There are many immortal song lyrics but, for someone who lived through the 80’s, few can trump The Clash’s iconic “Should I stay or should I go?” anthem.
Should I stay or should I go?
If I stay it will be trouble
If I go it will be double
Strangely those lyrics rang through my head as I read about the terrible aftermath of the garment building collapse in Bangladesh. Over 400 killed, dozens still missing and a population rightfully boiling over at government ineptitude and mass corruption.
Many of the Western retailers who used these facilities to manufacture dirt-cheap clothing are in crisis control mode. Benefit funds are being set up for survivors and their families, supply chain experts and lawyers are reviewing their governance policies and social media is having a field day. The same pundits who likely never questioned how a shirt at Primark in the UK or Loblaws in Canada could really cost under $10 are now righteously indignant. Many are probably the same folks who never questioned if their $5 Sunday roast was Sirloin or Shergar.
All these reactions are entirely appropriate though.
If competitive pressures have driven you to find the lowest-cost-per-unit source on the planet, it doesn’t absolve you of accountability. Regardless of whether your customers couldn’t find Bangladesh on the map, you still owe those workers, YOUR workers, the same rights & standards of safety as the folks down the hall at HQ.
My question is what now?
Should you stay or should you go?
This week Walt Disney elected to go.
Others are electing to stay but are doubling down on efforts to ensure “this kinda tragedy never happens again”. Noble sentiment but, cynically, I wonder what they could’ve proactively done before this happened.
Having grown up in Southern Africa in the 70’s and 80’s this question is even more personal for me. In the 70’s and 80’s hundreds of organizations left South Africa in boycott of the torrid politics of apartheid.
They were entirely justified doing so. No-one can argue the lighter side of apartheid.
And many companies freely elected to not financially support apartheid by paying wages and taxes to a government system they – and more importantly their customers and shareholders – abhorred.
However several companies did stay.
And, strangely the one’s that stayed garnered a significant level of loyalty for bucking the common, populist trend.
There was also significant debate about who was ultimately affected by this disinvestment. British PM John Major famously said “disinvestment would feed white consciences outside South Africa, not black bellies within it.”
Cui bono?
Who benefits?
For the direct jobs that inevitably disappear along with Mickey Mouse & Donald Duck, what about all the infrastructure that those jobs and facilities create? What is going to replace the income of a family that used to make those infamous $10 shirts?
For those manufacturers that stay, do they believe they can create enough oversight and review measures to change a systemic level of corner-cutting and government corruption? An embedded system that turns a blind eye to the welfare of their poorest citizens? Are those manufacturers prepared to increase their cost base just to bring all these facilities up to Western safety standards? Are you prepared to absorb those cost increases?
What about you?
Two months from now are you going to applaud those companies who left Bangladesh because of it’s pitiful safety record…or are you going to moan on Facebook that your latest shirt now cost you $15?
We can all demand higher levels of Corporate Social Responsibility…but, there’s also Individual Social Responsibility too.
If you’re a business leader you likely worry about two basic things.
Am I profitably selling enough?
Am I staying ahead of my competition?
Sure, there’s a multitude of other questions you’re probably agonizing over but #1 gets to the health and trajectory of your business, #2 is about staying ahead of the pack.
If you don’t know the answer to #1, respectfully I’d say WTF?
Question 2 though, isn’t quite as easy.
With hindsight its always easy to say “why didn’t we see that?” but I can certainly remember three times in my own career when shifts in the market caught us all flat-footed.
Until the late 90’s Ivory soap and “The Ivory Girl” were the epitome of natural and wholesome beauty, after all she used a product that was 99 and 44/100th % pure. “The Ivory Girl” was the girl you aspired to be. When Unilever competitor Dove began to chip away at the definition of purity with executions like “Litmus”, Ivory responded with increased trade activity. More bars for less money wasn’t the answer but Ivory didn’t readily have many other levers at their disposal. Today Dove, aided by their “Campaign for Real Beauty”, is widely considered the gold standard for pure, natural, unapologetic beauty. Equities that were once the hallmark of “The Ivory Girl”
Maxwell House was Canada’s best-loved coffee. Commanding an unassailable share of the at-home coffee market, it was the daily ritual of millions of Canadians. A decade later and the daily coffee ritual is a line-up (or drive-through) at Starbucks. Why drink Maxwell House at home when you can get your Starbucks fix via a slew of inventive at-home machines and Starbucks-quality roasts? Sure, Maxwell House still delivers solid numbers for Kraft but they’re nowhere near the dominant brand they once were. Particularly in a category whose dynamics have fundamentally shifted.
I was working with Nokia in 2007 when the first iPhone launched. Almost six years later, Nokia is no longer the world’s largest seller of mobile phones (Samsung has replaced them), they’re a distant third behind Apple and Android in the lucrative smartphone sector and their beloved Symbian OS has been replaced by Microsoft. For a brand once exalted as design and usability wizards, they’ve been out-designed and out-marketed.
Now before you rush to label me a business Jonah and the one consistent thread in this story of business mishap, consider some other possible reasons.
Structure over Agility: Scale on the level of Procter, Kraft and Nokia has many benefits but agility and responsiveness is seldom one of them. When your organization runs on strict planning, budgeting, development cycles and deadlines, its near impossible to react as quickly as the market requires.
Rich in Data, Poor in Insight: None of these organizations were bereft of data. If anything having too much data was the problem. Many pundits rightly take shots over the current obsession with “big data” and the ability to gather more information than ever. What remains at a premium though, is collecting the right data and mining that for deep insight. Knowing Starbucks retails coffee for $4.50 isn’t as critical as knowing consumers are looking for a third place between work and home…that just happens to sell decent coffee.
