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Disruption | Disruption is inevitable; brand disappearance is avoidable

Disruption | Disruption is inevitable; brand disappearance is avoidable

Innovation needs to be integrated into the business, not marginalized

James Hidden

Managing Director

Ogilvy

James.Hidden@ogilvy.com

Disruption is happening. Brand marketers understand that. But too often the focus on disruption is assigned to small, isolated skunkworks. For big brands to more effectively anticipate and drive change, disruption needs to be institutionalized and integrated into the business as a core day-to-day concern.

A lot has been written about the explosion of new Digital-to-Consumer brands disrupting traditional categories, be it Dollar Shave Club in razors or Casper in mattresses, as well as the stratospheric growth of challenger brands, like Halo Top low-calorie ice cream and Rxbar protein snacks in food. Disruption, it is said, is threatening existing models of brand-building. Big companies are dying on the vine, apparently. The slow-moving oil tankers of the last-century can’t turn quick enough to deliver the type of disruptive thinking that is so engrained in the new breed of start-ups.

The irony, however, is that in reality there is no new magic sauce here, no paradigm shift in the way products are developed or fundamental pivot in the way consumers behave. As the founder of a poster-child for disruption, Justin’s, maker of natural nut spreads, famously said, he just put an existing product (peanut butter) in a new form (sachets).

Furthermore, for every headline about the death of big brands or radical changes driven by trends like e-commerce, subscription services and increasing consumer demands for transparency and better quality, there’s a counter-argument: take Dollar Shave Club’s ongoing lack of profitability and Gillette’s continued two-thirds market share; or Blue Apron’s abject failure to scale despite it being trumpeted as the future of cooking; and even the reality of the failures of much-hyped start-ups like Juicero, a juice-making device, or Sprig, a meal-delivery service. Despite some standout examples, like the woes at Kraft Heinz, the reports of Big Co’s death seem greatly exaggerated.

It’s just that the most striking types of innovation seems to be happening outside of the traditional engines of growth, the big legacy CPG giants. What’s surprising is that these business behemoths should hold all the cards; they are big for a reason, and therefore have sizeable existing R&D capabilities to launch category-redefining innovation, the distribution footprint to scale a new brand fast, and the deep pockets to invest in media to drive awareness and sales.

Disruptive thinking is not a hobby

It’s not to say that big companies can’t do it. Of course they can. P&G built a $3 billion-plus business around Tide Pods in just a few years. Danone did the same with Oikos yogurt in the face of increasing threat from premium start-ups like Chobani. Green Giant anticipated consumers increasingly shifting out of carbs and into perceived healthier options with its hugely successful Riced Veggies line extension. Most of these, however, are incremental innovations, rather than game-changing innovation. So how should big brands be thinking and acting differently to deliver genuine disruption?

The reality is companies spend too much time looking inward, rather than outward. Too much time delivering what a retail customer wants today, not what they’ll need tomorrow. Too much time focused on margins on their current business, not the profit-drivers of the future. And when they do that, disruptive thinking becomes a hobby, not a business mandate. Disruption cannot be the remit of the mad scientists in the wacky Innovation Lab, occasionally paraded out as proof of forward-thinking for earnings calls, but in reality, underfunded and underappreciated.

Disruption, ironically, needs to be institutionalized. However, traditional organizational structures like “Core,” “Adjacent”’ and “Far Out” create systemic bias that kills disruptive thinking through inherent nominative determinism; when belt-tightening happens, as it inevitably does, guess which budget disappears…?

Disruptive thinking must be given as much importance as your day-to-day topline drivers. Put at the heart of business strategy and growth planning. Treated as a budgetary non-negotiable. Category-redefining provocative thinking given a real voice at the top table. Because without it, status as the “new Nokia” awaits.

Actions to Cultivate

Disruptive Thinking

  1. Place innovation at the top table

Too many brands underfund and isolate the people responsible for disruptive thinking. Even the lingua franca of skunkworks, labs and far out innovation create a perception that this is not business critical. This is dangerous. Ensure adequate resources and C-suite engagement, to drive systemic change that has business impact.

  1. Broaden your frame of reference

What category are you really competing in? Casper is not a mattress producer, it’s a sleep lifestyle brand. Halo Top doesn’t sell ice cream, it’s a purveyor of delicious healthy treats. How would this expanded worldview change how you might think about innovation?

  1. Imagine a world where your brand doesn’t exist

What happened? Why did it die? What existential threats are already out there, be it regulatory control, competitive threat or consumer behavior? Doomsday scenario planning may seem far-fetched, but it encourages a way of thinking that will foster genuine Disruption, not short-term incrementality.