Editor's note: This article is part of a series revolving around the concept of brands as intersections.
“It’s not the strongest or most intelligent who will survive, but those who can best manage change.”
“Welcome to a time of VUCA,” I was told as I sat in a recent leadership lecture. “Is your business VUCA-ready”? It felt a little bit like watching the early scenes in Avatar, where our initially hapless male protagonist is welcomed to ‘Pandora’ where the locals would ‘chew him up like juju beans and spit him out’. VUCA is a US military term, which has become more commonly adopted to describe the changing times in which we live: volatile, uncertain, complex and ambiguous. In short, the world in which we live in today is so unpredictable, that there are few precedents to gauge the future, and almost anything is possible. Factors that are radically changing the shape of businesses today, the nature of consumer behaviour and posing challenges in the way brands connect and engage.
First there’s the power shift. Brands that have been developed in the West and have largely developed their wealth and reputation in mature markets have for the first time in recent years seen a radical shift in focus, and therefore a need to understand a whole new set of consumers. Companies like Diageo have increasingly focused on emerging markets over the last four to five years, with a predicted shift to 70 per cent emerging markets by 2017. L’Oréal announced in 2012 that emerging market sales were only slightly behind Western Europe at €7.22 billion versus €7.25 billion. Emerging markets are deemed key for growth for the business, resulting in the shift in innovation centres, team structures and the need for new talent around the world. This means re-thinking communication and innovation more than ever; shipping out something made in the West in an attempt to make it work abroad just won’t cut it anymore.
Second there are new consumer behaviours to confront. When things are uncertain and unpredictable, there is anxiety, and often a lack of trust. No one is suffering more from this than traditional large mainstream corporations, especially in the face of the collaborative consumer. Participation, sharing or simply doing things themselves are routes to greater control and trust. New, nimble, entrepreneurial companies are embracing this change, and are able to cash in by providing solutions for new consumer behaviour.
Uber is one of the huge innovation success stories of VUCA times. It taps into the values of collaborative consumption—the drivers are people like you and me, the passengers are people like you and me. Uber drivers share their services for a fee cheaper than your average ‘official cab’. Passengers feel safe knowing who is picking them up, and retain the power of judgment with their ability to rate their experience. But Uber isn’t just a cheaper cab for the sharing economy, it offers ruthless efficiency clearly anchored in its overall mission to turn ground transportation into a seamless service—a mission which is allowing a nice extension into local courier services!
The sharing economy is being taken seriously. For example, the UK Government is conducting an independent review on the economic potential of collaborative consumption and the potential risks to established businesses led by Debbie Wosskow, CEO of Love Home Swap. On the review website, she highlights the economic importance of these new behaviours. Currently the sharing economy represents GBP 9 billion globally and is expected to rise to GBP 230 billion globally by 2025.
Reactions to businesses such as these are fascinating and sometimes misguided. I happened to be in Paris this summer during the recent taxi drivers’ strike against unofficial cabs (i.e. Uber). Unfortunately, in true French style the strike also happened to coincide with a broader public transport strike. Hmmm. No metro, no trains and no official taxis, what do you do to get around? Uber, which suddenly looked even more consumer-centric, reliable and seamless.
In the face of change businesses need to evolve or die. Remember Kodak? It actually did invent the digital camera, but where is it now? No one wants to be another headstone in the brand graveyard because they were too scared to take some risk and move on.
Large businesses may not be able to act like an Uber, but things are definitely changing. A spirit of entrepreneurship is beginning to run through large companies as they start to take a more challenging, daring approach to innovation and consumer connection. Unilever and Mondelez adopt an incubator model, giving startups funding and developing new partnerships, whether that be for new ways of connecting (like PlayTMN’s in-store gamified interactive experiences) or new ways of collecting real time observational data. Diageo invests hugely in new launches and initiatives. Recent examples alone show how that spirit of entrepreneurship is imbued throughout the business—from physical Johnnie Walker houses in China where the average spend is US$1000 per visit, to football matches between Nigeria and Argentina, attended by Guinness drinkers and watched on prime-time TV. From alcohol company to production company. And new ventures like this can often mean seeking new expertise and new partners rather than classic agencies—we too need to evolve.
If VUCA is unsettling, it’s also an exciting time for marketing. But one that requires new leadership skills. When under pressure or threat, it’s human nature to want to shut down and protect ourselves, managing our risk rather than embracing the new. And this is where short-term risk and long-term stability play out together. In managing brand behaviour in the short-term, it is the longer-term vision and clarity of the brand role that acts as the anchor, stabilising and providing the parameters for short-term innovation. Remaining open and adaptable in the face of ambiguity, and daring enough to try something new. Our clients are heading in this direction, as agencies we need to ensure we do the same.
Sam Gomez is head of client strategy at Flamingo London