Tag Archives: differentiation

Pricing the ecosystem

Take a look at the diagram below courtesy of Ryan Jones (thanks for the point Marc Abraham). It shows how Apple spans its offerings over a surprisingly wide range of price points.

By introducing new lines, retaining older lines at degraded prices and through the use of provider subsidies, Apple delivers an impressive range of ‘step-in’ opportunities for customers to join its ecosystem.

apple-price-points

I’m intrigued by this because, from a brand point of view, these arrangements provide a powerful alternative to traditional “up-sell” approaches and to the discounting that brands so often use to make high-end products more available.

Apple’s approach enables the brand to retain its all-important brand equity whilst providing consumers with the means to address any price barrier in the way they feel most comfortable with. They can enter the Apple world uncommitted or very committed in terms of contracts, with a spec’d up or spec’d down product (which they will then be encouraged to upgrade/add to). Until I saw Ryan’s analysis, I hadn’t realised the sophistication and range of this strategy.

Some learnings:

Choice is not the same as access. In Ryan’s graph, Apple has used product, price, capacity and configuration to turn 3 lines into 25 different ways to buy. The choices shown here are simple: iPhone; iPod; and/or iPad. The technical features offer scope to pay more or less for each product without cannibalising the opportunity to invest in the other members of the family (where more choices are available). There’s always a way to buy what consumers want – and there’s always more to buy.

Consumers are buying the brand, but they are deciding on the user experience they want by how they buy. Apple and its service providers have carefully calibrated the user experience (in terms of things like speed) so that, day to day, consumers either pay for what they get or get what they pay for. Regardless, they do so without any compromise to the Apple brand integrity.

Price isn’t about price. It’s about quantifying commitment. Most brands ask for the sale. Apple, it seems to me, goes one step further, and uses price options to actually ask for the commitment on two levels. First of all, they ask consumers to commit to the product without any obligations and pay upfront for that freedom, or commit over time with obligations and defer the cost of doing so. Secondly, and more importantly, they want consumers to commit to more and more of Apple. The Apple ecosystem exists to make this happen. So they’re not just pricing each range so that it is versatile and defendable, they are using their full ecosystem (including all the products not mentioned here such as laptops and desktops) to actively enable one point or multi-point commitment.

People commit to what they enjoy – and the more enjoyment they get, the more likely they are to continue to commit. With apologies to Hotel California, people can step in any way they like, because Apple’s intention is to then make sure they never leave.

More reading:
How to make sure your company’s next strategy succeeds
Why innovation needs to engage, not just impress
Strategy: 11 ways to purposefully achieve growth
Know thy enemy
You can’t lead as a brand if you follow another brand

Further perspectives
Take A Lesson from Apple: A Strategy to Keep Customers in Your Ecosystem (forbes.com)

Sustainability: Being good, not just doing good

Historically, corporate social responsibility has put the emphasis on how businesses are doing good. It’s become an increasingly varied checklist of “things we’ve done right”. Today though, socially aware audiences want more. They increasingly make judgments about you based on your overall likeability. They want to do business with brands that are good.

And that in turn means that, at a social level, your reputation depends less on your ability to simply highlight good works done in isolation (through community activities or sponsorships for example), and much more on your ability to show that you are inherently principled in your dealings and that you behave consistently across your organisation in ways that align with your social and commercial reputation.

That shift in the significance of social actions has a downstream effect on critical social initiatives such as sustainability. In my opinion, they should no longer be seen as nice-to-haves or even as opportunities to improve efficiencies across your supply chain. Rather, the actions you take in these areas are competitive opportunities to distinguish your company from others. Your social actions help define and demonstrate your ‘moral compass’ – and in positioning you as transparent, consistent, reliable and principled, they add value to dealing with you. They also help swing the dialogue, and therefore the consideration set, away from just price.

