How brands can prevent low-end disruption
Do brands have the power to save companies from low-end disruptive innovation? The answer is: “Yes.” Brands can create their own innovation avenues that can render low-end disruptions “irrelevant.” To reach this point, however, we need to move beyond the legacy mindset of traditional brand approaches.
In this overview I’ll discuss:
- Disruptive innovation and brands
- How traditional brand approaches invite low-end disruption
- Why “creating customers” is the best way for brands to defeat low-end threats
- How brands can make low-end disruptions “irrelevant”
“Building strong customers” vs. “building strong brands”
To understand the full context of brands and disruption, we need to grasp at the outset that “building strong brands” is not the ultimate goal for brand builders. The real goal is to build strong customers. Your customers are your greatest competitive weapon. They are your innovation partners within your strategic value network. As such, they provide the most resilient defense against commodity-level incursions.
Disruptive innovation is about customers, not products
An additional up-front observation is that disruptive innovation is not about products. It’s about customers. “Good enough” and “convenient” are disruptive benchmarks, and “good enough” and “convenient” are customer judgments. Because brands have the power to free customers from current constraints, brands can move the disruption landscape above and beyond product-level developments. You can use your brand to grow your customers into markets your competitors can’t reach–and that includes low-end competitors. (Growing the customer doesn’t mean making customers spend more money, or locking them into your products. It means making them more successful in a way that sustains your business.)
In brief:
- “Disruption” is a factor of culture, context and customer, and is thus brand territory
- Brands are a mode of innovation (replacing one customer mode with a better one)
- “Disruptive innovation” is the stuff of brands
I’ve discussed how “disruptor brands” can attack established brands in a previous post. My focus here is on mitigating low-end product disruption.
Disruptive innovation and brands
One of the traditional goals of brand building is to make brands so powerful that they’ll be insulated from the “low-end disruptive innovations” analyzed by Clayton Christensen in his numerous studies. These kinds of disruptive innovations get the attention of brand builders because they’re typically associated with the commodity threats that can undermine price premiums and customer loyalty. Unfortunately, the ideal of an “impregnable brand” seems to be wishful thinking. A Maginot line of brands might look good on paper, but when push comes to shove, it’s useless. Christensen has extensively documented how “best of breed” (conventional) brands can be thoroughly undermined by “good enough” products that carve out new markets from below
The disruptive innovation model
Christensen’s disruptive innovation model is well known. It posits that innovators typically bring a new product to market and then work to fulfill the inherent product trajectory, maximizing profit by serving those customers with the most demanding needs, and refining the product to higher and higher levels, steadily moving upmarket in the process. Over time this profit-maximizing arc can leave opportunities at the lowest market levels for new entrants. In time, however, these bare bone products and processes can mature and redefine the market away from the incumbents. Examples would be the slow, fuzzy desktop copiers in the heyday of Xerox; the first PC’s in the days of mainframes and mini’s. These “toys” eventually came to dominate their markets.
In this model, “good enough,” “convenience” and “low cost” gain footholds because they have price and practicality on their side, and because established companies deliver no products, and no brand value, at these entry levels. The potential disruptors are closer to the customers than the established brands, which never descend from the brand stratosphere.
Traditional brand approaches invite disruption
Traditional brand approaches don’t really fend off disruptive innovation. Actually, they make it worse. I’ve cited the many weakness of traditional brand approaches in previous posts. See here and here. In a nutshell, the problem with traditional brand approaches is twofold: 1) they model brands as communications rather than value delivery platforms; and 2) their top-down broadcast methodology leads to passive, low-performance customers, who return little value back to the brand. The lack of two-way interaction creates a brand vacuum that disruptive products can exploit.
Iconic brands are the most vulnerable
From my perspective, the brands most likely to be disrupted are those that act as icons to be revered, rather than as dynamic engines to create customer value. A brand that pretends to icon status can be seduced by its own image while real-world customers move in other directions. Such brands can flourish for a while, sometimes even defining a category, but eventually they dry out. Think of Levi’s or Gap, once dominant, now groping for context, and struggling financially. They dry out because they refuse to be nourished by customers.
As icons, such brands stand apart. Since they don’t want to dialog, they don’t listen. They want their customers to be passive “consumers,” i.e., sheep with credit. They also assume (foolishly) that brand inertia will keep customers in the fold.
