Disrupt Your Industry

In the world of enterprise technology, one name towers above the rest – a mammoth. It’s a company whose hands are in so many profitable pies, it’s easy to wonder how it keeps up. Its product have changed the way we live, learn and interact. It has opened up tremendous opportunities for information distribution and sales.

Despite amassing huge wealth, the company’s motto remains “Don’t Be Evil.” That company is Google, a disruptive organisation.

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Disruptive companies are the rave. They radically upturn existing ways of doing things. They look at business models and ask “Why are things done this way”? They say, “We’re going to do things differently and create new paradigms”.

Disruptive companies rip the corporate rule book to shreds, rewriting a whole new book.

According to Clayton M. Christensen who coined the term disruptive technologies, a disruptive innovation helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market.

Disruptivetechnology

How low-end disruption occurs over time.

In contrast to disruptive innovation, a sustaining innovation does not create new markets or value networks but rather only evolves existing ones with better value, allowing the firms within to compete against each other’s sustaining improvements.

There are three lessons we can glean from Google’s disruption and apply to any industry or market. They are:

  1. Create a new market or ecosystem

Google created a profitable business from search and online advertising, deepening the industry and pioneering a new monetization model for “eyeballs” and “click throughs”.

The lesson here is that while product originality matters, the creation of a monetization model that actually works is what qualifies you as a disruptive innovator.

  1. Scale up to own the product pipeline

Google’s successful product offerings include but are not limited to:

  • Gmail
  • Google Drive
  • Google Docs
  • Google Maps
  • Google Now
  • Android [acquired in 2005]

Each product interacts with the other and the idea is to own the customer so completely that it would be disruptive (see what we did there…) to go elsewhere. So as you use Gmail, it makes sense to attach heavy files with Google Drive. You also use an Android phone so your Gmail syncs seamlessly.

Apple employs the same methodology with its “i-ecosystem” – you can seamlessly buy music on iTunes and sync with your iPod. You can even buy that iPod with Apple Pay.

While other companies may have their own versions of some of Google’s products, the inventiveness and originality of thought that goes into providing an interrelated pipeline of products which create a market system is the hallmark of a disruptive company.

Take Google Now for instance. Google Now is one of the more ambitious evolutions of Google’s search software. The idea is simple — it predicts what you need to know before you do based on your habits, stored information and search history. It will show you upcoming appointments or tell you when you need to leave to get home on time.

It will give you a preview of your route, with one-button navigation. It will also show upcoming birthdays and anniversaries. Or, it can display weather information for upcoming travel destinations. A bit creepy…yes. And that’s just the beginning. Using its advantage in search and its rich store of consumer data, Google is set to create new markets in data mining and predictive sales.

  1. Drill down to develop promising new markets

Although Google is known for big bets, it also has incredible depth and coverage in niche areas. For example, the company created an interface for Cherokee speakers (a language of about 20,000 people). In doing so, it is poised to become a preferred service provider in that market.

If Google’s tremendous success over the years is anything to go by, disruptive innovation is definitely the way to go for organisations that wish to make big plays into new markets and industries.

Alder University | From Start-Up to Top Selling Brand with Limited Financing

In the competition to get the market’s attention for a product or service, fledgling entrepreneurs tend to get pushed to the side walk. Dealing with the cost of production, brand positioning, marketing and other aspects of business growth are difficult tasks that are often shouldered by the entrepreneur (or a small inexperienced team).

Is it really possible to scale up a business without relying on equity investors or hiring (and paying) experienced managers?  Are there other ways to minimise business growth costs?

Leveraging on partnerships

As a start-up business, you will benefit from forging alliances with partners, suppliers and staff. It all depends on your negotiating ability. Putting in place a payment instalment plan with suppliers is a great way to leverage partnerships.  For example, American Greek yoghurt company Chobani negotiated with large supermarkets to pay off slotting fees using sales proceeds during the initial launch.

chobani

 

 

 

 

You may also negotiate with staff to defer huge salaries for future stock options or the chance to do something innovative and industry defining.