Responding in expected ways: As marketers we’ve a few trusted response tools we reach for in times of trouble. Pricing and trade action is typically the first. If we just made/sold it cheaper or in more places we’d regain those losses. Simplistically I’d say “cheapening” your product is an inexorable hole you never climb out of. Look at telcos, airlines and hotels to see the impact lowering price has had. We’ve trained people to expect more for less (or nothing). Or we try mimicry. They’re on to something there, let’s do it too. Imitation may be the sincerest form of flattery but it seldom is the answer. Retooling your organization to chase a sector you’d missed or a product you weren’t structured or positioned to create seems a little foolhardy doesn’t it?
So, metaphorically, how do you differentiate between a harmless dust storm on the horizon and the approach of Genghis Khan and his plundering hordes?
I certainly can’t tell you how you should respond. That’s ultimately your choice. I can suggest ways, to coin a military term, to improve your organization’s situational readiness. Here are a few questions to ponder.
How rigid is your organization? Is your business highly-formalized with multiple layers of review, rumination and approval? Does compartmentalization stifle the flow of information from the front lines to the decision-makers? Do committees and consensus-building make up a disproportionate amount of your time?
How regularly do you review your competitive set? It’s no longer good enough to look to the folks doing exactly what you do. You need to look further. At the folks who want to make your entire category obsolete. To say China and the internet are the sources of disruption is too simplistic. You need to be looking at anyone that can streamline and simplify what you do. Ask Blockbuster about Netflix or Borders about Amazon.
How agnostic is your competitive analysis? Is your brand share as unassailable as you think or your customers as loyal as your NPS suggests? There is nothing wrong with confidence but if you’re not ruthlessly trying to find weaknesses inside your organization, you’re being complacent. We all know where complacency leads.
Which pulses are you measuring? If you’re not doing some level of social media monitoring you’re missing a trick. Syndicated sources are certainly important but increasingly you gotta tap into more fluid and time-sensitive resources (like social) to gauge the attitudes in your category.
Do you have a Response Plan B? In my experience few organizations consider and plan for multiple scenarios in their annual plans. They anticipate the usual responses (pricing, promotion etc) and not the larger, more obscure scenarios that can over-turn a category. Scenario planning is one way to ensure you’re actively considering response plan B…C…and D.
While clichés about globalization, competition, disruption and change abound, there’s no denying that categories and incumbent brands are being overturned at an accelerated rate. Being stronger at determining where your brand’s next upheaval could come from is more important than ever.
Paraphrasing an old joke, remember you don’t need to be able to out-run the lion, you just need to be able to out-run the other guy.
How have you strengthened your brand’s situational analysis? How confident are you that you’re collecting the right competitive data and asking the right competitive questions?
Much has been written about the notion of “humble leadership”. Almost 13 million returns on Google suggests this is a topic that has intrigued many writers – and perhaps eluded many leaders. In a business environment where Transparency, Authenticity and Customer Service (Servitude?) are espoused daily, I suppose it shouldn’t be that surprising.
But is there a place for brands that are humble??
Google the phrase “humble brands” though and you get less than 6 million returns. Less important? Or just fewer credible examples?
The definitions (or mantras) of humble leaders aren’t particularly surprising. A few of the common ones;
Share the spotlight or step away from it completely
Acknowledge your limitations/weakness
Invite feedback
Trust in those around you
Be strong and gentle
So is it possible for brands to act in this way? Because, let’s be honest, leaders come and go, so shouldn’t brands be carrying this water?
In my experience there are very few true examples.
We strive to show a deep respect for human beings inside and outside our company and for the communities in which they live.
Perhaps less well known, UK food and beverage company Innocent is another that typifies humility. I adore this remark – brimful of English sarcasm – taken from their mission statement;
We sure aren’t perfect but we’re trying to do the right thing. It might make us sound like a Miss World contestant, but here at innocent, we want to leave things a little bit better than we find them.
Food and beverage brands as humble? Okay, I can buy a certain straight line there. But a Utility company? In my experience Utility companies are the furthest from humble.
In researching this notion of “humble brands” a colleague pointed me to Canadian utility BCHydro. I was kinda surprised.
I also thought this initiative – Candlelight Conservation – was a great example of Humble Rule #1, driving more recognition for restaurant’s energy conservation efforts than it did for BC Hydro.
With sustainability such a key issue for all three companies, I’m not surprised that ethics and socially-empathetic initiatives register high for them.
What did surprise me was that, unlike many other companies, these three were quite circumspect about it. No megaphone shouting. No horn-tooting. Just quietly getting on with doing the right thing.
Maybe there are humble brands out there after all.
What say you reader? Are humble brands a new phenomenon or not? Should we be trying to cultivate more of them?
There really is no sporting phenomenon like the Super Bowl. It is sporting pageantry writ large. The single most watched TV event every year. Where other contenders like The Olympics or The World Cup finals only happen every 4 years, this is an annual assault on your senses.
For marketers its like Prom Night, Your wedding and Winning the Lottery rolled into one. Brands spend millions of dollars launching ads – then millions more buying media – when almost the entire population of the United States is glued to a TV. This year a reported 1 billion will be glued to their TV’s, tablets and mobile phones simultaneously as the networks and sponsors push multi-screen content around the game.
Sports writers, never shy of hyperbole, often compare it to the Roman Circus. A battlefield. A crusade. A bloody war. Inevitably one team is compared to David, the other to Goliath.