People like good brands. They trust them. They believe them. They see value in them. They see them as the counter to unethical behaviours. Subconciously, they look for opportunities to favour them. For those reasons, good brands carry lower “social risk”. They are less likely to draw adverse reaction, less likely to make the news for all the wrong reasons, much less likely to have their actions and motivations questioned.

But – and it’s a very important but – your social actions will only work to reinforce your standing as a business that is good to do business with if they are communicated in ways that directly link how you act with what customers can expect. With sustainability now treated virtually as a compliance matter in so many B2B exchanges, and expected by customers as part of how business is now done, the temptation, as I alluded to earlier, is to rattle off a list of “social” achievements and consider the boxes ticked. That in my view is an opportunity wasted. Rather than treating your sustainability actions as a list of initiatives, I suggest you look to present what you are doing as intrinsic social proof for why you deserve preference; for why you’ve earned the status of “a good brand” amongst the people who buy from you.

Take a food company with a sincere commitment to deep traceability in its supply chain. The temptation is to report on where ingredients were sourced and perhaps to elaborate on what standards were met. Such a description explains how the company approaches sustainability but does not do full justice to its actions. The real opportunity lies in explaining why the business went looking for such alternative sourcing in the first place and how that commitment aligns with their wider motivations to do the right thing. In other words, if you are that food company, don’t just tell your customers that you buy ethically. Tell them why you buy ethically, why your ethical stance is unique, how that aligns with the real actions that need to be taken, and what that says about your brand more broadly. Traceability should be aligned with the business’s worldview.

Two thoughts to close:

1. If you are investing in social actions such as traceability, diversity and sustainability, do so because they fit with who you are, and be proud of that. Make them an intrinsic expression of your DNA, not just something you do to fit in alongside everyone else.

2. If you’re concerned that you haven’t taken full competitive advantage of these actions, try testing the market effectiveness of your actions with some searching lines of enquiry. In the case of your sustainability story, consider this question, asked from the point of view of your customers: “When we bought from you – what changed in the world, how did you make that happen, why does that matter to me, and why will buying from you ensure things continue to improve?”

Your responses, told well, can certainly form part of the proof that you are better, in every sense, than your competitors.

More reading

Time to rethink the business model of some NGO brands?
The portfolio approach to strategy
The power of being purposeful

Other perspectives

Story myths

Great brands have great stories. But a great story doesn’t automatically create a great brand. For years we’ve told ourselves a story about what story is and how it works: develop a product; build a story around that product to give it value; sell that product at a greater degree of profit. We’ve allowed ourselves to believe that stories are the lynchpin of competition and that the best storytellers will win.

But that in itself is a myth.

Ultimately consumers don’t buy a story. They listen to a story. They are influenced by a story. But what they buy is a truth that directs their behaviour, captured in a story.

You don’t succeed just because you have a story. You succeed when you have a story that inspires people to buy your brand. The most beautiful, uplifting story in the world won’t cut it commercially if it doesn’t achieve competitive connection – if it doesn’t provide customers with reasons to connect with your brand at the expense of someone else’s.

Stories may influence behaviours. But only when powerful and distinctive motives drive the stories. In other words, only when, as Rajant Meshram says, it has “ground truth”. And only when the experience customers receive then lives up to the story they allowed themselves to buy into.

Otherwise, it’s a fairy tale.

More reading

Handpicked – the wider opportunity of curation
Not a problem: success pivots on what you solve, not just what you know
Affirmation: how to make a brand experience really count
Is your brand ready for the experience war

Other perspectives

The death of demographics? Does it matter?

English: A typical "As seen on TV" l...

(Photo credit: Wikipedia)

A new study by Catalina Marketing appears to cast significant doubt over a veritable pillar of media marketing. Demographic targeting, it seems, often falls wide of the mark. Catalina researchers looked at 10 brands targeted at households headed by women ages 25 to 54. They found that, on average, just 15 percent of the ads playing in those households reach the people that account for 80 percent of sales.