[Lesson: Forging partnerships with your suppliers and staff reduces the cost of business growth]

Brand design aids brand positioning

Design may help you gain the attention of your market and leapfrog competitors. Detailed packaging and appealing content come into play here. An historic example is the innovative move by Apple to create brand distinction in its stores with just a few products on display. According to Tim Kobe, co-founder of Eight Incorporation, an architecture firm that worked on the design of the Apple stores, “Steve Jobs’ perfectionist attention to aesthetics, his decision to lease extremely expensive real estate and his focus on selling just a few consumer Macs resulted in Apple averaging roughly $6,000 in sales per square foot per year”.

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[Lesson: Design differentiation helps you gain attention and leapfrog competitors]

Outsource non-core functions

You may consider outsourcing non-core functions to avoid the cost of specialist skills. An example is the outsourcing of business functions by Daimler AG, owner of Mercedes Benz to Mercedes-AMG GmbH, originally an independent engineering firm specialising in performance improvements for Mercedes vehicles. Both parties maintain their brand identity.

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[Lesson: Maintain your brand essence in the event of outsourcing]

Seek legal protection for your brand

In a business environment where ideas are easily copied, protecting your brand from infringement saves you the cost of a protracted legal battle. In 2000, Dyson Vacuums sued Hoover Company in civil court for patent infringement. Hoover had just released their Triple Vortex bag-less vacuum, which prompted Dyson to sue for patent infringement citing their Dual Cyclone vacuum. Hoover was forced to pull the Triple Vortex from the market.

Hoovers2005_logoversus      dyson logo

[Lesson: An entrepreneur should seek legal protection to safeguard brand assets]

Conclusion

Your ability to grow a start-up without over reliance on external investors (in the form of venture capitalists or strategic investors) gives you space to grow your business at your own pace and without undue influence over your brand. It also reduces the pressure to repay debt from loans.

However, to succeed with this model, you must be disciplined and plough back earnings or profits into your business to facilitate organic growth. As an entrepreneur, you must also be willing to sacrifice personal profit and pay-outs in the short term.

Copyright Alder Consulting 2013. All Rights Reserved.

Alder Strategy |The Four Drives of Marketing: Sleep, Thirst, Hunger and Sex

In the life cycle of every business, there exists a tipping point. Whether there’s an element of luck in getting there or a deliberate attempt to make it happen, surely there is a ‘science’ to building a successful business.

This science is predicted on four drives – sleep, thirst, hunger and sex. As plain as they might seem, the drives provoke a primal need in customers to patronise a business and purchase its products and services. They also determine whether customers have an emotional or functional attachment to brands and businesses.

THE FOUR DRIVES

table of drives

Brands that sell sleep and thirst are functional in their approach while emotional brands sell hunger and sex.

In its progressed form, sleep signifies peace, equilibrium, stability and predictability in a business or product. For example, Marriott is reputed for world class hospitality & service. It is not only a place to get a good night’s sleep, but also provides peace of mind and predictable standards across the world. Global discount supermarket chain, Walmart provides consumers with stability and assurance of everyday low prices.

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Marriott

Another drive is thirst. Thirst’s progressions include refreshment, intellect, pursuit of knowledge and innovation. A functional brand known for its delivery of thirst in its primary form is the beverage giant, Coca-Cola. For Google, thirst takes on a deeper meaning. The company constantly searches new ways to innovate while making the world’s information universally accessible and useful to consumers.

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google

In its primary state, food literally comes to mind when you think of hunger. An example of an organisation that sells food is McDonalds, the world’s largest hamburger fast food chain. Progressed dimensions of food are drive, energy, progress and ambition. A functional brand that delivers on hunger is American athletic shoe and apparel company, Nike. Its slogan encourages you to “Just do it”.

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nike-just-do-it

The last of the four drives is sex. Though sex in its primary form is obvious, its progressions include passion, excitement, pleasure, joy, newness and sex appeal. A brand that is primarily associated with sex is Playboy. Virgin takes things a step further by associating its brand with newness, excitement, fun, cheekiness and an element of risqué marketing.

playboy-logo

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The interesting thing about the four drives is the scope they portend for an organisation’s marketing.