The metaphors are particularly ripe this year. The coaches of San Francisco and Baltimore are actually brothers (John & Jim Harbaugh) and this Super Bowl also marks the final game of Baltimore linebacker Ray Lewis, a long-serving and much loved Ravens player.
Perhaps lessor-known is the Challenger brand story beneath all the Super Bowl hype.
Baltimore is home to two Challengers
Many sports pundits have the Ravens as Sunday’s underdogs but there’s another Challenger story in the mix here. Baltimore is also home of athletic apparel manufacturer Under Armour who goes head-to-head with league sponsors Nike on Sunday.
In a world dominated by huge behemoths like Nike, adidas and Reebok, feisty Under Armour has been aggressively throwing rocks at those Goliaths since 1996. They’re also becoming a darling of Wall Street with consistently strong results in a tough, competitive market.
Playing the Challenger at Under Armour
I was fortunate enough to interview Corey Friesen, Marketing Director of Under Armour Canada and The Americas, and asked him about working for a Challenger and his thoughts on Super Bowl XLVII
HB: Your CEO Kevin Plank started the company with just one product he sold to his other athletic friends? That kind of mythology is a huge part of the Challenger story.
CF: Yeah. Sort of the quintessential ‘American Dream’ challenge…a sports product that creeps up on the big guys and explodes. For Kevin Plank, the product was a tight-fitting, moisture-wicking t-shirt, designed to be worn under American football protection pads. All developed from Kevin’s own experience as a College football player. Some amazing networking, incredibly hard work, a few “all-in” bets and some magical slow-play “pay-outs”…and we’re snapping at more than the heels of the big dogs in athletic apparel & footwear. Be humble. Stay hungry. That challenger attitude of Kevin Plank’s still vibrates daily in the company strategy and actions.
HB: A number of the athletes playing on Sunday are signed with UA but Nike is the NFL league sponsor. What does that mean for your US counterparts and their marketing?
CF: Nike has the league uniform deal. So that affords them lots of camera time and sales of the licensed jerseys to fans. The glam AND the gold. Which is great for them.
But we continue to challenge, with our own deals on shoes and gloves, areas where we can improve athlete performance without all the noise that comes with the biggest deal – the jerseys. This means athletes can wear our products WITH exposed logos in the NFL, so look for the UA mark this Sunday. You might be surprised how many you pick up.
And this underdog position extends to other sports as well. Sometimes we are an “official baselayer” or perhaps “official cleat” (MLB) or sometimes we simply outfit our athletes/teams and hope for a bit of luck wrt exposure. Either way, we realize our wheelbarrows of cash are smaller, so we fight for whatever exposure we can get.
HB: Challenger brands often face limited budgets to do traditional mass advertising, especially compared to powerhouse Nike. Tell me a little bit about the attitude to advertising at UA.
CF: Make one dollar spend like three. Humble and hungry. We can’t outspend brands like Nike just now, so we have to “box clever” and resonate stronger with the current generation.
HB: Besides the hometown heroes the Ravens, UA also sponsors several other Challenger athletes like Canadian legend and World MMA Champion George St-Pierre. Which athletes would readers be surprised to know are UA athletes or is there a particular athlete or sport that is more suited/aligned to the UA brand?
CF: Gotta stop you there. GSP is bonafide champion about 7 consecutive title defenses. So wouldn’t put “Challenger” label on him. BUT, the sport of MMA would score as Challenger for us. Aggressively growing. Out to pull in more eyes, dollars and momentum than the others, like Boxing and Nascar. UA’s investment in GSP a few years back proved a great gamble in a Challenger sport.
Our roster is much smaller than that of Nike or adidas. But we’re fierce about supporting them and making them better. Emerging athlets looking for a sponsor have to play the “fish and pond size” game: become “athlete # 157” for sport X for one of those other brands…or go to a smaller roster where you can make more noise and get more activation effort.
A few to watch: Sloane Stevens. Carey Price. Izzy Folau, Brandon Jennings. Canelo Alvarez. Jose Reyes. The Hot Spurs.
HB: Last question…what’s your predictions for Sunday’s game? Is there any office pool going on at UA HQ in Baltimore?
CF: The Ravens and Ray Lewis are heartbeat entities for Under Armour. The Baltimore connection is gut-level strong. So Sunday = Ravens.
But the AFC championship was much tougher to call. Tom Brady is a high-profile UA athlete as well, so some definite hand-wringing on where to cheer that day.
HB: Thanks for your time Corey.
As a Challenger fan, I’m impressed with how Under Armour have kept their Challenger ethos alive. In the culture. In the way the company makes decisions.
Nike are a formidable force but UA highlights that Challengers can still take on world-renowned brands and win.
Over the past several years I’ve read, and written, many blogs on the subject of Challenger brands. I thought I’d condense some of what I’ve read into what, I hope, serves as a useful guide for those as fascinated as I am about Challenger brands.
A for Anita Roddick.Founder of The Body Shop and Challenger iconoclast. Anita is widely credited for shaking the conventions of the cosmetic industry by founding a company based on addressing environmental and ethical business issues. Today Transparency and Social Cause marketing are watch-words for business. As early as 1976, Anita saw the untapped potential to make those issues a pillar of her brand identity. True Challenger Lighthouse thinking.
B for Baumgartner. 2012 and an energy drink brand sponsors a man to throw himself from space and parachute back to earth. Only a storied challenger brand like Red Bull would’ve had the balls to do that. With a staggering 35 million views on YouTube, Red Bull Stratos redefined the term content marketing and highlighted there is no ceiling on Red Bull’s Challenger thinking.
