To Turbo Charge Your Innovation Efforts, Lean into Culture

on Wednesday, 30 April 2014. Posted in Innovation

How did it happen that the practice of innovation has come to be so, well, not innovative? For years, the majority of new products and services introduced have been line extensions or enhancements of existing products. The absence of the truly novel in the name of product innovation has been well documented, by Nielsen, Mintel and NPD. Their annual new product reports have become a depressing drumbeat of failed attempts to build a better, more appealing mousetrap by emphasizing better, faster, cheaper features.

In her book, Different, Harvard professor Youngme Moon describes most marketing innovation as simply adding features (augmentation by addition) or creating specialized versions to address specific audiences or needs (augmentation by multiplication). When consumers do not see so-called ‘new’ products as innovative, the marketing arms race paradoxically leads to homogenization of whole categories of goods. If you have any doubts about this effect, simply try walking through CPG category aisles of any grocery or drug store and imagine you are approaching the category for the first time. The proliferation of me-too toothpaste, shampoo, soap, soup, and other product offerings can be overwhelming. 

 

These attempts to distinguish through incremental innovation in the ‘red oceans’ of mature categories rarely lead to significant value creation. A consulting firm, Doblin Group, describes 7 types of innovation that lead to a shift in value creation.

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Research by Doblin Group found that the majority of the innovation activity of the past ten years has been aimed at improving the offering – e.g. creating bigger, better, faster product performance, systems and services. Their analysis shows that a focus on offering innovation accounts for less than 10% of the cumulative value created by innovation efforts over the past ten years.

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For brand marketers charged with creating value through innovation, this finding requires serious consideration, particularly given that revolutionary technologies and opportunities for business model innovation are difficult to achieve even for entrepreneurs and nearly impossible to sustain, especially within the brand structures of an existing company. Where is the opportunity for meaningful innovation?

 

Leaning into Culture

In their book, Cultural Strategy, authors Douglas Holt and Douglas Cameron advise marketers to leverage the immense power that comes from attaching a brand to the right cultural note at the right time. This type of innovation does not require breakthrough technology or augmentation. Rather, it requires deep insights about customers, context and the brand’s existing cultural assets. These assets may result from deeply held values, key business practices or historic cultural expressions that people still remember. Leveraging them can elevate a brand’s meaning and provide powerful differentiation without the need for distinguishing functional benefits.

There are many well-known stories of brands that successfully tied their fortunes to cultural innovation, including Jack Daniels, Marlboro, Harley-Davidson, Levi’s, Snapple, Ben & Jerry’s, Starbucks, Dove, Nike, Vitamin Water and Patagonia. In each case, the product offering itself was not necessarily the first or only one of its kind. Yet smart communications, some not even incorporating traditional advertising, but other more targeted (and cost effective) touchpoints, cued to consumers that these brands were more than the sum of their product offerings. In the process, these brands became cultural symbols and some became icons.

Discussion often reduces the reasons for these brands’ successes to a random event, difficult to duplicate, and serendipitous. And in some cases serendipity does play a role, but not without considerable trial and error. Yet the authors maintain that others can achieve similar success from a systematic disciplined approach to cultural relevance. Such an approach emphasizes remaining attuned to the cultural context in which consumers make choices and listening for consumers’ latent demands for new or rediscovered ideologies. They describe ideological opportunities this way:

“People always want better functionality. Ideological opportunities, in contrast, are produced by major historical changes that shake up cultural conventions of the category, what we call a social disruption. These shifts unmoor consumers from incumbent brands, and prod then to seek out new alternatives. It is an emergent kind of opportunity that is specific to a historical moment and a particular group of people.” (p. 12)

 

Dr. Dre Catches the Beat

beatsWhen a brand possesses a distinguishing feature, adding cultural dimension can turbo charge those differences. One example of a brand that elevated a modest product difference through adept cultural strategy is Beats headphones, now a $1 billion business with a 59% share of the premium headphones market. The technology was nothing revolutionary, in fact it has been described as ‘underwhelming – or worse – and overpriced.’

 

And its celebrity associations alone would not have been sufficient to explain its success, as a succession of celebrity endorsed technology products will attest (Beyonce/Samsung, Gaga/Polaroid, etc.). Nor is it due to product quality or design, which are better exemplified by Bose or Skullcandy. According to a recent Slate magazine article, the real reason for Beats’ success is its deft appropriation of a cultural desire for rebellion, as represented by bass sound.

