Have you got the right growth model?
In 1968 Dick Fosbury won the high jump Gold medal at the Mexico Olympics.
In itself, that’s no big deal – someone has to win the Gold. What was a big deal, however, was how he won it.
Before 1968 there were two common high jump methods. One was the ‘Scissors Jump’ where the athlete threw one leg and then the other over the bar before landing on their feet. The other was the ‘Western Roll’ which saw the athlete fling himself over the bar face down. Valeriy Brumel used this method to win the Gold in 1964.
At high school Dick Fosbury used the Western Roll technique. His best effort using this was 1.63m – more than 60cm short of the world record at the time. Given that Fosbury was 6ft 4in the conclusion was that he was a pretty poor high jumper. But he kept going.
In 1963 Fosbury asked his coach if he could change to a version of the Scissors Jump. In the next event he tried something different. He lifted his hips, which caused his shoulders to arch back and he went straight over the bar. He did it again and again. He cleared his previous best by 15cm, which, in a sport where improvements are measured in fractions of a centimetre, is massive.
This is how Fosbury described his new technique. “I take off on my right foot. Then I turn my back to the bar and then kick my legs out to clear the bar”. The Los Angeles Times said “he goes over the bar like a guy being pushed out of a 30th floor window”. His technique – ‘The Fosbury Flop’ – won him the 1968 Gold Medal and changed high jumping forever.
So, why are we talking about this? Well, in our industry we see a lot of focus on small changes. The standard growth model for brands is based on line extensions. These line extensions provide a bit of new news. They get supported with some communication and promotional activity. They give a small bump to sales. But the sales growth doesn’t last long. So you do another line extension. Then another. So do your competitors.
Before you realise it, there are now lots of similar products doing very similar things. You can become blind to it. Until the new brand enters the category. They start to do things differently. They start to steal share. They are jumping over the high jump bar backwards whilst you are still jumping forwards.
So, if line extensions were the old model, what should the new model be?
Step 1 = Simplify & Clarify. A lot of NPD doesn’t stand a chance. It is another product launching into an overcrowded category. Not enough shoppers are going to see it. The current Retailer answer to this issue is to reduce range. This is good and necessary. But it is not the only answer. Reducing range is one step. But a crucial second step is merchandising clearly. How clearly sub categories and segments are displayed. How clear price tiers are. Good/Better/Best used to be a big thing. It might still be, but you wouldn’t know it when you look at many categories in store. For categories to thrive, for new activities and products to thrive, the landscape needs to be clear in the first place.
Step 2 = Invest Behind the Winners. We are always amazed by how much resource is invested on products that haven’t sold yet (NPD). Nielsen could probably calculate the amount of money that is spent supporting products that don’t exist 3 years later. Think about the resource that goes into trying to protect (from de-listing) SKUs that sell very little. We often spend more time trying to protect stuff that doesn’t sell, than drive the stuff that does sell.
What if you reinvested that resource behind the products that matter in a category? To drive a clear advantage on the products that most shoppers buy. For instance, if you are in the soup game, you want to have the best tomato soup. Having a new Broccoli & Stilton flavour is nice, but it’s not where the action is. A 1% increase in sales of tomato is worth a lot more. Follow the money.
Step 3 = Deliver Real Innovation. This is easy to say but much harder to do. You may not be able to come up with the revolutionary new product. That’s OK, not every innovation is a game changer. But what you can do is put guardrails around innovation to avoid products that add little or nothing. This allows you to be clear about what ‘innovation’ should mean in your category. It could be superior delivery on the drivers of choice. It could be new formats. It could be products targeted at new occasions. These guardrails should set the direction for innovation. They should also help you judge innovation as it comes through. If a product is outside the guardrails you probably shouldn’t be launching it.
We have told ourselves the line extension model was innovating. But, the reality is that it has ended up complicating.
A lot of brands are still jumping forwards over the high jump bar. The innovators are jumping backwards over it.
Feel free to forward. Have a great weekend and speak to you next week.