In August 1997 two guys called Reed and Mark went to a record store in Santa Cruz, California and bought a used CD.
Next, they went to a gift shop on Pacific Avenue and bought “one of those little blue envelopes that you put greetings cards in”. Then they wrote Reed’s home address on the envelope, put the CD inside and dropped it in a mail box.
The next day Reed came to pick Mark up. He had the envelope in his hand. It had arrived at his house with an unbroken CD in it.
That was the moment when they looked at each other and said, “this idea might just work”.
Reed was Reed Hastings. Mark was Mark Randolph. The idea was Netflix. You might have heard of it.
Hastings believed that within a decade the average household internet connection would have the capacity to carry such huge amounts of data that entire movies could be instantly delivered on demand to a personal computer or TV.
His idea was to build Netflix as a DVD service first and then “eventually the internet would catch up with the postal system and pass it”.
Hastings knew what the end game looked like. But he wanted to know if he could take the first step.
So, he mailed himself a single CD.
Why are we talking about this? You can spend a lot of time and energy developing long term strategies. A big innovation strategy that is going to change what you sell. A big channel strategy that is going to change where you sell. A big promotional strategy that is going to change how you sell.
The thinking looks great. Everyone is excited by the opportunities. You can’t wait to share it internally and externally.
You don’t know if you can develop the ideas in your innovation strategy. You don’t know if you can sell in the new channel. You don’t know if you can change the way you promote.
To find out you need to take the first step.
So, how can you do this?
Figure out what your first step could be. Try it. If it works take a bigger step. For instance…
Before you launch a new product everywhere…try launching it in one retailer or channel. First give it the chance of succeeding there. Then look to roll out to other retailers and channels. This is the approach Charlie Bigham’s have taken on meals and now on puddings.
Before developing a new product to target a new occasion…try using an existing product to target that occasion. First see if more shoppers start using your product for the new occasion and then decide if it’s worth designing a specific solution for that occasion. Hellmann’s and Baileys are good examples of brands taking current products into new occasions.
Before making the switch to a new low discount promotional strategy…try running a different type of promotion (e.g., bundled deal, buy X to get Y, limited discount) to test the water. First, see how that impacts uplifts and, importantly, profitability. If it works, rebalance over time to lower discounts and more differentiated promotions. Peroni are a great example of a brand who promote regularly AND effectively.
Before rolling out a new message on your pack and POS…try putting the lead message as a simple call out next to your product image online. First see how that drives your online sales. Then see if you roll it out to all communication. Innocent are great at doing this with their “1 of your 5 a day” or “we never ever add sugar” call outs online.
Before designing the big new category fixturisation solution…try putting some simple fins at shelf to aid shopper navigation. First, see if the simple, easy implementable solution works. Then decide if you need to add all the bells & whistles (a tip – you probably won’t). M&S new sandwich fins are a great example. Blue for Fish. Yellow for chicken. Pink for meat.
For any journey you need to know where you are heading.
To figure out whether you can get there you need to take the first step.
You need to put the CD in the post.
Feel free to forward. We’re taking a summer break from blog writing. Don’t miss us too much, we’ll be back in September.