Wow. On the face of it, that’s some shortfall.

The clear take-out seems to be that demographics, in a media planning sense, may not be an accurate indicator of purchasing behaviours. According to the study, 53% of a brand’s sales volume, on average, came from outside its demographic target, with the remaining 47% of sales volume coming from people that the brand was actively targeting. Of the products studied, yoghurt was split 50:50 between targeted and untargeted; mayonnaise was 60:40 in favour of being bought by those outside the demographic target. The average brand in the study delivered 30 percent of exposures to households that were inactive in the category, meaning they never bought in the category or had bought just one time throughout the 12-month study period.

So what should we make of this? Well, for a start, no-one should be surprised. After all, it was John Wanamaker who, famously pointed out, that “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” Here perhaps is the proof that he was surprisingly accurate.

And yet, for all its inaccuracies, advertising, particularly TV advertising, has a powerful role to play for brands.

Why? If it doesn’t just reach who it’s meant to reach a lot of the time, how can anyone justify the expenditure?

The real answer, I would suggest, is the inverse of what the numbers might suggest. There is no doubt in my mind that media-based TV advertising delivers far more than presence to a specific audience. Done properly, it generates presence in a market, and that presence I would suggest is far more powerful and persuasive precisely because it reaches beyond a specific age-defined audience.

(Anyway, the demographics that get bandied about are stupid. How can anyone bracket a 25 year old and a 54 year old in the same group and call it a “target audience”? There’s nothing focused about it.)

Television is a broadcast media for a reason. It works not just because of who it targets, but because of who it reaches. And by that, I mean it achieves awareness (and generates conversation) far beyond who it is purely intended for. The very point that Catalina have identified as a weakness is also TV advertising’s greatest strength. Strong advertising generates talking points beyond its immediate buying audience – and that’s a good thing. That “leakage” gives strong advertising presence, familiarity and, most critically of all, the potential for interactivity. The wish to share is part of how iconic ideas become part of the culture, part of the social exchange.

A marketer these days, I would suggest, should not even be trying to hit a static buyer at a set time through a set medium with a set message. Their greatest challenge is not even who they reach – but what they reach people with, and how intensely that motivates viewers to reach out and share what they have seen with others through the plethora of media now available to all consumers.

Sadly, looking at TV breaks today, one would have to ask where have so many of the true marketers gone? Where are the people with the intrinsic understanding of the ideas that buyers want to excitedly share with non-buyers? Bring more of them back please. Give them the budget to do what they do, please. Make them the perfectionists that push their agencies to get the very best out of their advertising please.

Those people are certainly not commissioning most of the advertising I’m seeing. They’ve been largely replaced it seems by sponsors of fairground barking who have transformed media-based advertising for the most part into 15 minutes of unrestrained shouting per hour.

That may take place on TV, but that’s not advertising. That’s narrowcast barracking.

More reading

Other perspectives

Market leadership: why innovation needs to engage, not just impress

Blair points me in the direction of Booz & Company’s 2011 Global Innovation 1000 for some interesting insights as to why innovation works for some and not for others. (Thanks Blair.)

According to Booz & Co, innovation spending increased in 2011 to $1.15 trillion globally. The 1000 companies that Booz & Co surveyed represented almost half this spend and in the last year their innovation spend was up 9% on the previous year.

However, what interested me was the news that the companies that spent the most were not necessarily those that got the most out of their innovation investment. In fact, the top 10 innovators (Apple, Google, 3M, GE, Microsoft, IBM, Samsung, P&G, Toyota and Facebook) out-performed the top 10 spenders in three key metrics: revenue growth; EBITDA and market capitalisation.

So innovation can work but it doesn’t always work, and it doesn’t work the same for all. What really counts is the context in which innovation is applied. According to the report, 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals —and that their cultures strongly support those innovation goals — delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking that alignment. (By contrast, over half of companies reported that their innovation programmes and their business strategies and culture were out of alignment, and 20% of companies didn’t even have an articulated innovation strategy.)

