If you are going to take a break from digital “bliss” by putting your phone down, take the time to read this Harvard Business Review primer on augmented reality. “Augmented” is not the same as the “virtual” reality which your children love and of which you make fun. Augmented reality bridges physical reality with the data that all of the machines around us are generating utilizing a screen attached to our face (aka glasses). Think of a heads up display on a fighter jet.
So you can be on a plant floor, retail store, trading floor, or hospital and see the reality in front of you merged with the data that can assist you in making better and faster decisions. It’s well worth the read and sitting with your team to think through the implications for your business. One way we hope to use this technology is with our mechanical team so they can access repair manuals in front of the machine instead of going back to a terminal. Download the app before reading the article and it will literally jump out at you from your phone. This reality does not bite!
One of my good friends, Kevin Coupe of Morning Newsbeat, scored one of the best interviews of the new year. In his conversation with Tom Furphy, a former Amazon executive, he drills deep into Amazon’s secret sauce as well as its implications for the rest of us who are living through the “black plague in retail”. From overall retail to the impact of Alexa, it’s a great conversation, or as Kevin would say, “An Eye Opener” and you won’t find it in the Wall Street Journal or the NY Times. You can listen to the interview here: The Innovation Conversation
A theme for this year is going to be how big brands reinvent themselves to look “smaller” and more authentic. Between Amazon, Aldi and a generational bias towards less processed food, the big brands are under incredible pressure. But there is light in the tunnel. When the owners of brands invest in the “soft marketing” and brand building that is not price/promotion focused, they have a pathway to beat back the changing retail structure and dominance of low cost retailer managed private brands. The 2017 story of Cheetos creating a pop up restaurant is a great example what the winners will be doing over the next few years.
The Wall Street Journal: “The Spotted Cheetah, a pop-up restaurant small big brands specializing in dishes made with Cheetos, has sold out all of the roughly 300 reserved slots for its three-day run, say officials with PepsiCo’s Frito-Lay division that makes the snack … Spaces were gone within six hours of last week’s announcement of the opening, officials said, adding that there is currently a waiting list of more than 1,000 people should anything become available.”
“The Cheetos restaurant, helmed by celebrity chef Anne Burrell, will feature several varieties of the snack in close to a dozen dishes … Menu items, priced from $8 to $22, include Cheetos meatballs, Cheetos grilled cheese with tomato soup and Cheetos-crusted fried pickles. There are even desserts made with Cheetos, albeit the Sweetos variety of the snack.”
Sweetos? Now that’s something private label can’t do!
To understand Amazon‘s success, I need to digress a bit. A few years ago I visited a leading mid-western department store retailer on a regular basis overseeing their work with a brand they licensed from me and my partner. At the first few meetings in 2008 there were 5 people in the room (three from the retailer) as we meandered through a “new” corporate headquarters filled with empty chairs and easy parking.
Within two years the meetings were with a team of over 25 people (we were still 2 people) and my partner was introducing members of the retailer’s team to each other after fighting to find a big enough and unused conference room, never mind finding a parking place. Other than killing our brand along with many others they licensed during that period, the handwriting of bad management was literally around the overcrowded table around which no one could move forward.
With that story in mind, one of the better “digestif” pieces about Amazon/Whole Foods is in Harvard Business Review. The analysis focuses on investment in R&D and its clear where this story will end. But there is a chart buried in the story that is amazing. It lists, by year, the new initiatives taken by Amazon and whether it was successful or not. Red means bad and blue means success. Blue outnumbers red, but not by as much as you’d think. What is “Blue and Red”, is how innovative Amazon is relative to all others. We all knew this, but the chart captures the epic pace of innovation.
As I said in an earlier post, this is the Waterloo moment for the grocery industry and all of supporting brands because of the private label angle. Scott Galloway of L2 has a chart that illustrates private label penetration at Whole Foods vs Amazon Fresh. Brands must innovate and fast.
So what is the HBR secret innovation sauce analysis? “Amazon CEO Jeff Bezos famously believes that if you can’t feed the team with two pizzas, it is too large”. Thank God my competitors don’t even think of pizzas! There is clearly much more to innovation, but as they say, size matters.
