Are you really playing to win?
Think about these 2 scenarios.
In scenario 1 you receive a guaranteed £50. In scenario 2 a coin is flipped. You call it right and you get £100. You call it wrong and you get £0. Which scenario would you choose?
Your choice says a lot about your attitude to risk. If you would take the guaranteed £50 you are more risk adverse. You prefer certainty. Whereas, if you chose the coin flip, you are more risk taking. You would rather take the risk of getting nothing at all in order to give yourself the chance of getting £100. Indeed some of you would still choose the coin flip even if the other guaranteed option was increased to £60. Maybe, even £70 or £80.
So, why are we talking about this? Well, we think a lot of the things that get done in our industry are designed to minimise risk. This is particularly the case with bigger companies. They have detailed planning processes that are designed to get them to more certain outcomes. For instance, many of them will have a detailed innovation process. It has a number of stages that a project has to get through before it is ready to go to market. It is designed to reduce the risk of failure.
What is the best way to get a project through each stage gate? Reduce the risk. Less risk, more chance it gets the green light at that stage. But, if you minimise the risk at every stage of the innovation process, you end up with something that has very little risk by the time it comes to market. Good, right? Wrong. For success in the marketplace it is probably the worst thing. Yes, we might not fail, but we are also pretty unlikely to succeed.
The more we try to reduce the risk, the more we can actually increase it.
So, how can we do things that appear more risky, but are actually less risky?
Proposition & Communication. The safest thing to do is give shoppers lots of reasons why your product is good, right? The more things you say, the better they will think the product is. So, you load packs and communication with lots of messages. You cover all bases. But, all this really does is overload the shopper.
And this can become a bigger risk. Many shoppers will just filter out all those messages. Others may look, but you lose control over what they see – shopper A sees message A, shopper B sees message B. And so on. This can be a particular problem for brands at a price premium. They feel pressure to justify that premium, so load up the messages. However, the most important message, the one that really justifies the price premium, gets lost.
Mindset shift: We think the biggest risk is prioritising and only communicating one thing. When, actually, the biggest risk is not doing this. To play to win, you need to have confidence in your core proposition and communicate it in a simple and compelling way.
Promotions. Everyone else is promoting heavily. The sales target is looming. How do you minimise the risk? You do an extra 1 or 2 promotions. You go deeper with the discount. That will protect share, get you over the finishing line, right? Well, yes, it probably will.
But it stores up problems for you next year and the years after that. You’ve got shoppers to buy into the deal not buy into your brand. You’ve reset their expectation of what a fair price for your brand should be. For any brand facing competition – from other brands, private label, discounter brands – protecting your brand equity, protecting the key reason to buy your brand, is essential. If the battle becomes about price and discounts there is only one winner – whoever is cheapest or giving the biggest discount.
Mindeset shift: We think the biggest risk is scaling back on promotions. When, actually, the biggest risk is not scaling back. To play to win, you need as many shoppers as possible to be prepared to buy your brand at full price.
Innovation. Breakthrough innovation can be a risk, right? What if it fails – that is a lot of money wasted. What if it does well, will it cannibalise a lot of your existing sales – where will that leave us? So, often you play it safe. A brand refresh, a new flavour, some new news to protect shelf space. You know you can do it and the business is set up to do it. It will get signed off, because the last 3 got signed off.
Meanwhile, an emerging brand is working on the breakthrough innovation. A product that will grab shelf space, that will steal sales from your core and that retailers will get behind and support. A competitor has done to you what you could have done to them.
Mindset shift: We think the biggest risk is moving away from refreshes, variant launches. When, actually, the biggest risk is not doing this. To play to win you need breakthrough innovation that excites shoppers (and slightly worries you…)
Guaranteed £50 or a coin flip for £100 or £0? Playing not to lose – take the £50. Playing to win – flip the coin. In order to win, you have to be prepared to lose.
Feel free to forward. Have a great weekend and speak to you next week.