My own view is that the distinctions between innovation and improvement have been blurred in recent times, and the advantages of focus over finance have been overlooked. With so much hoopla about innovation in the business press, it’s tempting to believe that any change is innovation and any innovation will work.

But keeping up is not the same as forging ahead and brands need to be a lot more judicious in that regard in their identification of what they are developing. What may look like adjacent innovation at the outset can, at the pace at which markets move today, be little more than incremental improvement by release date. Incremental improvement is vital of course – but it’s not a gamechanger. It simply keeps you up to speed in the game you’re in.

More importantly, true market leadership is powered by exciting ideas not just impressive ideas. It seems to me that too many companies judge the success of their innovation programmes on technical shifts that wow colleagues and industry insiders. But the significance of these breakthroughs does not necessarily translate to marketability and therefore sales. And the changes themselves are not necessarily in line with where the company is heading, what the brand represents or where demand will rise.

There’s a significant difference between invention and innovation in a commercial context. Invention makes something new. Innovation contributes something new. It actually changes the company’s possibilities. That won’t happen if innovators don’t develop engaging innovation; innovation that doesn’t just solve a problem but actually meets a tangible and evolving need in fascinating ways.

Engaging innovations are the ideas that will power the business forward because they will gamechange the sector to your brand’s advantage, lift margins, meet future market needs, inspire customers to buy and directly contribute to the purpose you have set yourselves as a business.

Does your innovation programme do that?

If not, let me make two suggestions. First, change the innovation conversation so that it does.

Secondly, and even more importantly, change the participants in those conversations. If there’s not a senior marketer in the loop, changes are your circle’s either plain wrong or not wide enough.

More reading

The new role of marketing
The great customer vanishing act: what happens when you can’t track them?
The portfolio approach to strategy
The fall of the wall between customers and culture
The power of being purposeful

Other perspectives

Does my brand look big in this?

Nederlands: Japanese blowfish (fugu)

Japanese blowfish (fugu) (Photo credit: Wikipedia)

As marketers, we’re often encouraged to puff up our brands to look as big as possible so that they appear significant and credible in a global marketplace. There’s a sense that if you’re big, you must be successful and if you’re successful, then there’s a higher than likely chance that you’ll continue to grow.

Size matters. But not always in the senses that we have been led to believe.

My own view is that the size of your business is actually less critical than the scale and/or extent of your thinking.

A big brand on the hoof is a thing of beauty, to be sure. Strong, assured, competitive, resourced and focused on bringing its vision of the future to life. Big brands command presence and respect.

But the biggest companies aren’t always the smartest, they’re not always the pace setters and they’re certainly not infallible even though they might like to think they are. I have only to direct attention to the GFC to remind all of us that neither history nor size counts as an immunity pill. Sometimes the bigger they brand, the harder they fall.

And what if you’re a minnow? What then?

If you’re a small company in a sector dominated by companies that are large, powerful, respected and ebullient, you’ll never beat them at their game. They’ll outgun you quickly, arrogantly, even dismissively. But all is not lost. You could look for ways to lay down a big attitude that draws attention and gets people interested and attached to you. Such an approach may be your key to truly downsizing the cachet of those who otherwise will simply try and lord it over you.

Being a larger than life brand brings with it opportunities to achieve greater presence and respect than your natural mass might suggest. By pushing up your profile and achieving greater front of mind than your competitors might expect or than you would otherwise command, you can “blow-fish” your size in the market by being more cheeky, fun, rewarding and engaging than all the staid big players around you.

Competitive radicalism

All this leaves brands with four options in my view – all oriented around a competitive radicalism that I predict will increasingly see brands exiting the middle ground, in attitude at least.

To stand out, think very big or very small – or be one, and act the other.