America has the highest per-capita amount of retail real estate of anywhere in the world. And with the digital world crashing the world of brick and mortar, a lot of “b” and “c” malls need major changes in their customer bases.
According to some analysts, over 400 of the country’s 1100 malls may close in the next few years. Fortunately, Adam Smith (with some help from Henry Ford), is quietly riding to the rescue. The WSJ had a story titled “The Mall of the Future Will Have No Stores” about the re-purposing of a Michigan mall into a combo traditional mall by re-configuring one of the major retail anchor spaces into significant engineering design center for Ford Motor Co. for almost 2,000 of employees. The key to all of the re-purposing around the country has been to add either office space or residential into the retail mix.
Nothing like a market evaporation to bring out the creativity. My bet is we are entering a new golden age of Malls and far from the headline of the “Mall of the Future Will Have No Stores”. Or as Henry Ford said, “Failure is simply the opportunity to begin again, this time more intelligently”.
There is no better moment than realizing your brand is strong enough to move outside of its original category into an adjacent category or even make the epic move to a “lifestyle” brand.
The NYT had a great story that addressed the move of brands such as Aston Martin into the lifestyle category. Aston has licensed its name to a line of residential apartments in Miami, speedboats and sunglasses all derived from its “art of living” experiences which built upon the brand’s storied history. The key was finding partners who were as dedicated and knowledgeable about branding as Aston.
But the fun part of the article chronicles the bad moments when brands reach for a “bridge too far” or found the wrong partner. Colgate brand frozen dinner entrees, Zippo perfume and Harley Davidson cake decorating are worth learning about. Of course being the NYT, they could not “resist” throwing in a Trump licensing angle too.
The reality is that licensees who are sophisticated trustees of the brand’s adjacent
core values usually add value. The issue is when a large company sees the dangling image of guaranteed minimum royalties without taking a deep dive into brand management issues that come from choosing the wrong partner. As the article notes, “shoddy” work can be catastrophic for a brand not only in the extension, but in its core product.
The article quotes the brand expert Larry Light “Just plopping a brand logo onto a product… is a recipe for failure. Giving somebody the logo and then hoping the execution will live up to the brand promise-that’s a very risky strategy”.
Power Stick frozen entrees? Has a whiff of success, n’est pas?
It’s not often I can comment on a well written industry relevant story where we are the main part of the story. Enjoy the read even if it finishes with a bit of the “New Yorker” echo chamber view of the world. The reality is that our part of the “highway” is always at risk from over regulation and unfair tax policies that challenge entrepreneurial companies disproportionately than our larger established competitors. But that’s the best part of the American highway…You can always move!
Read the Full New Yorker article written by Adam Davidson HERE.
How much of our time is spent thinking how to improve our company’s offerings? We update labels, fragrances, and even names of items on a regular basis. Are we wrong to obsess?
According to one of my heroes, the former P&G CEO A.G. Lafley, we are on dangerous ground. In an intriguing Harvard Business Review article, he discusses why consumer innovations often “flame out”. His answer, based on recent advances in brain science, is that “…the mind loves automaticity more than just about anything else-certainly more than engaging in conscious consideration.” Or in English, “Customers don’t want to spend the mental energy needed to choose between products.”
When innovating a product and brand, a progression from the past is always better than a break from the past. Poster child of how not to make this change is Instagram’s changed icon and how Facebook destroyed MySpace. The article also has a very interesting sub section on small brands (could be us except we dominate our retail channels with two channel focused mega-brands). It’s titled, The Perverse Upside of Customer Disloyalty. Basically, it says that the market for most product categories is large enough to support a small brand that consumers occasionally purchase when confused or not loyal to the leading brands. They try the fringe brands to which keeps them in the market, but not enough return to help them break through.
So don’t engage in automaticity and read the article!
A friend in the venture capital world just sent me this story about an interesting idea that brings unit-dosing technology mixed with disco era chic to an anti-perspirant near you….. I’m sure there is a market for the product, but the more interesting discovery was the website that curated the story: www.nocamels.com
Continue reading “Disco Chic Under Your Arms? It Leads To A Better Place…….”