How brands should NOT approach disruption
For brands, the worst response to a low-end disruptive threat is to pull up the drawbridge and retreat behind the brand. This is like a fragile monarch who flees to his castle at the first sign of peasant unrest. It’s a response that treats the brand as an unchanging, static asset to be protected at all costs, much like our frenzied king would use his castle walls and royal troops. Unfortunately, this is a counterproductive strategy that will simply cause a greater rift between the brand and its customers. Autocratic brands will go the way of kings. The strategic goal of a brand is to get closer to its customers, not to itself. It does so by helping customers get to where they’re going, not by holding them back.
“Creating customers” is the best brand strategy
Through their ability to create customers, brands have the power to thwart, mitigate, minimize or otherwise disrupt the very forces of disruption themselves. Brands do this at the customer end, rather than at the product end, using the creative suite of cultural riches available to them. (Cultural and context elements are far more valuable to brands—and to customers—than symbolic and persuasive elements.)
Brands create a customer when they put that customer on a path where he or she can create themselves. The brand delivers vision, resources, form, power and freedom. These are expressed through your offerings in such a way that the brand becomes a creative dialog for a mutual advance of company and customer. For the first steps in this process see, How to design a customer. (A longer post on creating customers is in the works.)
Value-based brands can outwit disruption
When I mention brands I don’t mean conventional brands that act as symbolic or psychic wrappers, and which function as stylized sales stimulants. I refer instead to value-based brands conceived and structured as avenues of innovation. These are brands designed to create customers by delivering new forms of value that customers can use. It’s this very act of “creating customers” that can blunt the onslaught of disruption. Creating customers changes the customer landscape from the customer end. As a value delivery process it moves the context of the customer to a different location (one demonstrably better for the customer), such that a potentially disruptive “good enough” product becomes a limited, “not relevant enough” product. In other words, by elevating customers, brands can make disruptor offerings fall short.
Brands are value delivery systems
We can’t lose sight of the fact that brands are value delivery systems, not fabricated fluff. They raise the customer bar, and the customer. They understand that the survival game doesn’t go to the brand that looms the largest. It goes to the brand that creates the fittest customers—who will carry the brand forward.
Making low-end disruptors “irrelevant”
To render low-end disruptors “irrelevant” brands can innovate aggressively on the customer side to grow their customers in a direction away from low cost, “good enough” initiatives. In this process, brands consider the whole customer, not the stereotyped “buyer” or “consumer.” Their goal is to deliver new ways for customers to succeed within a particular context. Through this approach, brands can unlock new customer dimensions and deliver value to new customer realms. For example, an iPod puts you in a new customer realm where you have power over your music. It’s the realm of a DJ rather than the spider hole of a music listener controlled by traditional CD’s.
Creative brand value is the key
If a customer desires a low-end (disruptive) product, what can an established brand do to change that customer’s mind? The brand can offer creative brand value in the form of customer value. After all, the customer seeks a solution context, not just an isolated product. (”Holes, not drill bits!” is still the imperative, but brands expand that to: “Customers want more of themselves.”) Building out the solution context is one brand pathway. Creating a stronger customer is another. (The iPod is a good example.) Co-branded products, endorser brands, sub-tier brands and more flexible lease/buy terms are options. More important, though, is a brand platform approach intended to migrate the customer to a level where disruptive alternatives can’t compete.
Some rules:
- A brand can change a market category to alter the disruption landscape
- If your product “overshoots” a class of customers, raise them up so it doesn’t
- The brand goal is to sustain the customer, not to have the customer sustain the brand.
Brands and “competing against non-consumption”
There is common ground between Christensen’s concept of “competing against non-consumption” and what I call “creating customers.” They share similar planning processes in that that they are non-linear and customer-focused. Because brand innovation has continuous customer inputs, and can even be customer driven at times, it can sidestep established hierarchies and can route around conventional categories. In this process it can often speed along at a faster clip than product innovation itself.
In addition, creating customers often entails brand innovation above and beyond current (or conventional) business models. It can take totally new pathways. That’s one reason why you find Harley Davidson branded nick-nacks in the matronly aisles of Hallmark Stores.
“Purpose brands” built “to do a job”
In a 2005 Harvard Business Review article called “Marketing Malpractice: The Cause and the Cure,” Christensen discusses the concept of “purpose brands” as brands that can be “hired” by customers to do a specific job, mainly by communicating product fitness for purpose. (Thus, if you want to have a Martini and feel Manhattan artsy, you hire a bottle of Absolut.) There’s insight in this approach, but it reflects a conventional view of brands as a naming and communications device, rather than as an independent, value-producing process. In my view that limits its applicability. Brands are not wage laborers. They embrace, and are embraced in return.