Products, Ventures & What I Learned

Prior to leaving Wolff Olins, two of our long running discussions related to the importance of product and technology relative to brand and the need for the agency to experiment with new business models beyond the traditional project/billable time mentality.

Although these were generally two separate conversations, there were some of us who believed quite fundamentally that the gap between product, brand and technology is narrowing and that in the future only cohesive experiences that connect these dots will win.

Rather than continue to talk about it, we decided to do something about it and experiment with creating something for ourselves rather than for a specific client.

We called the program “Project Venture”, and recently the first product from this approach was launched. Whtespace is a collaborative email journal designed to help people curate and navigate the web. It’s really great and you should check it out.

However, rather than get into the details of the product itself I thought I’d write about some of the learnings that came out of the initial process, which might help others considering a similar approach.

The overall hypothesis that we worked from was that we could identify an idea for a new digital product/business and a founding team from within Wolff Olins. That we could then coach and fund this team to quickly create a product, which we could then launch into the world in order to understand whether or not it would be viable. If viable, we’d then investigate potentially attracting further funding or maybe even sell it to someone.

This is what I learned:

1. Put learning at the heart
There’s no guarantee that anything you create will make any money. 75% of all new products fail, less than 5% of all startups succeed. With those kind of odds stacked against you, there has to be an inherent value beyond making money. For us, the experience of identifying a potential product, building it and getting it out into the world was an incredible learning opportunity. It was a chance to put theory into practice and gain a deeper understanding of some of our clients issues. Putting this at the heart, rather than a revenue target, freed the process up and took a tremendous amount of pressure off of what was essentially an experiment. We simply didn’t know what the final output would look like. This isn’t to say that we didn’t want to do something that would make money, we did. We just didn’t put undue pressure on it having to succeed straight off the bat. I’m glad we did that, and I think the product is better for it.

2. People generally aren’t entrepreneurs just waiting to be released
There is an easy to make, but flawed assumption, that people in creative businesses are inherently entrepreneurial and that they just need the right opportunity to release it into the world.

The truth is rather more complicated. Rather than having a drawer full of business ideas waiting to be brought out, we instead found that although people were excited they were also quite intimidated. They were concerned that their ideas perhaps weren’t very good, or that they didn’t know how to be entrepreneurial.

To get past this, we created a very simple brief:

“What is a problem in your life that you think needs to be solved?”

We weren’t asking people to figure out the next Google or Facebook, but we did want them to think about things they’d like to see improved in their own life.

3. Coaching beats competition
In our original plan, we wanted to do things in a very pure startup and VC kind of way. We wanted people to come up with ideas that they would then have to “pitch” to a venture board. Because of point 2 above, we quickly realized that we’d have to abandon this approach. Instead of “pitching” ideas we instead created drop-in casual advice sessions where people or teams could discuss their ideas and be coached in how to tweak them into something really interesting.

After a few weeks of these coaching sessions we had six groups who felt they had really good ideas they wanted to share with the rest of the office. At that point, we turned their five-minute pitch presentations into a bit of fun and asked everyone viewing for anonymous views on their preference.

While a small venture board (made up of people from different seniority levels from most junior to most senior) made the final decision, everyone got to participate in this entire stage of the process.

4. Get help
Wolff Olins weren’t a digital product development company, so we had fairly limited capabilities when it came to building a product and keeping everything under control. To help, we reached out to the very nice folks over at Prehype. Their approach meant that we could deliver the coaching sessions, and focus not just an idea with commercial potential but also something we could build in a very lean way with a limited financial commitment.

Getting this kind of outside help was also beneficial in other ways. It gave an honest broker aspect to the process, gave us new and different insights and created a learning and coaching environment for skills that we didn’t already have.

5. Make everything as clear as you can upfront
As we started the process, there were some areas we didn’t have answers to. The biggest was the question of who owned what and who would benefit if it made any money. Unfortunately, we had some unanticipated accounting and financial issues here that really held up getting to a definitive answer (Which to be honest, I’m not really qualified to get in to).

