Nine years ago, I left Procter & Gamble. I was P&G’s global marketing officer from 2001-2008, and even in those days our competitive set was starting to change toward smaller brands. I remember first seeing Method’s environmentally friendly cleaning products on the shelves of Target in 2003; impressed, I returned to P&G’s headquarters in Cincinnati and recommended to our CFO that we acquire them. He felt they were too small and a distraction. Fourteen years later, in 2017, S.C. Johnson purchased Method for an undisclosed amount.
Like many established large companies, P&G’s growth has stalled. One reason has been this rather sudden shift in big companies’ competitive landscape, as well as shifts in consumer purchase habits. I look at my own purchase and consumption habits over the past few years and they are dramatically different: more voice-activated information and entertainment, more shopping from my mobile, and, yes, more craft, story-rich brands. Brands like Deeper Roots Coffee, Rhinegeist brewery, and Thistle for meal delivery.
I started my own consulting firm and think tank when I left P&G, with its headquarters in Cincinnati. Our team has worked with more than 75 large companies over the past nine years, and by far this is the most frequently asked question from our big company clients:
“How the heck can we compete with this new breed of competitors!?”
My colleagues and I have done a lot of thinking, debating, researching and consulting to help companies answer this question, and compete more effectively with smaller companies with different capabilities. In short, to win versus the ever-expanding craft brands.
Here is what we have learned, our playbook for big brands:
Unleash the energy in your organization by engaging everyone in your purpose.
Big brands can do this at scale, and this blunts what is the essence of most craft brands. Many people adore brands like beauty-sample subscription startup Birchbox and the fitness start-up Orange Theory, because they are pure about their purpose. It is what they reward, it is what their leaders talk about, it is what they communicate externally.
Successful big brands do not accept that purpose cannot be a competitive advantage—they see their “purpose scaled” as an absolute strength. Unilever, with brands like Lifebuoy, Axe, and Persil, is a poster child for inculcating purpose into billion-dollar brands. Their leader Paul Polman has been indefatigable about the power of purpose. Unilever’s stock price has nearly tripled during his tenure, and their revenue is up nearly 30%.
At 77,000 people, MGM Resorts International is betting their future on enlisting each associate on how to bring their purpose of “blowing the mind of all mankind” to life in their daily work. Staff friendliness is at an all-time high, employee pride is surging, and MGM’s stock price is on a tear.
Create “kick-ass” products and services by driving what makes you special.
We find it appalling and amazing that what should be a strength of large enterprises is actually a deficit in many companies. The reason craft brands took hold quickly in the beer and food categories is because many of the large companies were complacent, and their offerings were boring.
This does not have to be. Fifty-year-old Taco Bell is a red-hot big brand, with six consecutive years of same-store sales growth, because it is relentless on product and service innovation. Witness the success of Doritos Locos Tacos and the sold-out Forever 21 Taco Bell clothing line. Taco Bell’s new Cantina concept, where they are experimenting with a more premium restaurant experience, is off to a strong start. Everything the brand does, says CEO Brian Niccol, is driven by its brand mantra “Live Mas.”
Lego has grown into the number-one toy company in the world by understanding what makes them special — “to inspire and develop children to think creatively… to release their potential.” This ambition fuels a broad and constant array of innovation, not just in its signature boxed sets, but also in digital experiences, movies, and STEM education.
Personalize your brand experience and make it frictionless.
This is totally in your control. Well-known small brands — think Bonobos, Warby Parker, and iRobot — surged to high awareness and high popularity because they created personalized experiences and made it easy to be a customer. Levi’s and Lenscrafters could have done that, but that is not where they were focused.
Amazon (and its companies like Zappos, Shopbop, and Audible) is the best example that even one of the largest companies in the world can still provide a personalized, relatively seamless experience — and to never stop innovating in that space. Other companies that have committed major resources to building a personalized experience include Delta, LVMH, Nespresso and Domino’s; it’s no coincidence that these brands are winning market share.
Does this personalization work across categories? You bet it does: from a recent large-scale BCG study; “brands that create personalized experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase two to three times faster than those that don’t.”
Be relentless about trial among new users.
Big brands have greater resources to drive trial, and this plays to their strength in distribution and awareness. Loyal brand users will buy your brand anyway — this has been proven over and over. Focus your marketing and sales efforts in new segments, to pull in new users. Adidas has been great at this — going after new segments like little leaguers and fashionistas, leveraging social channels and a soaring e-commerce business — up 66% in the most recent quarter.
Show your humanity, your personality.
While we were working on this playbook for big brands, I mentioned to my two millennial children what we were doing. I asked them what they think big brands could do to compete with the brands they love — brands like Glossier and Homage. They were quick on the draw: be nostalgic, be proud of your heritage; be transparent; be good to the environment; give back to the community; be consistent and reliable (which is often a vulnerability for craft brands).
In short, show you care. Show that you love your work, showcase your people. Share your efforts in the community and for the environment. Stop hiding behind inauthentic advertising and PR facades.
Fortunately, we have many role models of these behaviors from big-brand leaders — but not enough. We need more Howard Schultzes, Oprah Winfreys, Yvon Chouinards, Sheryl Sandbergs, Mary Barras, and Satya Nadellas.
It does not take a new invention to do this. It does not take any new technology, or higher budgets. It just takes leadership, focus and courage. And that is in all of us.
We can take inspiration from a fast-growing, trendy, 2-year-old brand in Italy, a leather-goods brand called M. Gemi. Their slogan: “Italian shoes. Made the old way, sold the new way.”
That’s pretty good advice for big brands.