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

Brands like Smirnoff, Ritz, and Sour Patch Kids apply mar­ket­ing prin­ci­ples gleaned from star­tups to avoid indus­try dis­rup­tion.

Lisa Lacy By Lisa Lacy. Join the discussion » 0 comments

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.

Lisa Lacy

Written by Lisa Lacy

Lisa is a senior features writer for Inked. She also previously covered digital marketing for Incisive Media. Her background includes editorial positions at Dow Jones, the Financial Times, the Huffington Post, AOL, Amazon, Hearst, Martha Stewart Living and the Dian Fossey Gorilla Fund.

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