The net result, unfortunately, was a lack of clarity to people in the organization around what they’d get out of it should their idea be chosen. I guess its human nature to assume you have a multi-million dollar idea even if the chances of its success are extremely low!

If doing it over again, I’d recommend being clear upfront about who owns what, and also be clear that the value proposition to the employee isn’t just about what they get out of it financially, but also the learning they get from what the agency is putting in.

In our case, Wolff Olins was funding the process, the employee time, the Prehype assistance, a development budget and some financial support for running the business post-launch.

Effectively, this was a zero risk proposition to the employee, with the opportunity for the winning team to learn from top digital product people how to get something new out into the world.

I think the overall driver of success though lay how flexible we were. When things weren’t working we changed them, creating an extremely positive experience in the process. We learned a lot, we had six really great ideas to choose from, and the one which was chosen has turned into a really interesting version 1 product.

I know that Wolff Olins intends to continue doing more of this in the future, and that everyone involved has learned tremendously about how to align brand and product in a new way.

I’m certainly very proud of everyone who participated. I know that I learned a lot, and I really look forward to Whtespace having great success in the future.

Image borrowed from http://www.whtespace.com

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Building Marketing Products (Redux)

Henrik asked yesterday about my post on building marketing products. He asked the simple question of when a marketing product is valuable and when you might use one? And it’s a fair question to ask.

Where this approach seems to work best are where three things are happening:

  1. The market you’re in is intensely competitive
  2. There are many available substitutes and core product performance is commoditized
  3. Where loyalty is declining, and meaningful differentiation through traditional means is harder and harder to achieve

By imbuing the marketing of the brand with an additional layer of utility, you bring the product and the marketing of the product together in a way that has not previously been possible. Arguably, Pepsi Refresh is another example where a new form of emotional differentiation is being created within an intensely competitive environment.

So what is the value and who should be doing this?

I think the value, very simply, is in a new ability to make the core product more desirable than that of a competitor. Essentially by creating an additional layer of customer focused usefulness within the brand that is designed to complement and enhance the utility of the product (rather than the brand disconnecting from the product as sometimes happens).

Who should be doing this? Probably any marketer whose category dynamics are intensely competitive, increasingly commoditized and where loyalty and meaningful brand differentiation are either in decline or not where they need to be.

With so many categories facing exactly these challenges, I’d be surprised if we didn’t see an explosion of marketing products in 2011. Some of which might even become amazingly successful in their own right.

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Building Marketing Products

Nike+
There is no doubt that the world of marketing is changing fast.

One observation I’m fascinated by is the incredible rise in what I would describe as “Marketing Products” such as Nike+ or the Geico Glovebox app.

While R/GA would prefer to describe Nike+ as a platform, I think the product analogy is both more accurate and possibly more interesting.

Traditional marketing communications has borrowed the mindset, metaphors and ideas of the entertainment industry. Seeking to create advertising and marketing programs that entertain their audiences as much as selling to them. Just think of all the ‘funny’ superbowl spots or all of the ‘sticky’ online games that brands have created.

Now, however, the possibilities enabled by connected technologies mean that marketing can instead borrow from a different set of metaphors, those of product development. Instead of being concerned primarily with entertainment and amusement, marketing products can be created that are more focused on solving customer needs and creating utility. In essence giving marketing itself a value proposition to the customer.

And this, of course, fits much more with what consumers say they actually want. A recent Harris Interactive study for EffectiveUI found that consumers primarily want branded apps that make it easier or more convenient to do business with that brand, with almost 40% being unhappy with current branded apps and 75% feeling that an app should “do exactly what I want it to do”.

This data suggests that the many brands out there who look at apps as nothing more than mobile microsites are probably doing their brand harm, and certainly aren’t adding value. It seems that when people are aware of what is possible from technology, the underlying entertainment metaphor so beloved of traditional marketing communications begins to lose steam. And while not all marketing products will be delivered as apps I think the example holds true.

