As you sit down to write your 2020 budget plan, ask yourself this question: how different will this plan make us look by this time next year?

It’s likely, in many cases, that the answer is, ‘it won’t.’

This is something we can help to change. Here’s why and here’s how.

Why?

Today’s marketplace is dominated by brands looking for a cause to align themselves with: a purpose to adopt and work into their brand messaging to show they are sufficiently aware of environmental, societal and technological forces to know where their own values intersect. In most cases, this is nothing more than marketing.

marketing (noun)

1. the action or business of promoting and selling products or services, including market research and advertising.

The most trusted brands today are those focused on their central beliefs and who present their message most efficiently. This is not something an established brand is going to do successfully in a single budget cycle, but if your brand is to have any chance of growing, it is something to consider.

Don’t confuse growth with doing business as usual.

Planning a 2020 budget without making any changes to what you do only maintains the status quo and, while it may work for a year or two, it won’t work for ever. A well-deigned marketing plan will make it possible to sell more than last year, until the marketing stops working. As we all know, marketing always stops working, and a new plan is always needed.

For evidence of this, look at the size of your marketing budget versus your ‘innovation’ budget. See what I mean?

How?

Having a core purpose to your business is more than, for example, changing from virgin plastic to post-consumer waste in your supply chain, or removing some packaging from a product, or working up a VR social media advert.

Having a core purpose is what new positionings are based on. Without a purpose, you will not be seen as actively engaged in the issues that matter to newly influential consumers: Gens Y, Z and Alpha. Without an embedded and ingrained purpose, you are actually sliding out of relevance, whether you know it yet or not.

You?

Taking a stance inside a business, that doesn’t speak to the norm of what it does today, is hard for anyone. The route of least resistance is to keep your head down and get on with what you are paid to do. If you are doing work that no-one is noticing, you’re running with the crowd and there used to be nothing wrong with that. But we believe that, today, it’s not a sustainable position for anyone to adopt. Workforces need to be mobilised as innovators.

To be the agent of change in your company, you must be the nucleator; the grit in the shell; the person that stands out for suggesting ideas that immediately attract resistance.

You don’t have to be difficult or contrary or deliberately confrontational. But you do need to push against something to know that your idea has made a bump in the road and that, now it’s out there, it has a chance of forcing a change from within.

We’re not suggesting revolution

…only that you take it upon yourself to create an atmosphere within which change can occur.

Being controversial is hard. Happily, today may be the absolute best time to be controversial, because this is where disruption starts. And if you’ve read anything about business in the last five years, disruption is the word of the day, every day.

Some examples

George Soros is controversial. His money supports activities that some people would prefer not to happen. He isn’t always popular but, anyone that has ever read reports about his ventures, knows what he stands for (George Soros interview at The Guardian).

Ben and Jerry’s is an ice cream brand with purpose beyond their product. As long ago as 2009 their Marriage Equality policy was written into their core values and reflects in product marketing.

Patagonia has only ever said what it says. Its uncompromising stance on environmental impact has never changed. This is a core value instilled by Yvon Chouinard when the business was founded and remains firm.

When you realise that these core purposes are so long held and so deeply embedded, it’s easier to understand why they attract such a lot of support from their social media communities. People who know that some brands represent more than making money, making ice cream or making T-shirts reward them with consumer trust.

When you sit down to write your 2020 budget, please have a think on what the right thing to do next year is:

purpose (noun)

noun: purpose; plural noun: purposes

1. the reason for which something is done or created or for which something exists.
2. a person’s sense of resolve or determination.

Our answer to starting this process is called 10, 20-30 and you can download the outline here.

Is innovation part of your three year plan?

As long ago as 1962, Everett Rogers published the Diffusion of Innovation concept, coining the phrases ‘Early Adopters’ and the ‘Early Majority’ that are still popular today.

In 2016, McKinsey assessed the average lifecycle of a company in the current market at less than 18 years. Three years on, this is more likely to be 15 years.

In 2018, I suggested that all established market positions are under threat from new and disruptive start-ups, whether or not they’re technology-based – the theory of inevitable failure.

Ideas collide

There’s a confluence of ideas here that, seen separately, may not raise any eyebrows. But put them together and every CEO, in every sector, should be reaching for a legal pad and making notes.

Let’s start with Everett. His bell curve is shown below, and it’s easy to see why we love the idea of payback early in the adoption cycle. But if you overlay a fifteen-year cycle, suddenly there’s a problem: the three-year planning and strategic vision favoured by so many CEOs only makes it as far as the earliest point of break-even.

You may think it’s very convenient to overlay a rigid timeline onto a chart like this but bear with me. If the market you’ve launched into experiences unforeseen activity, even the three-year view is cut short. This scenario will never allow you to reach profitability, the product won’t mature, and customers will jump to the next thing.

It’s far easier and less messy (not to mention cheaper) to start up a new product from scratch than to work an idea into an established business structure. But let’s look at my theory of ‘inevitable failure’, otherwise known as ‘the need for innovation’.

Denying reality

It has been said that the only difference between humans and other animals is our ability to deny reality. As brands come and go, experienced watchers will recognise a clear and unavoidable fact: everything dies. Ignore this at your peril.