C for Chobani. 2005. A shuttered Kraft plant. 5 employees and a family yogurt recipe. Hollywood couldn’t write the Chobani story. While the category incumbents had walked away from Greek yogurt as a “no-win” sector, founder Hamdi Ulukaya’s Challenger thinking lead to explosive growth in a category now valued at $1.5 billion where Chobani owns 17% share, more than double its next competitor.
D for Dyson. An eccentric engineer whose obsession (see I for Idea-Centric) revolutionized the household appliances sector. James Dyson was so obsessed with creating the perfect vacuum design that he experimented with over 5,000 designs before launching the perfect model. That same obsession has lead Dyson to tackle other inefficient designs – and category incumbents – in hand dryers, fans and washing machines. Challenging conventional wisdom – vacuums need a bag and four wheels, dryers need a blade – is what makes Dyson a true Challenger brand.
E for entrepreneurial. Hardly a shock, but many Challengers are founded by serial entrepreneurs. Folks who are keen to forge new paths and eschew the traditional ways of doing business. Branson has famously launched over 300 Virgin companies in his tenure. By acting like entrepreneurs, rather than incumbents, Challengers are able to question conventional wisdom and challenge conventions.
F for folklore. Every Challenger brand has an element of folklore built into its DNA. Some of those are about Challenger brand CEO’s (Branson is dyslexic, Ulukaya and Armancio Ortega are recluses) or about how Challenger brands act (Harley Owners Group rides, Saturn “Homecoming” picnics, Ben & Jerry’s highly-successful efforts at crowdsourcing names)…folklore magnifies the impact the brand has and is a core tenet of Challenger brands.
G for Goliath. In every category there is a metaphorical Goliath. A large, brash, arrogant, entitled brand that is the sworn enemy of the true Challenger. Like the biblical David, Challengers are the champions of the people, using their natural agility to defeat the lumbering category behemoths.
H for Hsieh. Tony Hsieh, CEO of internet phenomenon Zappos, is another Challenger icon. Where many had shrugged off the potential of selling shoes on-line Hsieh saw opportunity. In addition to transforming Zappos into a company acquired by Amazon for $1.2 billion, Hsieh created a service culture that is the envy of many. Where other online business’ have slashed customer service to drive profit, Zappos were the 1st to over-invest in customer care which has driven loyalty and referrals. Challenging category norms is why Tony Hsieh is on this list.
I for Idea Centric. Challengers are born from a fixation on an idea versus merely being consumer-centric. Ideas that drive from “What If” versus “Consumers have told us”. A mythical 3rd place between work and home (Starbucks), a car you can rent by the hour (Zipcars), mass-produced high-fashion available almost overnight (Zara). It is the Idea that sustains Challenger companies and it is the Idea that creates legions of fans.
J for Judicious Challengers often spring from humble beginnings where cash-flow is monitored obsessively. Challengers must obey’s Michael Porter’s first rule of Strategy“The essence of Strategy is choosing what not to do”. This obsessive fixation on an Idea (see I for Idea-Centric) versus bending to the will of the market means Challengers must always be incredibly judicious in the choices they make.
K for K-Swiss. While Nike, adidas, Converse may be more recognized athletic shoes, K-Swiss has always enjoyed celebrity Challenger status for its irreverent stance and positioning. The first to allow customers to completely customize their shoes, K-Swiss understood personalization before it became mainstream. If you want a flavor for the K-Swiss attitude, check out the hilarious spokesperson Kenny Powers the MFCEO of K-Swiss
L for Lazy. Lazy categories where complacency or fear is rife are classic Challenger opportunities.Perhaps my favourite Challenger quote comes from Sir Richard Branson who said; “I love tackling lazy industries”. From the man who has challenged the music, financial, airline, rail, bridal and space industries, this quote rings incredibly true.
N for Nandos. Quirky South African brand Nandos has redefined the QSR category causing global players like KFC to sit up and take note. With a history of humorous and politically-charged advertising, Nandos highlights that Challengers are unafraid to take on any incumbent – even if that incumbent is the ruling ANC Party and their sponsorship of Zimbabwean dictator Robert Mugabe.
O for Opportunistic (and Overcommit). The story of Virgin Atlantic serves as a great example of this classic Challenger attitude. The idea formed when Branson was stranded by a cancelled flight in Puerto Rico. Branson essentially began operations with a single leased jet that blew up days before the scheduled launch of the airline. Undeterred Branson pulled money from other Virgin companies and VA went ahead. Years later he was forced to sell Virgin Music to continuing funding an idea that he still passionately believed in. This type of Overcommitment is another hallmark of great Challenger brands.
P for Passion. Not surprisingly passion is a core component of Challenger brands. Often manifest in founders like Branson, Dyson, Hsieh, Dietrich Mateschitz (Red Bull) but, more importantly, Challengers evoke similar passion in their employees and in their fans. Challengers are renowned for delivering service excellence at all touchpoints – think Zappos, Virgin Atlantic, Jet Blue. That doesn’t happen without commitment and passion.
Q for Quirky.com. If innovation and crowdsourcing are the Challenger business priorities of the future, then Challenger brand Quirky.com is leading that charge. The website essentially democratizes the entire innovation cycle by providing a site where innovation and real consumers can interact. Not only can you view inventions but also help improve their design and help determine a market price too. Quirky is bringing Challenger thinking to the classically closed arena of New Product Development.