 

 

"In the end, though, Dre is selling something few besides him could credibly offer. In a way, he’s selling the same thing he has since the start of his career. Beats by Dre aren’t really cutting-edge technology. They aren’t trendy fashion accessories at heart, either. Beats by Dre are actually bass-delivery systems. Bass has signified both sex and rebellion at least since Duke Ellington got the ladies on the floor in 1920s. From the rabble-rousing of Sly and the Family Stone’s Larry Graham and Funkadelic’s Bootsy Collins, to Johnny Rotten ditching the treble wail of the Sex Pistols for the dubby rumble of PIL, to American teenagers ditching rock for rap in the late ’80s (and European teenagers doing the same for rave), all the way up to today’s generation waiting for the drop. Bass has always been the quickest way to piss off your parents and dazzle your eardrums…. Who cares if the nerds quibble? Beats by Dre deliver the bombast. People want them, and love them, because bass is the place Dre’s fans want to be."

 

 

Despite significant competition, Beats maintains its $299 price point and its pre-eminent position as the coolest headphones. Dr. Dre himself seems to understand that it’s not about being the best, it’s “all about point of view and taste.” Beats President, Luke Wood, continues to listen closely for what he describes as ‘the tug.’

 

“I always go back to my experience in the music business,” says Wood. Today, as then, Wood looks for the “tug”—the little sign that he has a hit. Then he trusts his gut, and doubles down. Back in the day, a tug could be an album that gets sudden critical acclaim or a band that suddenly sells a lot of merchandise at its gigs. Now, he says, he gets the same sense from how fans respond to Beats’ ads and products.”

 

Listening for Emerging Ideologies

What are the cultural tugs we should be listening to today? Clearly, Millennials represent a vast under-tapped ‘blue ocean’ of potential social disruption. Their choices continue to surprise us, and often represent new streams of cultural thought.

 

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This week we noted an article describing young women’s fascination with fur. Driven by interest among Millennials, fur sales grew 10% in 2013 to $1.7 Billion, and to $4 Billion when trim and accessories sales are included. What could be more out of the cultural mainstream than fur? As a counterpoint to today’s emphasis on political correctness, the literal embrace of fur makes a statement about individuality, luxury, sensuality. Even vegan, Beyonce, has been known to sport fur.

 

When we checked with our Millennial fashionista friends, they confirmed that fur is fun, not that expensive and definitely au courant. New York’s Fashion Institute of Technology professor Karen Kroner confirms that her students are “in love with [fur].”


“I have never seen such overwhelming interest. Perhaps because they didn’t grow up with it, she says, “It’s exotic to them. It can be purple, or fluffy. It doesn’t have to be an old lady coat, and there seems to be something inherently sensual about it. It’s not that these kids believe in cruelty to animals. They just see fur as part of a life cycle, and are smarter about the environmental consequences of all fabrics, whether it’s pollution created by cotton farming, or the way synthetics clog up landfills.”

 


Sometimes the real innovation is not following the trends, but looking for the counterpoints. Interestingly, it has been noted there is no cultural outcry when women refer to other women as ‘girls.’ There is a “Girls” TV show, Zoey Deschanel is “New Girl” and ultra-feminine ‘resort’ fashion wear brand, Lilly Pulitzer, is on fire among sorority women on many college campuses. These counter intuitive cultural trends may actually represent early indications of a ‘latent ideology,’ the emergence of a new kind of sensibility, one that does not rely on cultural tropes or political correctness. If so, brands like J. Crew and Lilly Pulitzer who represent ‘classic’ fashion should be listening closely for the underlying ideology and looking for ways to appropriate it.

 

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 The “Free to be Me” attitude emerging among young women may spill over to other areas beyond fashion. There is cachet in rebelling against rebels, challenging what’s accepted as ‘cool.’ As with choosing spandex over cotton, there may be more of a statement to be made with going with the practical over the too precious. Etsy is not for everyone, and choosing a mass produced beer may make as much of a statement as choosing a hand-made craft beer.

 

As to whether these echoes of disruption are indications of an emerging ideology, only time will tell. But those interested in true innovation, would be well advised to listen closely for opportunities to innovate based on ideology, not just product, processes and finance.

 

 

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