Tag Archives: brand-led innovation

Campaign Article: What Exactly is Brand-led Innovation?

I was invited to be one of the “thought leaders” that publishes work semi-regularly on Campaign USA. This post is my first piece, building upon some of themes covered in my recent DigiDay Agency Summit presentation. The original article can be found here.

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It’s unfortunate when a potentially valuable word reaches “buzzword” status, as is the case with “innovation.” (A quick Amazon check shows almost a thousand new books on the subject released in just the past 90 days.) Yet ironically — or perhaps as a direct result — few companies can agree on a definition.

Yet understanding what innovation is and how it works at large companies is important to those with brand expertise. Organizations clients turn to for brand oversight may also be uniquely qualified to help lead their innovation efforts. After all, a company’s brand is a key asset in innovation.

At Finch15 we define innovation as “the introduction of the relevant new.” This builds upon the simple, but too-broad-to-be-useful, Merriam-Webster definition. Working backwards, it provides a three-step process for corporate innovation:

  1. Concept something new (for your company)
  2. Ensure it’s relevant (Relevance varies by industry, by company … and over time)
  3. Introduce it (It isn’t innovation until it leaves the lab)

Each of these three steps is relevant when thinking about brand-led innovation. Creative organizations that deal in growing brands are culturally suited to concept new ideas. In fact, most companies engage agencies for this creativity, which can be hard within corporate walls.

To understand what role brand expertise plays in steps Two and Three, it’s helpful to view the landscape of innovation across the spectrums of risk vs. reward. Most innovation dollars are currently spent in vertical innovation (i.e., lower risk and lower reward), and things will likely remain that way for the foreseeable future.

Vertical innovation is best defined as innovation that optimizes a company’s current offering. Investments in things like longer battery life, more miles per gallon, new flavors and customized production epitomize this form of innovation. It’s been around (and studied) for a long time. There’s a wonderful example from a company that’s been at the forefront of innovation for almost 200 years: GE. Just look at this “documentary” it released in 1955 about automation.

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On the other end of the spectrum is lateral innovation, which is best defined as innovation outside the current context of a company’s offering. The company isn’t just doing new things within the same space; it’s introducing completely new things in an effort to pursue a fast growing opportunity (i.e., higher risk but higher reward). Most lateral innovation involves new fields or new models within established fields.

GE — the same innovative powerhouse touting the automation age 70 years ago — is now working with crowdsourced invention platform Quirky to create networked appliances like the Aros Air Conditioner as we begin to live in “smart homes.” Although appliances are a key vertical for GE, the pursuit of a networked home is an investment in lateral innovation.

Lateral innovation requires venturing into the unknown. What better compass than its own brand can a big company like GE have as it heads into such uncharted waters? In other words, its brand helped determine what innovation was indeed relevant. The GE brand is already welcome in millions of homes. Not only that, GE has a number of incredibly important and relevant patents that it was willing to offer to the Quirky community for help with these networked products. Those are key assets that can help guide GE as it pursues “the relevant new.” Innovation that’s built upon partnership and that leverages brand equity among consumers? That sounds exactly like the type of effort a company would want its brand agents involved in.

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To truly capitalize on a brand as an innovation asset, though, a good partner should do more than guide its client on lateral innovation opportunities. It should also ensure the brand serves as a safety net as the client pursues these new ventures. It’s impossible to ensure a new business will be successful, but it’s certainly possible to ensure that if it fails, it will fail smartly.

If a company’s new product or service drives brand benefits for its core business, irrespective of its financial success, that’s a worthy form of insurance. Just look at the Nike Fuel Band. The business unit shut down last year, but it’s arguably the most successful, mainstream “marketing” effort Nike has ever had in evolving its brand from a “shoe” company to a “sports technology” company. That shift in brand perception gave Nike a soft landing, even when it didn’t successfully cross the chasm. The brand helped lower the risk of introduction for Nike in its innovation efforts.

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This emerging world of innovation is one in which marketers can play a key role in new offerings. That sounds like the days of yore so many agency management teams long for …

… and like the ultimate agency innovation.

Agencies as Innovation Partners

I recently spoke at the Digiday Agency Summit in Austin, TX. These slides represent a 10-minute talk on how ad agencies can evolve to become “innovation partners” for their clients, an ambition often mentioned, but rarely executed successfully by an industry in the midst of incredible change and experimentation. 

