The Dangers Of Industry Disruption: Why Brands Must Think Like Startups

Is bold entrepreneur-like thinking the marketing model of the future?

Branding

As the world moves toward a one-device ecosystem and technology and platforms disrupt established models, brands and marketers must adapt as well if they don’t want to die out like the proverbial dinosaurs in the hotel and camera industries. Marketing experts say brands and marketers must think like entrepreneurs and startups. They must be proactive to avoid disruption. Brands must be more willing to take risks and they must be nimble and go where consumers are, which sometimes means into uncharted territory that doesn’t offer metrics. And while that can be scary for more traditional and established brands, their business and marketing models will eventually lose effectiveness, so it’s an imperative.

Airbnb is one example of an industry disruptor that caught many brands off guard.

Brands have long stood for consistency and reliability and traditional business models have been about efficiency in repetition, said Jonathan Hall, president of consulting at brand development and marketing services firm Added Value.

“But in a world in which Airbnb can disrupt an entire industry, it’s not what it used to be,” he said at Social Media Week New York.

And, driven by vast technological changes, the future is not what it used to be either, he said.

Adapt Or Die

Innovations like robotics and 3D printing will have profound effects on industries like health care, education, and manufacturing, “fundamentally [changing] the dynamics of industry…and [destroying] existing giants,” Hall said. “It’s an exciting and scary time to be in business.”

This is trickling down to marketing departments as well.

While marketing used to be a lot easier, the upside is that there are now more opportunities than ever to connect with consumers, said Bonin Bough, vice president of global media and consumer engagement at food and beverage conglomerate Mondelez International.

“Look at the scale and growth of the tech sector and how fast consumers [adopt] platforms,” Bough said. “Marketers are able to take technology and fuse it with more traditional core business values to drive unbounded growth.”

And that, he said, is where the market will see the kind of growth expected of Mondelez-sized brands.

Oreo’s Twist, Lick and Dunk game, for example, has 7 million downloads to date and it’s essentially “playing an ad that has ads inside of it,” which, Bough said, “is a whole new model.”

What’s more, said Matt Bruhn, senior vice president of global marketing at vodka brand Smirnoff, “What we’re realizing is the speed of change is faster than we’d like it to be.”

Traditional business models in which companies make more of the same more cheaply will no longer work, Bruhn added. The companies that win and survive will be the ones that make disruptive products.

The World Is Changing

Smirnoff sells in more than 120 countries, which means Bruhn works in both emerging and emerged economies with completely different skill sets. Access to technology is growing in some countries – including a large population of mobile-first/only consumers – and perceptions are changing in others as the sharing economy takes hold and, for example, consumers embrace the idea of sharing their homes with strangers, which was unfathomable a decade ago.

“Massive shifts are coming in marketing departments and big corporations must really respond to them or they’ll fail,” Bruhn said. “What our marketing department looks like today, it will not look like in six months, 12 months, or two years.”

So, too, is there huge disruption in the TV industry as Matt Britton, CEO of creative and technology agency MRY, said the market moves toward a one-device ecosystem in which all content will eventually be streamed from that single device, including everything from TV to billboards.

And that means brands must move/change/adapt to this single-device, sharing-economy ecosystem, or they’ll die.

“Go back to Kodak,” Bruhn said. “A moment of disruption has undermined its entire business model. It’s a dangerous place for companies that refuse to move.”

Adopt An Entrepreneurial Mindset

An entrepreneurial mindset is one technique brands must adopt to survive, Hall said.

In other words, the hub and poke model – in which brands have limited skill sets in the center and farm out marketing work to multiple agencies – will no longer work, Bruhn said.

“The level of complexity is giving rise to the inability to be disruptive and these paralyzed entities can be interrupted [by players like] Airbnb,” Bruhn said. “They’re so busy trying to manage themselves, they fail to recognize external stimuli.”

But this alternative requires more of an appetite for risk. And it means there won’t always be metrics upon which to base a campaign’s relative success or failure.

Go Where Consumers Are

That’s particularly true when experimenting on new channels.

“Keep in mind that a lot of emerging platforms have no way to track performance,” said Pauline Malcolm, vice president of agency strategy and development at short form video firm Maker Studios. “Brands have to be comfortable that it may be ephemeral and disappear or there are no KPIs to track.”