1. Be the monster – the brand that the whole world can’t help but notice.

2. Or be the upstart – the brand that someone can’t wait to discover and tell others about.

Better yet:

3. Be a monstrous upstart – a cult brand that is noisier than its size warrants because it wields a big attitude and a loyal community.

4. Or an upstart monster – an established brand that tirelessly challenges its own rules.

Strong brands project. They cast a powerful image of themselves to the world that may or may not correspond to their size. And they can project a future for themselves that is immensely powerful.

Loom large in the minds of those who buy from you and those who compete with you. Or slowly but surely fade away (or get eaten).

Stark choices.

More reading

Market leadership: the –out and the -est
The business of cloning
Always be branding
You can’t lead as a brand if you follow another brand
Great brands unearth
Is your brand ready for the experience war?
Brands at the speed of life

Other perspectives

Market leadership: the -out and the -est

Two thoughts that I really like, brought together.

The first was one introduced to me by Rob Smith, CEO, Paper Plus back in August 2008. It’s called –est. It goes like this:

There are a very small number of fully competitive positions in a sector and you need to own, and align yourself, to one:

Quickest
Biggest
Cheapest
Coolest
Specialist.

Anything else is the middle ground.

Everyone I raise this with debates the number and raises other possibilities. But you get the idea. It’s superlative and competitive and combative. To me, this is the –est test in brand positioning. Who are you going to be? And are you sure, are you really sure, you want to be that?

Second thought, introduced recently by Seth Godin in this post.  Out-. You win when you:

Outsmart
Outlead
Outcare
Outlisten
Outconnect

He gives others. They’re fabulous of course. To me, they are the market leading opportunities. They signal how you intend to win.

I think this question brings the two together:

Who are you going to out-______ in order to be the ______-est in your sector?

What I really like about this is how scary it is on the one hand.

And how specific it is on the other …

More reading

The business of cloning
Always be branding
You can’t lead as a brand if you follow another brand
Great brands unearth
Is your brand ready for the experience war?
Brands at the speed of life

Other perspectives

Handpicked – the wider opportunity of curation

A picture of a display in Brooks Brothers

A picture of a display in Brooks Brothers (Photo credit: Wikipedia)

The first time I really thought about the role of an astute retailer was while watching Mary Portas. Her point: any retailer can stock. Smart and profitable retailers, by contrast, handpick items that their shoppers will crave – and that is where they add value. In a great shop, she was saying, you don’t just come to buy, you come to discover things you wouldn’t normally find housed together. Fine point, well made.

These days, curation is all the rage. As Trendwatching so rightly observed in an article aptly titled “Everyone’s a curator now”, what used to pass for selecting, choosing or finding (Didn’t we once call that editing?) has been transformed into the more scholarly-sounding art of curating. That’s hardly surprising, Trendwatching observes, given the massive levels of choice that consumers now face, nor it is actually that new. In fact, the idea morphed out of the art galleries more than a decade ago, and really picked up pace with the arrival of Facebook, iPod playlists and Flickr.

To Steve Rosenbaum, author of Curation Nation, the trend is the next step in the democratisation of information. Twitter, blogs, Google and Facebook have brought a “daily data deluge” to people’s lives, he says in this article in Wired. Humanising that down into what people want to see, read and discover has generated social search, he says. Curation amounts to “a human-filtered web”.

John Doyle agrees. The VP of digital strategy at Cramer-Krasselt/Chicago says, in an article in Mashable, that marketers are excited by the thought of curation as an evolution in online influence. It helps shoppers sift through the huge range of choices available to them and, just as importantly, it does this with a human touch. (That to me is the interesting part.)

Doyle points to the way that Pinterest lets people organise the things they discover and he sees huge potential for retailers to put a new twist on this online. “Shopping curated collections can be a lot like shopping in a real-life boutique … where the goods are selected and stocked to meet the needs of its best customer: you,” he says. “And because these collections are created by real people (in many cases, friends from within the shopper’s own personal social network), the resulting shopping experience is authentic, powerful and hugely influential on purchase behavior.” He has some great ideas in his post as to how brands can take advantage of this.

