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.
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.
- 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?
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.
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.
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:
noun: purpose; plural noun: purposes
- the reason for which something is done or created or for which something exists.
- 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.
At room44 we have to maintain an agnostic view of every client’s business. To deliver landscaping strategies that present our customers with perspectives they couldn’t see for themselves, by themselves, and to be able to extrapolate an idea into a product concept that their competitors haven’t seen: that’s where we earn our bread and butter.
There are a few tenets we hold dear and we’ve developed a manifesto that we’d like to share with you. However, we’re also aware that, as world politics and environmental issues continue to dominate our news, and market responses to mega trends go on evolving, these tenets may change. We recommend that every CEO is able to change her, or his, mind in the face of new information, so why wouldn’t we?
1. Question everything
The constant in all our lives is change. The question that we must all ask isn’t ‘what’s going to change?’ but ‘what won’t change?’
This is where room44 starts in all our work. The probability of change and disruption occurring correlates directly to the probability of your new idea being successful, so it’s an important first step.
2. The way you do anything is the way you do everything
To look for insight where you’ve always looked, or where you know your competitors look, isn’t going to provide you with any business insulation. The recent eruption of new business start-ups and the resultant increase in business failures makes the chance of existing business faltering higher than ever before.
Adjacent opportunities must be sought and grasped. Longer term scenarios must be mapped and reviewed. Persistent and tenacious interrogation of your market dynamics and consumer behaviours is imperative.
The way you do anything is the way you do everything. If you are taking care of business today with only an occasional look at immediate threats, the way you will react is ‘occasional’.
Regularly working in your future makes your opportunities appear regularly.
3. Choose yourself
Waiting for market approval is commercially limiting and puts you into a competed position before it’s necessary. Being first to market may not always be the best position, unless you can sink countless £/$/€ into support – but waiting isn’t the answer either.
When you ‘know’ you’re right, have a little faith in yourself and launch. The worst that can happen is that you don’t make the money you need. But even in this, there is an experience to sell and benefit from later on. Choose yourself every time.
4. It’s never too big to ignore
Overwhelmingly huge issues are a challenge that individuals cannot ignore. Big issues require a big vision and baby steps. As Greta Thunberg has written; “no-one is too small to make a difference”.
5. It’s never too small to launch
Everything starts at the beginning. A step starts a marathon, an acorn starts the oak tree, a flake starts a blizzard… When we have the germ of an idea, we start it and feed it and water it, and we see where it goes.
An ideas that you feel is right should be nurtured even if the data isn’t available to support it. In fact, if the data is there the idea has already been seen by somebody else.
As we say in number 3, choose yourself.
Our own room44 initiatives
At room44, we see the danger that exists if commerce, industry and consumers continue to crave growth in all things. We buy-in to the need for us all to make less individual impact on our local environments, and we’re trying to offer others options too. It’s all very well for a consultancy to preach a message, but we believe that we should make it easy for people to access better alternatives. In 2019 we have been working on new ’small’ ideas and invite you to take a look.
room44 does more than talk about change
In 2019, we have kicked off two new businesses. One is a sustainable start-up focusing on artisan clothing.
The other is a partnership with an established eBike retailer to become their first brand licensee. Micro-mobility is starting to affect how towns are designed and how residents view their travel options. We see eBikes as democratised personal transport for the 14 to 140 age group. In time, we’ll introduce bike-sharing in our area but for now, we’ve started small and we’re thrilled to have found great partners who we can work with to promote a less polluting way to get around.
More to follow on this one.
Future thinking. Future-proofing. It’s what we do, in theory and in practice.
Malcom Gladwell, in his new book Talking to Strangers, discusses the misunderstandings that arise when what you say isn’t what you mean.
For an aspirational business leader, this can easily be resolved with some clarity of purpose (remember ‘purpose’? It’s that elusive thing brands must maintain to ensure they resonate with customers). Only last month, we were trying to decide what Emotional Quotient meant to us; now there’s a new kid on the block asking for definition.
With specific attention to innovation and product planning, your policy may say something like “Our purpose is to make a difference by giving people innovative solutions for ….” But how?
What strategic steps will you take and what strategic position will you arrive at?
Policy (noun) – a course or principle of action adopted or proposed by an organisation or individual.
Strategy (noun) – a plan of action designed to achieve a long-term or overall aim.
See the difference? Policy is a general statement that no-one can really follow because it doesn’t tell them what to do – just what to believe. A bit like blind faith.
Strategy, on the other hand, is descriptive. It tells you that there is a target, an intent and a plan.
Lots of companies have a policy document or a mission statement.
Fewer have a product strategy that knows what its customers want to see it do – now and next. Why? Because a strategy must be specific and measurable, and it can be hard to know what to be, when everything around us is changing all the time. So, instead of making a decision and acting with intent, business leaders hedge their bets and do nothing, waiting for the next big idea to strike.
Anyway, back to Malcolm.
Don’t fall into the trap of being vague. Say what you want your teams to do. Company staff need to be told what is expected of them and the overarching purpose: why are we being asked to do something, where will it take us, and how can I make a difference?
Put this in place and all manner of intangible efficiencies start to open up: elephants vanish from rooms and black swans appear all over the place.
Telling your staff and customers what you plan to be in the future, and how they can help you achieve it, is a strategic action. It supports the policy and it means you have thought long and hard about it, removing the need for any lingering blind faith.
You can get really hung up on ‘purpose’, but in the interests of business survival it’s always better to have one than not. Working on an innovation or product strategy is a great way to start.
If we can be helpful to you, let’s talk. Here’s my diary.
Future thinking. Future-proofing. It’s what we do.
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.
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’.
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.
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.
Try this: when you leave the house, see what you need to pick up and say out loud, I’ve got my case, my coat, my coffee, my keys, my lunch, my kids…
By calling it out, you’re giving yourself the chance to notice what’s missing: wallet, computer, water bottle, dog…
This habit starts to build a picture of what’s normal and expected. It helps avoid mistakes.
Pointing and calling is a method that is used in some unusual places. Stand on a railway station in Japan and you’ll see station staff walking up and down the platform pointing at things and calling them out: signs are red, doors closed, platform edge.
By doing all this while the train is stationary, they are noting the normal. When something unexpected happens, they see that too and they call it out. Action follows. If a door is open, it gets noticed before the train moves, and gets closed before a more serious incident can develop.
These actions become habit. Habits build into an unconscious awareness of the station staff’s surroundings and staff become attuned to changes in the air. They are expert in their tasks and they know when the picture looks wrong.
room44 adopts the same approach to your business.
We immerse ourselves in your world for two reasons: to see it the way you see it, and to see it the way you don’t – in other words, the way everybody else does.
Doing this – pointing and calling out what we see, taking a view of the broader environment – competitor activity, emerging technology, flagged consumer behaviour – helps to call out the non-standard. It’s a simple, but powerful, way of seeing things as they are and as they aren’t. This is where the opportunities for possible products hide.
Get us to run a design sprint or an innovation audit, and you’ll see how quickly your colleagues pick this up, and how they develop the habit of noticing the normal and the non-standard.
The compound effect of pointing and calling.
Little habit changes, practised every day, turn into major changes over time. Eat a piece of cake a day, or an apple, and see what happens. To form a habit takes commitment. It takes resolve, and it requires you to prioritise this new action so that it happens regularly – a bit like a habit. In fact, exactly like a habit.
This is how we start. Take the first step to a new habit. [button link=”https://meetings.hubspot.com/tristan28″ type=”big” newwindow=”yes”] Click here to book time to talk[/button]
Seeing it differently. Future-proofing. It’s what we do.
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.
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.
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.
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.