What is key is that marketing products be inherently useful, as opposed to simply marketing communications which are often seen as wasteful. This has the potential to radically change how people view marketing. Instead of “it’s just marketing” meaning something is essentially untrue and irrelevant, the marketing proposition itself begins to inherently add value by layering utility on top of the actual product. A product that may in fact be quite commoditized, such as car insurance.

In an effort to distil what I think constitutes a marketing product (and this is by no means the final word, so please feel free to make suggestions) I’ve observed the following 5 principles:

1.USEFULLY SOLVES PROBLEMS
– works against a real customer need and addresses real pain points that exist

2.HAS INTRINSIC VALUE
– something people would pay for (even if they’re not asked to)
– something that ideally is cost neutral in terms of operating expenses

3.CREATES ACTIONABLE INSIGHTS
– data can be parsed to generate usable customer insights
– drives user data back to marketers

4.BUILDS THE BRAND
– creates a story about the brand through the experience
– encourages brand recommendations
– builds on the core, creates loyalty by providing utility competitors don’t have

5.SAME COST, BETTER RESULTS
– deliver within existing budgets
– replace media spend to create marketing product as owned media

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Image borrowed from: http://www.workinonmyfitness.com/2008/01/07/my-first-nike-plus-run/

From Products To Services For Growth

It’s interesting that recently P&G has started moving some of it’s most venerable product brands into new service categories. First with Mr. Clean branded car washes, and now with Tide branded Dry Cleaning services. Last year, we also saw Mercedes Benz create their Driving Academy focused on improving the current 90% of all car accidents that are caused by preventable driver error.

On one level this shift into services makes perfect sense. Many service categories are fragmented and suffer from both variable quality problems and inconsistent pricing. A branded champion under these circumstances has the potential to create real disruption. It also makes sense from a consumer standpoint. We’ve seen a phenomenon over the past few years that where loyalty has tended to decline over time (primarily due to the Internet and how easy it is to check out alternatives), consideration has tended to increase (again, due to how easy it is to check out whether something is good or not). Basically we’re in a world where you have to earn your loyalty, but if you do then people are more likely than they have ever been to consider you for other things.

In this case, Mr Clean, Tide and Mercedes are all brands which bring a lot of trust and capability to the table.

The business rationale also makes sense. Clearly these are all brands whose Western markets are facing flat to declining growth. At this point, the logical question becomes one of getting the most out of existing assets (in these cases, the brands) in order to drive growth. Services make sense not only due to their fragmentation, variable quality and lack of brand presence, but also because of their business models. They don’t require large scale plant and machinery and franchising options create the potential to scale rapidly.

With all this being the case then, the question should really be why more product based brands aren’t leveraging themselves into service categories for growth?

I think there may be two related factors at play preventing this.

The first is simply that a service business model is too far from the core operational strength of most product focused corporations. While it may make sense for a consumer, an organization built around the discipline of the things that they produce finds it hard to deal with a services business focused on services that are consumed at the same time as they are produced. Also, while these corporations may understand the nature of things, they don’t necessarily understand the nature of people. And finally on this point, these firms rarely have any direct connection to the consumer. Their businesses tend to work through intermediaries such as retailers (in the case of Mr Clean and Tide) or dealers (in the case of Mercedes).

The second factor, closely allied to the first, is that by the time a brand has achieved maximum strength, it is also likely to be managed in it’s most conservative fashion. Put simply, the discipline of tightly managing a large brand in a mature market tends to attract very different managers than brands which are driving the growth of markets. Brands which have over time shifted from being entrepreneurially driven to being administratively driven tend to find it very hard to get back to an entrepreneurial mode.

However, I do believe that with major well known firms such as P&G and Mercedes creating new services businesses that we’ll see much more services based brand leverage as a growth strategy in 2011 and 2012.

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