OK – Google meets the personal shopper. I get that. But what are some of the wider implications of this handpicked phenomenon? It works for retail. Does it carry into B2B? What if you’re a consultancy or a professional services company? What role could curation have for you?

Exactly the same dynamics are at play in this space it seems to me: a plethora of thinking and new developments that client businesses don’t have time to sort through. Sure, some of them are just updates or revisions. But some are more than that. There’s new approaches, either from your field or another, that people deserve to be aware of. If you’re a consultancy, you can’t own others’ ideas of course, but you can add value by bringing your professional perspective to those ideas and to the evaluation of their wider worth.

For example, the other day I had a really interesting discussion with two strategists I was mentoring on when to use a Disruption-type model versus when you might want to use an amalgamative model like Medici. Neither of these models is my idea. But the principles of each are sound, proven, well documented and applicable, to best effect, in different circumstances.

There is some amazing thinking coming from the big names, but some of the most dynamic thinking is coming from bloggers and thinkers who aren’t at the top of Technorati – or at least not yet.

To me, part of the role of thought leadership is championing the leading ideas, whether they are yours or someone else’s. I think things get really interesting when, just as the Pinterest group did with Brooks Brothers, you start aligning the ideas and approaches of a whole range of thinkers. As long as – and here I completely agree with Mark Schaefer – you attribute generously and openly and don’t just colonise someone else’s intellect for your own gain. If you have the good sense to borrow from someone else’s mind, at least have the good manners to acknowledge that you have done so.

It takes huge skill and a massive amount of time to bring ideas to life. Especially big ideas. But, you know what, it takes an equally big-hearted person to evaluate an idea and to draw attention to it.

A facilitator it seems to me gets between an idea and the person it will benefit and tries to make money or gain profile from just being there. A selector just picks from what they know and feel comfortable with – so, essentially, more of the same. A curator finds an idea or a product and brings it to light in ways that will really benefit the community they are part of. Whether you like the term or not, there’s little doubt in my mind that the value any intermediary can add today is curational not just functional or selective.

In the fast moving, multi-channelled, multi-market, competitively converging world that we all work in, true value-add can’t just be about more of what you know. That’s stocking. Increasingly, it’s about having the confidence and the integrity to bring to the table the whole world’s best and latest thinking – yours and theirs – sifted, layered, organised, appraised and consideration-ready.

Incidentally, if you don’t think you have time to do that, what do you think constitutes a better use of your time as far as your clients are concerned? Today, it’s not just what you have that counts, it’s what you’ve found and what you’ve done with it.

More reading

Other perspectives

Not a problem: success pivots on what you solve, not just what you know

If you’re not a fan yet of the Scattershot blog, then I’d like to suggest you should be. In a post published earlier this week, Rajant discusses the concept of “ground truth”. Ground truth, as its name suggests, is the view on the ground that verifies and informs the satellite view. It’s a great way to separate a problem from a truth.

What’s interesting about this is that the perspective that brands have of situations gained from afar can be very different from the reality closer to home. In fact, those on the ground may not see that they have an issue at all. That’s a significant hurdle when your cue for action is something your audience doesn’t recognise. Rajant gives the telling example of P&G’s launch of Febreze, which initially failed. The reason? You only need an air freshener if you understand that you are surrounded by bad smells. The problem with that: “even the strongest odours fade with continual exposure … And Febreze’s reward (an odourless home) was meaningless to someone who couldn’t smell offensive scents in the first place”. If my house smells fine to me, then my truth as a consumer is that scent is not a problem and therefore there is no reason to take action. There’s literally nothing to fix. That premise isn’t going to fly.