Focusing on the deeper dimensions of the four drives creates product distinction and marketing appeal. It also provides breadth for innovative and intriguing messaging.

How can the four drives influence your marketing today?  What are you really selling?

Alder Strategy is a blog on brand strategy for businesses and brand practitioners.

Copyright Alder Consulting 2013. All Rights Reserved.

Alder Strategy | Are you a Commodity or Brand?

Imagine your business in the assemblage of global brands; reputed for innovation, integrity and excellence. It’s become a great place to work; a case study for competitors and start-ups. Then imagine where your business is today – fighting for survival: constantly convincing clients to pay what your products/services are worth; commoditised by competing providers and fighting endless price wars.

You have tried every method in every strategy book to escape the commodity trap. You’ve even tried branding and design because you’ve heard it can differentiate your business. Perhaps it’s time to stop, take stock of your methods and revisit some brand fundamentals.

A basic feature to note about business is that it has two definitions. The first definition is descriptive and functional while the other is conceptual and brand based. The second definition is what separates branded businesses from commodities. It is known as conceptual definition. So powerful is conceptual definition that it drives product innovation, HR, culture and vision. It is the very essence of your business, its philosophical underpinning and corporate building block.

Here are some examples of conceptual definitions and their business implications:

Functional Definition

Travel, entertainment, financial services and consumer products group

Conceptual Definition

Rebellion against the establishment and provision of cheaper and qualitative alternatives

Business Implications

Drives product innovation – Introduction of quality air travel at cheaper rates

Drives marketing – Use of cheeky, risqué advertising

Drives culture: Informal ‘no-ties’ work environment

Sample Virgin Atlantic Advert

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Functional Definition

Integrated financial services group

Conceptual Definition

The world’s local bank

Business Implications

Drives recruitment: The bank engages locals with deep knowledge of the market in each country it operates in

Drives marketing – Use of community icons and traditional lore

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Functional Definition

Global discount supermarket chain

Conceptual Definition

We save people money so they can live better

Business Implications

Drives supplier negotiations – A focus on getting the best prices possible from suppliers so the cost savings are passed on to consumers

Drives HR policies – family members are allowed to work in the same store, as it’s believed this increases the standard of living for the whole family

Functional Definition

Consumer electronics manufacturer

Conceptual Definition

Poetry

Business Implication

Drives product design and customer segmentation – A poetic approach to manufacturing, raises the standard of design and appeals to consumers with an appreciation for abstract art

Sample Bang & Olufsen Product

Conceptual definition is the formula for brand differentiation. Once you uncover it, ensure you dimension your business and brand expressions with it in mind; from visual identity to the kind of staff you recruit to product design.

The consumer electronics behemoth, Sony suffered a sharp decline when the corporation deviated from its core conceptual definition which was: “Pioneering Spirit”. Competing brands like Samsung and Apple now dominate the product innovation space

[Lesson: A business without a unique conceptual focus will become commoditised and will be left with no other option but to compete on price]

The concept of your business is the reference point that allows you to move in a logical sequence as you develop your brand. It saves you from what is technically referred to as ‘failure cost’- the aggregate cost of not doing things right from inception. It enables you to use your resources judiciously to reinforce who your organisation is and what it stands for, thereby achieving message uniformity.

More importantly, it helps you develop a brand essence that’s tied to your heart and guts if you’re an entrepreneur; something you strongly believes in and that represents you. That way you are not trying to be what you are not. Instead you manifest who you are and project what you most care about. Your business becomes an “essential” offering that goes beyond the profit motive. It becomes something consumers buy into and are passionate about. (cf. Apple)

So, take the time to write down the concept of your business. What is it all about beyond making money? What wakes you up each morning beyond survival?  What can you do for customers that will bring you immense joy? You will be doing yourself a world of good when you finally articulate your conceptual definition. So, start now.

Alder Strategy is a blog on brand strategy for businesses and brand practitioners

Copyright Alder Consulting 2013. All Rights Reserved.