Sectors resisting change

If you’re working in a market today, that market will shut you down eventually. For example, every internal combustion engine component manufacturer is three to five years away from a major realignment of their market. Why? Because electric vehicles are mandated by governments and EVs don’t use carburettors, fuel tanks, engine blocks, fuel gauges…

Plastic packaging is another case in point. If you are invested in multi-material, complex laminations that use more than one compound type and you’re not working towards a new VP, move on. The people who work for you deserve better.

If you’re a brand that persists in using more than a single packaging material to present your products, the same applies.

Innovation is an experience

This collision between theories suggests there are lots of great new products that may have become innovations; but won’t. Time is not on their side. The rate with which emerging technology is hitting your market sector and the rapidity with which companies start up, thrive and die, means even the best and most successful ideas aren’t guaranteed a long and happy life.

Future proofing

So, what’s the answer? Simple. Look further ahead and plan for a different market.

As a company or brand owner, it’s your responsibility to create a view of your future that is unique to you. Confirmation bias is a thing of the past; you cannot rely on doing what everyone else does to succeed. Creativity, speed of communication and technology are moving more quickly than products can be developed and distributed. The consumer experience is now to leap-frog a product generation because so much happens between purchase occasions. This means that brand loyalty is at an all-time low – the cost of switching brand allegiance is zero; the cost to you is survival.

A new training offer

room44 is soon to reveal a new way of delivering innovation insight and process training.

To get in early and help us shape our plan, hit this link and leave your phone number. I’ll call you back and, if you decide that being a beta-subject is a good idea, we’ll discount 30% for the first ten sign-ups.

#room44innovates

Product trend-spotting is a bit like birdwatching, or chasing hurricanes. You know they’re out there, but you don’t know when or where they’re going to show up. Patterns from the past may tell us roughly what to expect, but the actual event is harder to predict. So, because the product trend is an unpredictable beast, the conflict between delivering short-term results and innovating is a real one.

Here’s a typical scenario

Company A (CA) works in a consumer segment that has been reliably solid for years. Competitors have come along over time. Some have dropped away; some were bought and consolidated into the CA structure; some stayed on the market and incentivised CA to change up its product range from time to time. This is a reasonably common condition that can be managed through traditional marketing and sales tactics.

Another standard feature of this scenario is the year-on-year growth target. The R&D team works with Marketing to identify new product prospects, and runs research programmes to identify shifts in consumer thinking, usage and attitude, ethnography and so on. Range development is planned out to about 18 months. The budget runs to the end of this year. Beyond that, things are a bit vague.

During the year, the team goes off to trade shows to see what’s going on and what they might design into the product offering. Shows like Packaging Innovations may throw up a new material; consumer health and electronics shows could reveal some new functionality; and consumer experience shows point a way to customer service systems.

R&D get interested in some themes. They start looking to new ideas and working up some PoC projects.

Problem 1

Around mid Q3 the sales budget begins to look tight, so a gradual refocus on the year end begins, and by the time Q4 comes around, the whole company is working on promotional priorities to bring in the results declared to the market / stakeholders / staff bonus scheme. And the longer-term thinking, designed around new ideas picked up from market scanning, falls by the wayside, and the next year starts from point zero – again.

Problem 2

The new ideas picked up from trade shows were already old ideas. The new service and product designers exhibiting at the show, or working in an incubator to generate VC funding, were responding to a market need they saw way before you did. By the time you became aware of the solution, your competitors had seen their own version of your market dynamic.

No matter who picks up the idea, the fact is that it’s going to be a lot older before you research it, position it, brand it, package it, sell it in, deliver it – get it to market. That may still be in time to meet the anticipated consumer need, and you may launch at the same time as the rest of your sector. To make it to market alongside your competition validates the idea in the eyes of management. But the reality is that you’ve only kept up with the market – you haven’t outpaced it.

This is the trendy trend. The one everyone believes because everyone responds at the same time. Safety in numbers.

New ideas

As Theodore Levitt said, “Invention is having new ideas, innovation is doing new things” – not the same things as your competitors. To do this, you must see the future market as a real opportunity, and be confident in your assessment without the need for industry confirmation.

It’s hard for anyone in a corporate structure to be different. You may have seen this quote attributed to Steve Jobs (he didn’t write it), and “Think different” is the essence of the Apple brand to this day:

“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 push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”

My point is this:

• Please let your creatives create without barriers.
• The end of year result should have been underwritten long before Q3.
• The innovation forecast has more veracity if it features products and services that meet consumer needs that don’t feature in your competition’s line-up.

If your team wants to go to the big trade shows and shop new ideas – ask them whose ideas will be more compelling: yours or everybody else’s? Trends are available for everybody to see. The most valuable ones are not obvious – but they are available.

Seeing it differently is a skill. Seeing it differently enough to be compelling is the skill further refined.

A skill takes time to develop and practice to get right. In the same way that captains captain boats and pilots pilot planes, trend-spotters spot product trends. Don’t underestimate this. It’s not a function you buy from an analyst or a forecaster.

This hard to define, sometimes intuitive, always practised skill comes from experience. It’s not easily written into job specs or recruited for. If you get lucky and find someone who can do it, hang on to them – give them the space to rebel.

Without a round peg and a square hole, the best you can do is follow the trendy product trend. A round peg will seek out the innovative opportunity. If you can’t wait for that person to show up, get in touch.

“Great companies make change for a living.” Michael Schrage.

Future thinking. Future-proofing. It’s what we we do. Click here to see how we start.