The actual problem for most marketers is seldom the problem we’re presented with or that we think we have. Often what we’re seeing, or thinking we have to solve, is either something we’d like to solve or a trigger action, the last straw that convinced everyone looking on of the need to take action. If you take either of those literally though, you’re breathing in the wrong air.

Selling what you want to sell is wishful thinking. And that’s all it is until you establish need, habit and (probably) scale.

As for trigger actions – falling sales are not a problem, they are a symptom. Same for increased competition, lack of market share, consumer antipathy … Any solution based on addressing that data alone risks the same outcome as Febreze. It solves something that no-one but the brand owners recognises or feels pain over. It’s not an answer. It doesn’t actually address the real underlying need. The one based on the ground truth.

Most brand strategists run a discovery process, at which they seek to uncover the facts and get to grips with the situation they are being asked to solve. They fact find. And of course that’s necessary. But the real purpose of the discovery process is not to gather information. The purpose of the discovery process is to overlay what you’re learning (facts) over what’s happening (symptoms) in order to unearth the real problem or opportunity (driver).

One of my favourite reminders is that it is not the job of a marketer, or anyone else for that matter, to revive sales, close out competitors, lift customer survey results or increase the Klout score. Because those are all things outside of a brand’s control. They are customer decisions. The role of people who work for a brand is to really understand why those things are happening and to address them in ways that delight, surprise, engage, provoke, and/or motivate buyers. The sign that they have done that well is when sales lift, market presence increases, customer survey results climb and the social media metrics increase.

As HL Mencken once remarked, “There is always an easy solution to every problem – neat, plausible, and wrong.” Marketers love to look for simple answers to easily identifiable problems. The ground truth is that consumers aren’t simple people.

More reading

Other perspectives

Is your brand ready for the experience war?

Thanks to Cato who once again this year kindly invited me to the Wellington simulcast of the AG Ideas Business Breakfast held in Melbourne yesterday. The theme for the AG Ideas 2012 Business Breakfast was how companies could use design and innovation to compete effectively in high-cost economies. Technical issues prevented those of us on this side of the Tasman getting the video feed, but there was plenty to listen to, as Dana Arnett, Dale Herigstad, Mauro Porcini and MC Göran Roos steered us through the morning. Today, I want to touch on a couple of points raised by Göran Roos in his opening statements and one or two takes on an interesting, point-packed address from Mauro Porcini, Chief Design Officer, 3M.

Porcini pitched a new social scenario; one where consumers are not just savvy, expert and demanding, but also difficult to categorise and understand because of four overlapping generations (boomers, X, Y and Z) and different geographies and cultures (which themselves were in different states of market maturity). The emergence of this social scenario, he said, has led to a sea-change in product development – where companies such as 3M have moved from developing products focused on functional tasks to releasing products that now essentially accompany experiences intended to fulfil emotional needs.

He talked about increased irrationality on the part of customers, or rather, needs that are much more difficult to rationalise, and that catering to these whimsical audiences requires organisations to function and innovate outside their comfort zones. At the same time as it jeopardises traditional corporate approaches to product development, this new market dynamic hands leadership opportunities to those prepared to mix innovation (meeting people’s needs) with customer engagement (through storytelling and prototyping)

Products now operate at three levels, according to Porcini. They must compete effectively in an age of mass customisation (meaning they must provide what he referred to as “intimate pleasure”); they must work as a signal to others that the brand user belongs to a community (because consumers want to be able to send signals about varying types and levels of status to those around them); and the products themselves must convey and carry meaning (so there must be a natural flow between the product and people).

Design, he asserted, can be a powerful contributor to all of these operations … as long as companies don’t simply see design as styling. His views echoed those of Roos earlier who, in his opening statements, said that design continues to be misunderstood, particularly in the business world. Design, says Roos, has been assigned the label of art. However, in today’s context, it is not about developing pretty things at all, but rather creating value. The objective of design is to generate and achieve behavioural change; change that is desirable for the user, beneficial to the supplier and positively impacts other stakeholders.

