What's to stop the disrupters becoming the disrupted?

What is the long-term commercial viability of businesses rooted in purist product and service design and delivery?

It’s a great time to be a consumer. There are countless stories of entrepreneurs engineering highly useful products and services to disrupt tired, established categories. We no longer need to be held to ransom by multinational corporations when it comes to our razors, our hotels, our food shopping – new 10x style companies are delivering us form and function beyond our wildest dreams.

All this excitement aside, what is the long-term commercial viability of all these businesses rooted in purist product and service design and delivery?

Between 1975 and 2015, there has been an inversion in how S&P 500 companies derive their market value. The value of a company’s tangible assets - such as its product – has been steadily decreasing in proportion to that of a company’s intangible assets - such as its brand.

Yet that is seemingly not the commercial theory subscribed to by many of the 10x companies of the world. They are of the view that if you can build something truly useful, consumers will come.

When a promising start-up launches a new product, it usually has a number of unique and distinguishing features – superior quality or functionality or delivery. All wrapped up in beautifully designed branding and packaging, whispering sweet nothings to millennial aesthetic sensibilities.

And while they may generate initial attraction, what’s to stop a competitor launching a product with the same superior quality and design at a lower price? What’s to stop the disrupters becoming the disrupted? (Spoiler alert: the brand).

What’s to stop the disrupters becoming the disrupted?

A brand is not a collection of product features. A brand has implicit meaning to the person who buys it, acting as a symbol by which they can express their personality, their beliefs, their interests, their style. If brands are only ever a collection of features, how do we navigate them? 

“Think about what and how you buy in your business and personal life. Whether it’s household products or enterprise data services, what ultimately determines why you buy from one company rather than another? It’s the brands’ images and reputations and the relationship you have with them…If you want great business results, you and your brand have to stand for something compelling” - Jim Stengel, Grow

What gives a brand meaning is its purpose. If the answer to the question 'what business are we in?' does not extend beyond the category, that’s a problem. Because ultimately, people love (and subsequently choose) brands which enable them to be part of something bigger than themselves.

It’s not what people buy, it’s what they buy into
— Millward Brown, Brand Z study

Lego, one of this decade’s greatest brand success stories, is deeply loved the world over. Lego isn’t in the business of manufacturing coloured building blocks, Lego is in the business of creativity and play. It exists to ‘inspire and develop the builders of tomorrow’. This purpose guides all aspects of the business; from their internal culture, to their product innovation, to their external communications and beyond.

Lego is loved not just because of how useful the product is, but for what it stands for and how it enriches the lives of children (and adults). Just ask my colleague who spent four hours in The Lego Store with her niece and nephew last weekend.

We are now starting to see some of the tech giants joining the purpose party. Last year Airbnb and Facebook launched their first masterbrand campaigns with purpose at the heart of the communications, Airbnb’s “Belong Anywhere” is a great example.

Even more recently, Pinterest and Uber have arrived. While the success of these giants is undeniable, what impact might it have made to the long term success of these brands, if purpose had outwardly underpinned the business from the start? Do we really love these brands beyond their utility?

In 2015 the then CEO of Uber, Travis Kalanick, was right on the money; “As an engineer you make stuff and you let the work speaks for itself. For most of Uber’s five year history we’ve been doing that. But if you’ve grown like we’ve grown and you’re like a black box, not telling your story, then people fill that box with whatever gets clicks…getting in front of it and telling our story is one of the things we’re still learning about.” 

After so many years allowing people to talk for them, whether positively or negatively, it's interesting to see Uber now trying to join the likes of Airbnb and Facebook, moving from purely functional to purposeful. The new “Where to?” campaign has focussed less on the brand's ability to get you a taxi, and more on its aim to keep people on the move. Will the new thought stick, both internally and externally?

As challenger brands, we need to be building in our purpose from the ground up - ensuring there is an ongoing investment of time, energy and resources in brand building.

It’s not enough to be useful, you have to be loved. And to be loved, you have to stand for something greater than yourself.

OpinionCecelia Hund