Are dinosaur brands doomed by disruption?

Hannah Rowley, Marketplace Co-ordinator at BITC, is part of a team, currently working on a Purpose Toolkit to provide practical support for companies on the emerging agenda of corporate and brand purpose.  Here she take a look at some of the key areas bigger businesses should focus on to make sure their brands remain relevant in today's disruptive, hyper-connected marketplace.

Disruptive innovation is a challenge affecting all industries. Keeping customers loyal and engaged now means negotiating a noisy minefield of new technology, customer distrust and disruptive changes coming from all quarters.

Smaller companies are able to adapt and innovate easily, but can big incumbent brands keep up? Are they dinosaurs, fated to be overtaken by more nimble competitors? Or do big name companies have a guaranteed place in tomorrow’s marketplace due to the wealth of resources, knowledge and reach they have? 

To ensure this, they need to unlock the power of customer engagement and innovation.  Here are three areas we believe businesses should focus on to achieve that.

Collaboration

Whether it be Silicon Valley giants like Cisco or High Street stalwarts such as BHS, many large firms have been slow to adapt to new technologies and customer preferences, instead struggling on with outdated ways of working.  Others, meanwhile, have been using and fostering collaboration to try and stay relevant.

One industry in which this can be seen is banking.  This industry has seen a new breed of fintech (financial technology) companies challenging traditional banking service providers, often offering new services. Research from Accenture found global fintech investment growing 75 percent in 2015, exceeding $22 billion in value.

Some established banks are finding new ways to work with these disruptive entrepreneurs. Barclays’ Rise programme, which operates in sites including London, New York and Mumbai, creates a community for entrepreneurial individuals to collaborate within, disrupting the business models of the past to gain access to potential partners and finance.

“By accelerating the development of groundbreaking products and services, we know that we can help to keep Barclays at the cutting edge of financial services, all while helping to revolutionize the industry,” says Michael Harte, Barclays’ Chief Operations and Technology Officer.

Another method the banking industry has adopted is mentoring and investing in new companies. The FinTech Innovation Lab set up by Accenture in 2014 provides a link through which large financial institutions such as HSBC, Bank of America Merrill Lynch and BNP Paribas mentor start ups for 12 weeks. These start ups then get the chance to pitch their ideas for investment.  As HSBC notes, sponsoring innovation of this sort is important for making banking “simpler, better and faster for our customers”.

The litmus test for all of these schemes is whether experiences gained are then brought back into the commercial engine rooms of the bigger businesses involved, or whether they function simply as one-way CSR.  The potential rewards are great - 1.5 million adults are still unbanked in Britain and outside-in thinking could have the power to deliver social impact and unlock new markets for those involved.

Customer-led innovation

When it comes to brands, customers are making their voices heard louder than ever.  Edelman’s 2014 Brandshare Report found that customers are looking to have more meaningful relationships with the brands they fill their lives with. This must be seen against the context of the importance of digital sharing and consumption today, where 92% of consumers are more likely to trust peer review over brand advertising, and 88% of consumers trust online reviews as much as personal recommendations. Given this, how attractive might it look to a consumer if a company’s product innovation and business strategy was driven by their peers?

Online platforms offer businesses the opportunity to engage consumers in new and inventive ways. One example of a company offering real engagement to consumers is Salesforce, which uses its Idea Exchange platform to let them suggest new product features and comment on each other’s ideas. This gives Salesforce new ideas and real-time user feedback on those ideas.  As well as being good business sense for Salesforce, this is a responsible way of running a business, offering a democratic way to give customers a voice and open up decision making.

Inevitably, not all customer-led innovation will spark the “next big thing”.  As Deloitte have noted, it’s “important to be realistic about what a customer-led innovation process can deliver.”  Yet collaborating in this way can enable companies to develop new products and services more quickly and cost-effectively.

But could brands go a step further by engaging with customers on the social issues that matter to them and their communities, as a way of connecting on a deeper level with increasingly conscious and skeptical consumers? Initiatives like Spark Something Good, run by Marks & Spencer, have the potential to forge a unique way of building relationships with customers beyond transactions, helping the business to better connect with and learn about their customers.

Have leaders at all levels of the business

You may be surprised to learn about some of the well-known products that were the result of employee innovation. Sony’s Playstation and Facebook’s infamous ‘Like’ button both stemmed from employee ideas. The ideas of employees are an asset businesses can easily tap into, so long as they create a culture that allows them to flourish.

Take 3M.  The company has based its profile as a world-class innovator on employee engagement for many years (with resulting products including the Post It Note!). By providing employees with a variety of opportunities and forums for innovation and collaboration, it gives them the freedom to create a pool of practical ideas that are potential business opportunities.

3M’s scientists share knowledge through the Technical Council and Technical Forum. Employees are given a set amount of time per month to be able to follow their own interesting projects. 3M has succeeded because its system encourages employees to be resourceful and to take the initiative, which motivates them to contribute their energy and insight into achieving the company’s goal.  Similar methods are used by Veolia, our Responsible Business of the Year, to engage its employees in innovation.  Its Innovation Forum has already given rise to seven projects that have been developed for market, generating a combined revenue of over £1m.

Crucially, ‘ordinary’ employees, rather than costly R&D labs may be more likely to suggest useful market solutions to real-world issues that they as citizens (and consumers) care about.

And, more and more, employees crave meaning from their daily jobs. Deloitte research revealed 60% of Millennials want to join businesses with a higher purpose. With the trend for purposeful innovation on the up, encouraging staff to be ‘social intrapreneurs’ is also a way to attract talent and unlock new ideas.

These are three of the nine hallmarks Business in the Community has identified of truly purpose-driven businesses and brands. The hallmarks form part of our Purpose Toolkit, to be launched by our Marketplace team this October, which will provide practical support and guidance on the emerging agenda of corporate and brand purpose.