R for Red Bull. From inception to launching folks from space (see B for Baumgartner) Red Bull is a Challenger brand personified. While other energy drinks took the road of athletic sponsorships, Red Bull became the must-have trendy drink at rave clubs. When others were sponsorsing mainstream sports, Red Bull has been sponsoring Air Races, downhill ice derbies, free running spectaculars and others. Where extreme mental agility meets physical endurance, Challenger Red Bull can be found.
S for Sacrifice. True Challengers realize that, by Overcommiting they are going to alienate some consumers and some markets. Challengers are not, like most brands, trying to be everything to everyone. Southwest Airlines are not for folks who want lavish attention. US cable company AMC has avoided category clichés like RomComs and Celebrity gossip programming, preferring instead to champion some of the most breakthrough (and award garnering) TV programming in recent years with shows like Breaking Bad, Mad Men and The Walking Dead. Both have sacrificed easier routes to market but, by sacrificing, they’ve both gotten higher loyalty and fandom than their category peers.
T for Thought-Leadership. Challengers tackle the tough issues within categories. The sacred cows others aren’t comfortable addressing. Not surprising they become the thought leaders in a category. The trailblazers determining where next. Ecological values in cosmetics (The Body Shop), the conversation around periods (ubyKotex), customer service not cost-cutting in the airline industry (Virgin Atlantic). Challenging the conventions and leading the conversations is what Challengers do best.
U for U/X or ubyKotex. Okay, I took a little license here but the ubyKotex campaign by San Francisco agency Organic has turned the tired and out-of-touch feminine hygiene category on its head. No more blue liquid demonstrations, no more girls in white jeans, ubyKotex has been lauded as the first women’s brand to actually talk intelligently to women. An incredible example of Challenger brand thinking that resonates.
V for Volatility (and Virgin). Business today is more volatile and fragile than ever. Brands that continue to operate in traditional models – HMV, Blockbuster, Woolworths, Borders – are being obliterated with ruthless efficiency. Often by true Challengers – Amazon, Netflix, Spotify. There has never been more impetus to consider Challenger thinking in your business.
W for Waitt. Ted Waitt was one of the founders of iconic Challenger tech firm Gateway. In a market serviced by Dell, H-P and IBM, Gateway famously shipped their computers in spotted boxes designed to look like cows, a head-nod to the company being started in an actual farm in Iowa. Unfortunately Gateway, like many tech firms, was unable to survive the dot-com bust and was acquired by Acer in 2007. For his instinctive understanding of Challenger credo #7 “Use Advertising & PR as a high-leverage asset”, Ted Waitt and Gateway make this list.
X for X-Factor. Why is it that some Challenger brands are ever-lasting and some fizzle and die? Personally, I think those that attain Challenger status and then fade away are missing a vital X-factor. That X-factor is continued commitment to acting like a Challenger. Avis, Pepsi, and I would even add Apple to that list, have all shied away from the Challenger commitment that took them to the top. In doing so, they’ve lost a step.
Y for Y (okay…Why). Cut me some slack here guys. You know how few words and brands start with a Y? Anyway, this is a mantra near and dear to my heart. Challengers look at business through a lens of “Why Not” instead of “Why Would We”. That has a profound effect because it means the seemingly impossible suddenly becomes feasible. No frills airlines (Southwest) Expensive, under-performing motorbikes (Harley-Davidson), Weird tasting beverages (Red Bull). At their heart, questioning conventional thinking is where Challengers shine.
Z for Zara, Zipcar, Zappos. Three iconic business models that have redefined their categories. Zara’s founder is nowthe 3rd richest man in the world. By challenging traditional fashion category practices, he stripped weeks from the “catwalk to the store” cycle creating the “fast fashion” movement. Zipcars success was so profound that Avis recently paid $500 million for the feisty Challenger, hoping to reinvigorate their business. The irony of Avis, a Challenger in its own right, acquiring Zipcars was lost on no-one. Zappos has also seen incredible success. A success that Amazon founder Jeff Bezos was keen to capitalize on. Read this incredible letter by Tony Hsieh on the acquisition to see how fundamental Challenger thinking remains at the company.
I’m sure I’ve left out some favourites, mis-appropriated terms to fit them into my tidy alphabet, missed some key terms.
Weigh in readers. What’s missing from the list above?
I wanted to thank the awesome folks at eatbigfish for their help on this post. The ever stellar Chad Dick was fantastic. If you love Challenger brands, then find more great thinking here or follow them on twitter at @eatbigfishLDN
Drive long enough and you’ll have that heart-wrenching moment when an errant squirrel suddenly and unexpectedly darts out into the middle of the road.
And stops.
Unless you’ve the reflexes of a fighter pilot, the next part of the story unfolds in sad, graphic detail.
Slowly. Agonizingly. Inevitably.
Roads, we’re told from childhood, aren’t safe places to play. Markets, we learn as adults, aren’t safe places to play either.
And the worse place to be – be it a road or a market – is slap-bang in-the-middle.
Historically, business’ could delude themselves into straddling the middle of their market. Offering just enough breadth of inventory or points of distribution that they could avoid the commitment required to become a big-box retailer (say like WalMart, Tesco, Loblaws) or a highly-specialized niche offering.
Of course the Internet and the music-downloading phenomenon are cited as key reasons. Just like Blockbuster’s bankruptcy was put down to the superior online streaming services offered by NetFlix.
That’s a fair analysis. The Internet has created a powerful alternative to the business model in which HMV and Blockbuster operated under. It was just easier (and often cheaper) to sample, browse and buy online than schlep into a store.
But that’s not the complete story.
