tweaks and operate incremental course corrections. It’s worked before; why wouldn’t it continue to work?
But the environment has changed. Today’s threats employ discontinuity as a strategy. They don’t think incrementally. The only word they can spell is disruption. The only way to get ahead of disruption is to dump incrementalism, stop following the herd, and go against the flow.
I’ve spent my career in airports. Over the years, I’ve learned how to travel by plane. I have a long list of tips and tricks. Here’s one: if you’re late for a connection and you have to run to your gate, run against the oncoming crowds, not with the people heading in the same direction as you.
If you run with the flow of the crowds, nobody knows you’re coming up from behind them, so they just take up space and slow you down. If you run against the flow, you’re running towards people. They’ll see you, and they’ll scatter, and then you’ll have the running room you need to make your flight.
Same for your brands. Today, if brands just go with the flow, they’ll move incrementally, one small step at a time – and they’ll arrive too late.
People are getting used to radical change. A Swedish rail company started allowing commuters to pay for travel using embedded microchips. A Wisconsin company, Three Square Market, offered employees the chance to have chips implanted which can be used to open doors, buy snacks, log into computers and use the copy machines.
This isn’t incremental change. This is change which can’t be undone. There is no going back.
Incremental change isn’t working anymore. Research shows the amount you need to invest in product innovation is becoming uneconomic for larger brand-owning companies. While many CPG product launches could be runaway successes for small challenger companies, for big brand owners they are just small potatoes and they don’t deliver game-winning plays.
Global brands can’t compete efficiently at a small scale – it’s Asymmetric Warfare on the business battlefield. Global brands can’t win because of the relative return on investment.
Stanford University Researchers researching innovation in the U.S. since the 1930s found that the investment required to discover or invent a new good idea is higher than ever, but the return is lower. That’s not enough for big brands: a little bit more of the same guarantees falling behind.
The easy gains of the past are gone. There is no return to them. The future of consumption demands that big brands break away from the crowd. The only way out of the innovation trap is to find the rule-breaking innovations, the ones that go against the flow.
Several companies have shown the way in big ways.
- Volvo went against the flow when it announced that it would stop selling gas or diesel-powered cars.
- Unilever bought Dollar Shave Club to challenge Gillette with a business model unlike anything it’s done before and unlike anything in the category.
- Amazon’s $13.7 billion bid for Whole Foods drove an immediate jump in the internet giant’s share price, which more than covered the acquisition cost – in effect, Amazon bought Whole Foods for free. It promptly slashed prices for organic food, relying on its technology and delivery expertise to offset any lost margin.
- Rival retailer Best Buy matched all prices, including Amazon’s, dropped certain product lines to make room for Microsoft, Samsung and Verizon to open stores within its stores, cut costs, and reinvested in services – improved website and phone app, training for salespeople, expanded Geek Squad and in-home consultations to help people integrate their technologies.
You cannot change business models incrementally. Incrementalism won’t blunt the momentum of disruptive competitors. You cannot get ahead of creative destruction incrementally.
You have to radically change course – even if it means running against the crowd.
Contributed to Branding Strategy Insider By Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar
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