Apple is a living example, Roos said, of the triumph of design over innovation. Apple didn’t so much break new ground, as redesign emerging ground, and that when they do this well, everyone in the Apple ecosystem benefits. Clearly the Apple brand benefits. But so do those people who design apps that can be used on Apple devices and so do the telcos that carry the data generated by these apps. A point very well made that for me set up a key premise for the morning.

I’ve long held and expressed the view that most of the innovation hype is based on a myth – and the myth is that if you innovate, you will succeed. Not true, Roos seems to be saying. You don’t have to be the innovator – if you back your design approach enough to trump what the market has seen already. Not true either, according to Porcini, if you think that innovation revolves around products. Increasingly you must look to innovate experiences, and design products to deliver them.

Forget about satisfaction, Porcini asserted. Deliver customers magical, surprising experiences. Insist on it. So many companies, he says, set out to be exceptional and then let the magic and the pleasure be ground away during development. I smiled broadly, as did everyone around me, at his views on research. The secret, Porcini says, is to conduct research and to listen to it, but not to necessarily believe everything you’re told. Sometimes what you’re hearing is not market rejection, it’s market indecision. It’s literally a lack of imagination on the part of those being polled to see what it is you’re asking them to give an opinion on. Design led companies, he says, get that. They learn, they adjust but they don’t compromise.

Experiences are too important to be left to chance. Instead they must be carefully designed. Porcini talked us through how great experiences have a strong pragmatic flow that mirrors the sales funnel. People buy into an idea. They see and purchase. They receive/unpack and they discover. They use and interact. They keep and live with the product. And one day, they dismiss the product from their lives and they leave it behind (perhaps for an upgrade, perhaps for a competitor).

Simultaneously, he says, people’s experience with a product evolves through an emotional flow. They start out by having a visceral experience (the impulsive, purchase decision). Then they have an interactive relationship (where they immerse themselves in the product and enjoy it). At this stage, they accumulate loyalty. Finally, they have an expressive relationship, during which time they want to share their experience with others and recommend the product to all their friends. He didn’t explain why customers then move on from this expressive relationship to leaving the relationship (assuming that the pragmatic flow and the emotional flow mirror each other as a logic” magic combination), but as I said earlier I suspect it is because they upgrade and the process starts again, or they are tempted to make an impulsive decision elsewhere. In which case, I wonder whether we should see both processes as linear.

What the new social scenario does demand though, says Porcini, is that brands pack as much experience into each part of the relationship as they can. Nothing should be exempt – product, packaging, the purchase experience, web, interaction with people, facilities – all should work to delight and deliver magic.

Finally, let me share Porcini’s definition of a “design strategy” because I think it is quite different from how many companies would define it. Design strategy, he says, is business strategy that leverages design. What I got from this is that value is designed not generated, and it is quite literally born of how a company thinks.

That thought led me to review my own definition of brand strategy, which I have now amended to this. Brand strategy is how a business leverages its brand(s) to achieve its business goals. (Brands will only achieve those goals if they are prepared to intelligently design for value and competitiveness.)

So where does all this leave us? Perhaps my biggest take was that amongst the world’s big product brands at least, the war for market share is now firmly experience-driven. The experience race is on. Expect those experiences to not only come thick and fast, but also for them to become less spontaneous as companies look to design more and more of how they deliver as well as what they deliver. Expect too that the value of each experience will commoditise much more quickly as consumers come to expect surprises-by-design as a matter of course. Finally, understand that innovation in such an environment could perhaps be more accurately described as the opportunity to supercede rather than the continuing invention of the “new”. Companies like Apple have shown that out-delivering by out-designing can be highly effective if second-to-market is better-in-market.

Overall, lots to think about. Huge thanks once again to Cam and the Cato team for the invite and the hospitality.

More reading

The fall of the wall between customers and culture
Great brands unearth
Sense and Seratonin
Human marketing
Participation versus differentiation