Its not just the Internet
If it was, what about other casualties in the retail wars? In the UK brands like Jessops, Woolworths, Comet have gone to the wall. In Canada, Hudsons Bay Company and Sears have had a long bumpy road. The Internet isn’t solely responsible surely?
Perhaps the answer is infinitely simpler? By playing in the middle of the road, they were all destined to become roadkill.
Not large enough to compete with WalMart, Costco on scale and volume or to negotiate hard enough to drive low prices. Not niche enough to charge higher margins by virtue of superior service, deep expertise or product knowledge like a specialty boutique. Like that errant squirrel, caught frozen in the middle…with receivership barreling down upon them.
Challenger brands and Retail
For me personally, that’s why Challenger brand thinking is so powerful and so needed in today’s retail environment. It abhors middle-of-the-road positioning and forces brands – regardless of their size – to take a stance and make a commitment to that positioning. Retail Challenger brands – like Zara and The Body Shop – have sustained global growth because they’ve remained laser-focused on a differentiated story. Zara’s incredible “fast fashion” ethos brings bleeding-edge trendy clothes from concept to store in 10 days, The Body Shop has been unwavering in its ecological mandate years before the rest of the industry took notice. Like true Challenger’s they defined a succinct story and rallied the entire organization behind it.
For HMV the dye was cast when they moved from the location for die-hard music lovers to mass appeal. Decisions requiring employees to hide their tattoos stripped HMV of their most passionate music-loving staff. Catering to the masses meant inventory that could be bought cheaper on-line or at larger retailers. No win.
The lesson?
Straddling the fence is not a position
It’s actually the complete absence of a position. Straddling is not a strategy of playing it safe in a market rife with risk and uncertainty. It’s actually riskier and inherently dangerous. Sure, your demise may not be overnight but, like HMV’s 10 year slide into receivership, its inevitable.
Have any brands flourished by servicing the middle? Can Challenger brand thinking give retail brands a new lease of life?
What say you brand and retail experts?
<While we’re clinically passing judgment on HMV, take a moment to consider the 4,000 staff directly impacted by this. These decisions to “play it safe” do have a very real human consequence>
We’ve a number of rules pinned to the fridge in the Barbour house. Friends often suggest that Rule #2 “Talk like a big girl” is actually directed at me.
However, there’s no mistaking Rule #1 “Be Respectful – Kind Voice, Kind Hands”
As important as that mantra is for our darling 7 and 4-year old to internalize, it is becoming ever more important for organizations to act in a similar fashion if they want to build successful business’ in a socially-connected and socially-minded world.
The toughest struggle, friends within the cause marketing arena tell me, is drawing the straight line between time invested in social causes and direct shareholder benefit and good ol’ ROI.
Thankfully new data might assist in convincing those ROI-obsessed executives.
This month’s HBR shows the first (in my reading) empirical signs that cause related goals can lead to financial success. In fairness the authors concede that the direct correlation is zero BUT it does highlight 5 high-performing organization’s whose strategic commitment to social issues did translate into richer performance.
So with correlation between investment and bottomline still so tenuous, why do companies continue to invest?
Competitive advantage – HBR’s data highlights Danone and adidas as two companies showing strong correlations. Considering the spotty environmental and labour track record of competitors Nestle and Nike, you can appreciate how this investment may further differentiate these brands.
Talent attraction & retention – Talent is the battleground of this millennium. Global companies are justifiably concerned about how they attract and retain the best and the brightest. As social commitment becomes a yardstick for whether talent joins or stays at your company, you can understand the imperative to show that your organization is socially-aware and socially-committed to the markets in which it profits.
Topicality – Transparency is the societal buzzword of the day. Understandably so. Organizations with questionable practices are being held accountable in ways un-imagined before social media. Many are responding admirably. Here at home, McDonald’s Canada is doing an admirable job opening up the corporate kimono and being transparent.
It’s no longer a 1st World “trend” – Anyone watching the unfolding gender crisis in India realizes that globally social systems are coming unstuck at an increasing rate. Global agency Edelman’s superlative 2012 goodpurpose report highlights that social participation and cause-related initiatives rank higher for consumers in developing vs developed nations. Those looking to make the BRIC nations their next market would be wise to read that report.
I’ve long-admired organizations like Ben&Jerry’s, Patagonia – and Canadian examples like lululemon and BCHydro – who intuitively understand that smart social practices generate goodwill, loyalty and even love amongst their customers.
So the data linking cause-related investment and ROI remains spotty…but I’d argue its even harder to put a price on customer goodwill.
What say you? Should ROI determine the level of cause-related activity a company does? Is goodwill and employee engagement enough of a yardstick?
As a teenager growing up in Africa in the 80’s, I had no idea what an “Apple” was, what a “Macintosh” did or who “Steve Jobs” was…but I sure as hell had seen (via pirated VHS tape) the iconic “1984” commercial from that years Super Bowl
Apple started my love affair with Challenger brands
It was Challenger brand advertising at its very best. Defiant. Opinionated. Unapologetic.
“1984” and Pepsi’s “Choice of a New Generation” campaign from that era sparked a love affair with Challenger brands that still burns bright.
Fast-forward to 1997 – now at Ogilvy & Mather working on the prestigious IBM account – I have another piece of advertising magic framed on my wall.
The sheer poetic majesty “Think Different” campaign became my yardstick for every piece of IBM copy I reviewed. There was no one on the team who didn’t yearn to write copy like this;
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.
The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them.
About the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.
Maybe they have to be crazy.