Even in Failing, Nike Continues to Show It’s a Leader in Innovation

(Co-authored by Finch15 Lead Analyst Jess Tsia)

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One of the biggest announcements in innovation– and technology– this past week was news that Nike would be discontinuing the hardware side of its widely hyped FuelBand. The purpose of this post is not to hypothesize on why (A change in corporate strategy? A shift in the wearables marketplace? Some secret deal with Apple?); rather, we want to focus on how this is a case study in the way big companies innovate differently than small companies– and why that’s a good thing.

“Failing right” is a term more often associated with startups who are advised tofail early, fail fast, fail often. But for large companies, especially publicly traded ones, to fail right is something that can be more complex, and is therefore, rarely achieved.

It’s easy to say that downsizing the FuelBand business means Nike’s plan for it didn’t succeed. But the fact that this decision still leaves the company with a viable exit strategy (i.e., a focus on athletic and fitness software) points to how “success” can’t be so easily judged.

So what did the company do right?

Nike structured a major innovation strategy with intelligently hedged technology bets.+

The company’s Nike+ platform supports a line of multiple devices and applications. Unlike the SportWatch GPS or the Nike+ Basketball offerings, the FuelBand is for everyday fitness motivation. In launching a product for the health-conscious individual who’s not a hardcore athlete, Nike is a pioneer in the wearable space. As a result, the company has been instrumental to bringing the Quantified-Self trend closer to the mainstream market (while, of course, getting the consumer’s foot in the door with its other Nike+ products).

The actual FuelBand, however, was never actually Nike’s strong suit, as evident by the many complaints about its inaccuracy. And brand clout alone wouldn’t have been enough to save the FuelBand if if it didn’t have a killer software to back it up.

Between its partnerships and internal development team, Nike has put an emphasis on software, which, as a result, has been ahead arguably of its wearable competitors (and has led to the opening of its Fuel Lab andAccelerator Program). The company’s commitment to perfecting its software is one reason, with the exception of the Nike+ Running app, the company has barely broken into the Android market: Quality first, scale second. Investing so much in software goes against the fail-fast mantra but it indicates where Nike saw its strength (software) vs. where it wanted to explore (hardware).

This becomes clearer when looking at the motivation behind why none of the Nike+ products speak to each other (Although NikeFuel is a “single, universal way to measure movement,” the FuelBand doesn’t recognize that we’re also exercising with our Nano to provide a summary of activity across all our Nike+ devices, each of which, by the way, has its own dedicated app.). In a world where consumers want it all at the proverbial one-stop shop, this can be frustrating. This strategy does, however, make a lot of sense from a testing perspective. With Nike+ as the core underlying platform, the company is able to test and perfect iterations of its software across multiple experiences, giving each device and app just enough customization to meet different market demands.

All together, the Nike+ platform of offerings seems like a huge undertaking– and risk– by Nike. But by keeping each experience in a pseudo-silo (strategically or not), Nike allows itself to both develop and shutter faster. And it does so without infringing on its other offerings. Nike’s bet on software allows it to structure innovation in a way that enables multiple hardware plays, each of which, at the very least, helps refine and enhance the software.

Startups simply can’t afford to deliver well on such a modular experience. It would likely hurt their consumer base and culturally, they would rather go all in and fail than place multiple bets at once.

Nike made sure its lateral innovation strategy always benefits the brand.

Nike departed from being a shoe and apparel company a long time ago. The company made a strategic decision to play at a higher level that would broaden its role in fitness and sports. It’s understandably difficult for anyone to launch a new line of business when failure is always a risk. But failure isn’t absolute, not when a company, even in failing, is able to add value to its core business. So the FuelBand wasn’t right for Nike. The product still helped launch the company into a whole new territory of sports technology that it’s poised to continue pursuing.

What made the FuelBand popular certainly wasn’t the hardware. As one writer put it, “My unit broke twice days after I got it, then had to be replaced three more times after that. It didn’t matter to me, I didn’t buy a performance device I bought into a concept.” And Nike alone was able to achieve this, he continues, because it appealed to “an audience that aspires to everything the Swoosh represents.”

With brand equity and sheer size behind it, Nike has shown that it’s able to do what many startups can’t and what many large companies seemingly don’t want to risk: use its existing assets– from its supply chains to customer bases– to make a substantial bet outside of its core competency and do so in a way that even failure has its benefits.

All this points to the value of having an innovation strategy. It’s easy for small companies to talk about innovation and failing the right way. For larger companies, adopting this strategy seems more difficult, but corporations have the resources, the experience, the expertise, the customers– luxuries most startups don’t have– to make smart bets. Nike shows that really innovative companies always leave themselves a few options that allow them to land softly– and that takes planning before lift off. Failing fast may not be always be an option, but failing right always is.