In particular, Malcolm said younger marketers are imploring their peers to embrace this movement or die, saying, “’This is what Millennials are doing. This is how they’re consuming content. You can no longer reach Millennials on TV. You have to go to emerging platforms.’”

Though YouTube isn’t an emerging platform anymore.

“YouTube has emerged,” Malcolm said. “It’s here. But it’s being superseded by Facebooks, Twitters and Snapchats that have come out with their own video platforms. If you’re not there as a brand and increasing your market share overall in this fragmented landscape, which continues with the emergence of new vehicles…for marketers, having that mindset of wanting to be where the consumer is is the way you have to go to survive.”

It also means creating on-the-fly content without storyboards and with no guarantees about what the final product will look like.

‘Flatness Is Failure’

Bruhn acknowledges a willingness to go into production without storyboards is tough for traditional marketing teams, but it’s something he argues is necessary.

“Organic content development is the future of marketing, but it requires a new breed of marketers to come through that understand the process more intrinsically,” he said, noting Smirnoff just shot video in Argentina for six days with a handycam, four paid actors and no script or storyboards.

“We let the camera run for 60 hours and filmed sequences of events to deliver the brand story,” he said. “It’s traditional 60s and 30s, but shot organically. We want to be authentic and real in terms of the consumer experience.”

But, he notes, simply letting a camera run to acquire organic content is difficult to get signed off at a major corporation.

“You’re putting down money for either brilliance or failure,” he said. “It will either be amazing and capture the authenticity of the experience and engage the audience or it will fail.”

But the alternative is bland, vanilla content, which is far worse, he said.

“Flatness is failure,” Bruhn said. “If you’re delivering vanilla content, you’re wasting every dollar.”

In fact, Bruhn calls for a revolution of sorts and for marketers to create a movement within their organizations.

“If you’re trying to convince the CEO, you need to have sheer weight of numbers on your side in people who are mobilized throughout the entire organization and with well-articulated arguments: ‘Do you want to be Marriott Hotels, interrupted by Airbnb?’” Bruhn asks. “You have to create a level of fear and paranoia, so they don’t accept continuity.”

Take Risks

Bruhn’s advice to marketers is to “make a big risk feel like it’s not a risk and to make the alternative feel worse.”

And, he adds, “You have to have real conviction, but know you’re putting your reputation on the line. When we sell making real content, we sell it like, ‘If we don’t do it this way, it will be a disaster. This is the only way to make the change we need. The alternatives are not worth considering.’”

And brands that don’t move/change will have to respond in crisis mode.

“Look at the case study of Marriott Hotels,” Bruhn said. “They’ve changed the way they do [food and beverage] because the entire industry is in food trucks and stalls. They’ve changed completely because they’re in crisis mode, so they’re redoing things…if you as an internal person can make them believe that if they don’t change, they will die, you can inspire senior members of staff.”

Bough agrees marketers don’t have to move the entire organization, but rather the people willing to move with them – a so-called “coalition of the willing.”

Think Like Entrepreneurs & Startups

He also notes there are multiple ways to change the mindset of marketers within a given organization, but Mondelez chose the startup route in its Mobile Futures program in which several of its brands literally partnered with startups to develop and incubate new mobile ventures in 90 days.

The result has had a profound impact on participants, as well as on Mondelez brands and marketing efforts since.

Kathryn Sheaffer, senior associate brand manager of Ritz at Mondelez, said the experience has made her think differently about how she approaches problems, including a program with a retailer in which Ritz ultimately brought in another startup “and gathered people and for a scrappy budget and did a really cool thing” the brand will talk about publicly in a few months.

In other words, after participating in Mobile Futures, Sheaffer said she has “the ability to think about things in different ways and pull people in and not worry so much about results, but [rather] to think about how to partner with the right people.”

Similarly, Lauren Fleischer, another senior associate brand manager at Mondelez who works on the Sour Patch Kids brand, said Mobile Futures increased her willingness to take on risk. That includes more of a willingness to work with influencers like Bethany on YouTube, who, she said, is more of a celebrity than a Beyonce to teens.

“So we have this nugget around influencers and do some testing…but if I had not been through Mobile Futures, I might not have felt that way,” she adds.

How do you think marketers can avoid disruption?

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