To paraphrase Simon Sinek’s brilliant work, this was the perfect articulation for why people buy Apple – and why, certainly in 1997, Apple was the poster child for Challenger brands.
From Challenger to Incumbent
Today Apple is probably the most envied – though not necessarily respected – brand in the world. Steve Jobs has become a posthumous business guru talked about in the same reverent tones as Gandhi, St Jude and Mother Teresa. Apple stores and the Genius Bar have redefined retail. iTunes redefined the commercial music business. In a perverse way, Samsung’s Galaxy S3 parody merely highlighted the zealotry of iPhone buyers everywhere.
And, one of the funkiest comparisons I’ve seen is this blog which highlights all the things that Apple is worth more than. All of the prescription drug sales in the US? The entire US aircraft carrier fleet?
At the time of writing, Apple is trading at $507 with a market cap of $478 billion.
That’s no small potatoes.
Why the beef then Hilton?
Challenger brands are an ethos, not a reflection of market share
Many folks mistakenly assume that Challenger brands are only for those trying to become #1. That it is your relative market share that gives you Challenger brand status.
Wrong!
As I’ve written previously, Challenger brands are an ethos, a state of mind. A deliberate strategic decision to act in a certain way. A disciplined manner in how you chose to behave – and, importantly, not behave. It has bugger all to do with you being #2, #5 or #27 in a category.
To that end, there is no reason why Apple can’t still act like the Challenger brand that spawned “1984” and extoled us all to “Think Different”
So where’s the evidence?
If I were to characterize the Apple of old with today’s Apple, I’d say they’ve started to exhibit the type of largesse that typically overwhelms incumbents. That, secure in the slavish devotion of Apple acolytes, they’ve lost sight of what made them one of the original Challengers.
Incrementalism versus Innovation – Apple’s recent launches have been minor modifications versus the traditional big leaps of old. Confident their fans will buy anything new they launch (see Samsung parody) Apple deliberately keeps technology back for their next release. Is there any reason iPad Mini release 1 doesn’t have retina display like all their other tablets? That major iPhone releases seem to happen within shorter and shorter cycles?
Pushing proprietary systems – The new Lightning connector is the best example of this. After a decade of using industry-standard USB and Micro-USB connectors, Apple has introduced a proprietary system for iPhone5 and all future releases. The outcry has understandably been enormous (read the comment section of this TechCrunch blog). Many are, rightly IMHO, calling this a money grab by Apple. An opportunity to spur a new market in peripherals, connectors, docking stations and to eschew industry standards. Ask any Sony consumer how much they liked being locked into a proprietary walled-garden set of technology.
Corporate hubris – The much-publicized Apple Maps debacle – and subsequent apology from Tim Cook – marked a huge mis-step in Apple’s famed design. Perhaps more worrying is the vicious patent court battle between Apple and key competitor Samsung which seems more about creating an Apple monopoly (read brilliant synopsis here in Forbes) than anything to do with protecting Apple IP.
When a company stops acting as scrappy upstart and becomes bullying behemoth, then you’ve definitely lost your Challenger creds.
Can Apple become a Challenger again?
Some might argue that it is irrelevant if Apple starts acting like a Challenger brand again. They are debt-free, their pipeline is supposedly robust and their 2012 Christmas performance was decent. So why worry?
The worry is that their competitors – Amazon with Kindle et al and Samsung – are taking a real bite out of them (pun intended). Both are acting in the scrappy Challenger fashion that was formerly the mark of Apple.
A satirical story broke in the days following the Apple/Samsung patent ruling. Supposedly Samsung sent a convoy of trucks to pay the fine in nickels and dimes. The story went viral even though it was blatantly untrue. In my opinion, it went viral because that’s the type of Challenger attitude and gumption that people now ascribe to Samsung…and they see Apple as the bullying incumbent.
For Apple to go from Challenger to Curmudgeon is an enormous change in popular sentiment.
My personal hope is that Apple gets their Challenger mojo back. That the people who brought us “Think Different” can reinvigorate that attitude. The starry-eyed African teenager that still resides in me would love to see it again.
What say you? Is Challenger thinking important or irrelevant in Apple’s future?
The strategies deployed by Challenger Brands are an increasingly hot topic. Red Bull’s recent Stratos event was enviously watched by brand marketers the world over. Marketers wondering why their particular brand wasn’t able to ignite the same fervor and passion. Marketers perhaps looking for lessons they could take to their brands.
There are lessons aplenty. We’ve all witnessed brands that have attempted to become Challenger brands and failed. Sadder than that though, there are several once-proud Challenger brands that lost their Challenger edge completely.
When Saturn advertising proclaimed “A Different Kind of Car Company” they weren’t blowing smoke. Saturn owner’s picnics and off-the-chart customer satisfaction marks suggested the GM off-shoot really was entirely different. Launched to block the rise of Japanese imports, and then Japanese cars built in America, Saturn’s growth began cannibalizing sales from the GM mother ship. It also drained billions of dollars from GM’s coffers. Billions that the flagging corporate brands were desperately crying out for.
Lesson: Challenger brands require absolute corporate commitment. Challenger brands can’t survive if they’re not advocated for at the highest levels. Saturn was, sadly, a victim of its own success. A success that put it in direct competition from larger, more vocal stakeholders.
In 1888 Sears turned the retail business on its head by launching its famed catalog business. Seeing an opportunity to appeal to customers without access to reasonably-priced goods, Sears became the forefather of companies like Amazon who have ‘democraticized” commerce. Almost 125 years later, Sears is seen as an organization mired in the past, struggling with a Kmart merger that further weakened their retail decline. Most recently their executive board have been cited as being more interested in being a fund company not a retail company. A sad fall for a brand that once (upon a time) defined the category.
Lesson: Sears created a schism in the retail space but seemed unwilling to continue to innovate. The boldness of the catalog become a (very lucrative) crutch they were unwilling to keep revolutionizing.
Wherefore art thou my “Choice of a New Generation”? Pepsi has had a proud history of Challenger Brand marketing from being the first to start a sales team focused on selling to minority black audiences (we’d call that niche today), the Pepsi Challenge which provided the impetus for Coca-Cola’s “New Coke” debacle (talk about the definitive Challenger success) to iconic Challenger Brand advertising. Where is all this gone? Here in Canada, Pepsi was once the preferred soft-drink of the French province of Quebec – no longer, Coke is back on top. While Coke was doubling-down on beverages, Pepsi expanded into food (via Quaker/Frito-Lay) and began fighting the new consumer wave of healthier snacks on two fronts. Where their beverage group may once of set the Challenger Brand tone for the organization, Pepsi are now mired in underperforming beverage business.
I do love this little ad gem from their Challenger heyday though.
Lesson: No way I’m going to try boil 25 years of the Cola wars down to 4 pithy sentences. Pepsi certainly captured a cultural shift in the 80’s, capturing the trends just on the edge of becoming mainstream. But they seemed unable to mirror their advertising efforts with similar product and business insight and innovation. The Frito-Lay acquisition “distracted” them from their core beverage business allowing the Coca-Cola folks to redefine vending and set the new standard for social business.
Once the poster-child for affordable PC’s, Dell has recently slipped to number 4 in the global PC market. Ironically citing the fact that they’re unable to produce machines as cheaply as competitors Acer and Lenovo. From the heady days when Dell’s expertise in JIT management, supply-chain management and customized builds made them the darlings of college students and start-ups worldwide, Dell has lost their way. A mis-timed, or misguided, jump into electronics retailing saw them fighting for even lower margins versus well-entrenched giants like Sony, Hitachi, Panasonic. In recent months, Dell executives have suggested their future now lies further upstream – with corporate enterprise clients. A battleground that already has significant players like IBM, Accenture and HP poised and ready.
Lesson: Dell’s credentials were based on two key components – high customer service and low(er) cost PC’s – that became unsustainable. As the bottom fell out of the PC market, Dell couldn’t afford to service their customers to the same level. In recent years, the lack of a retail presence and the acceleration of smartphones, often in lieu of buying a PC, have also left Dell stymied. Simplistically if you willingly erode a core differentiator of your brand – service – then you can’t be surprised when your remaining “value” pillar makes you a commodity. Perhaps taking a lesson from Zappos’ business would be key for Dell executives. – it is still possible to over-service customers in a low margin business.
The biggest lesson? Challenger brands are not something created overnight by a zealous Brand Manager. No amount of wishful thinking will transform your current business into a Challenger Brand. The brutal reality is that Challenger brands require a tremendous amount of attention and an almost pathological obsession to remain true Challengers. Yet for every Saturn, there remains an Audi. An Amazon for every Sears. A Red Bull picking up where Pepsi left off. An Acer (or Samsung) carving out former Dell territory.
Are there other “former” Challengers I missed? Are there lessons from those stories we should be paying attention to?
In recent months you can’t pick up any business-related article without being beaten with the “I” word – Innovation. Like the glorious “e” word that IBM unleashed over a decade ago, every C-level executive is falling over him/herself to initiate an innovation culture within their organizations.
A quick scan of HBR shows no less than 5500 articles on the subject; all with grand titles like “Structure Your Global Team for Innovation” and “Confronting the Pain of Innovation” and dire warnings like “Five Ways to Ruin Your Innovation Process”
Yet, in the midst of this Innovation furor, are companies missing the wood from the trees? With so much stacked against success is it a worthwhile pursuit? Or is Innovation merely a siren’s call doomed to lure your corporation aground?
I’m a huge proponent of Innovation but my fear is that executives – and their legion of external advisors, brand agencies, consultants and experts – often seem more intent on pushing category redefining innovation rather than meaningful incremental change.
Innovation with a big, huge “I” versus a small “i”
To that end, a friend recently asked a really pointed question. “What if all the energies expended trying to redefine categories and innovate business models was just invested in making decent products and services? Wouldn’t all of us be much happier?”
Innovation is absolutely an imperative for companies to evolve, grow and remain relevant. However, the popular press has created a business mythology around companies like Apple, Google, BMW and the like. A mythology, like pots of gold and rainbows, that lures companies to chase projects they’re ill-equipped to bring to life, that they don’t have the structures, process and resources to activate nor, that their customers are really seeking.
Innovation is an area worthy of investment. However, with so many areas crying out for your attention is this really the Bright Shiny Object you should be steering your ship toward?
Do you believe little “i” innovation can be more meaningful than category-redefining Innovation?
Bio: An insatiable curiosity is my defining characteristic. Which is probably why I got into advertising over 14 years ago. I know it aint a real job in comparison to say, a fireman or a nuclear physicist but hey. Anyway, along the way I've developed an opinion on a coupla things. This blog allows me to air a few of those opinions and thoughts. I thank you for your visit and welcome your feedback.
If competitive pressures have driven you to find the lowest-cost-per-unit source on the planet, it doesn’t absolve you of accountability. Regardless of whether your customers couldn’t find Bangladesh on the map, you still owe those workers, YOUR workers, the same rights & standards of safety as the folks down the hall at HQ.
