Voices: the CMB Blog

After a brutal winter, many of us in the Northeast are glad to finally begin our annual spring-cleaning, but we’ve noticed we aren’t the only ones looking for a fresh start. With confidence in the economy growing, there has been an uptick in established brands taking a fresh look at their brand strategy, an area they may have neglected during the recent tough economic times.For most, a brand refresh means creating a stronger platform for growth. To see evidence of this, one need look no further than recent TV commercials. Domino’s eliminated “Pizza” from their name, allowing for new items beyond their foundational menu offering. Meanwhile Buick promotes their redesigned cars through commercials with actors stating in disbelief, “That’s not a Buick.” Even Southwest has jumped on the bandwagon, highlighting that customers not only receive low fares and free checked bags, but some TLC when flying on one of their planes: “Without a heart, it’s just a machine.”

Some common triggers that appear to spur brands down a new path:

1. The product and service offerings have fundamentally changed. That is not to say the brand has transformed at its most basic level, but needs to be updated to better reflect what the company is currently offering.

2. The target audience has shifted. The brand may no longer be reaching its intended audience due to that audience aging, narrowing, broadening, or otherwise changing. Legacy brands may need to create a fresh image to become more relevant to younger audiences.

3. The company is outgrowing its old brand. Recent company growth from geographic expansion, mergers and acquisitions, or internal structural changes may necessitate a shift in the brand or a split into sub-brands in order for it to stay true.

So with spring in the air and a little more life in the economy, now might be a good time to re-examine your core brands. A thorough market-based review may confirm your brand positioning remains strong and remind you of the core tenets that keep the brand motivating, distinctive, and believable. Or it could reveal opportunities for renewal and reinvention.

Lindsay Maroney is a consultant at South Street Strategy Group where they combine strategy and marketing science to uncover insights that help clients grow their business and strengthen their brands. 

Diversity in the workplace has proven massive benefits for organizations that rely on innovative thinking. Contrary to what most people believe, however, diversity in business is not just about surrounding yourself with people who look different. It’s also about equipping your team with a wide array of approaches to a common challenge.You can imagine each of us having a diversity score – based on 3 dimensions – that fluctuates depending on the collective characteristics of the team. However, the score isn’t static: each of us can increase our individual and team diversity score at will. Let’s take a look at the three common dimensions of diversity to understand how we can do this:

1. Inherent Diversity

Inherent diversity includes race, ethnic background, gender…hardwired traits that we are born with/into and cannot be controlled. For better or worse, these traits can influence the way we perceive the world around us, and vice versa.

A McKinsey study shows the difference inherent diversity can make, finding that executive boards in the US with inherently diverse members enjoy a 95% higher return on equity than those without. Impressive! On the flipside, what is an example of the drawback to sameness? Ask Bertelsmann, whose all-male team turned down Bethenny Frankel’s pitch to launch a low-cal alcoholic beverage for women. They simply could not relate to the target market, and the unseized opportunity gave rise to Skinnygirl, the fastest growing spirit brand in history.

2. Acquired Diversity

This dimension involves the ingrained experiences we collect throughout our lives that train us how to think and behave, such as educational background, professional expertise, and even experience abroad.

An Art History class might allow you to understand the context surrounding important works and to fully appreciate the artist’s vision. Raising children helps you value an uninterrupted night’s sleep and wholeheartedly empathize with new parents in a way that others simply cannot. Though we cannot dictate all life events, we do have a great deal of control over the diversity we acquire over time.

According to the Harvard Business Review, companies with leaders who exhibit 2-D diversity (that is, each leader possesses at least 3 inherent traits and 3 acquired traits) are 45% more likely to report growth.

While this is all wonderful, raising the level of inherent and acquired diversity at your organization (especially at the leadership level) is not something that is easily achieved. We believe a third dimension is needed; a dimension to help you raise your overall diversity score immediately with the human capital you already have: that third dimension is Inspired Diversity.

3. Inspired Diversity

Through the development of our subject knowledge over time, mental models begin to take form and solidify in our minds. That’s natural, but these biases can also blind us to new opportunities and challenges. In order to increase our openness and mental agility, we must constantly identify opportunities to branch out from our immediate environment and learn how others might solve interesting challenges, focusing on how we might apply their insight to fit our purposes.

For example, touring a manufacturing facility can give fresh insight to the way we think about our internal processes and workflow. Interviewing an exceptional street performer could provide wisdom on courage and leadership. Perusing an exhibit at an art museum can help you reimagine your brand’s image through the artist’s lens.

When I run rapid innovation programs with clients, there is a clear trend among the super creative folks who consistently ideate at a higher level: They are renaissance people. They have many interests, are curious about many subjects, and partake in many activities that all contribute to having a wide array of perspectives. They have the unique ability to create using their past experience (acquired diversity) and also in-the-moment when they bring a specific business challenge to an outside activity (inspired diversity). They challenge themselves with new experiences and perspectives as often as possible.

When business requires innovation, pulling novel ideas out of thin air is simply not a realistic expectation; it’s about attacking a challenge from angles that have never been considered. And this level of thinking requires diverse individuals, with diverse minds, stimulated by diverse activities.

Andy Cole is a consultant for South Street Strategy Group where we use a multi-method approach to identify and test growth and innovation strategies for increased commercialization success. 

In an effort to counter the fear-based culture that inhibits innovation at many companies, some leaders (Google, Amazon, Roche) have advocated actually celebrating failure. Interesting! Could this new mindset really be the key to building an internal culture of fearless innovators?Clearly, we want to create a safe environment for employees to admit faults, share lessons learned, and have the courage to attempt things that have never been done, all without the fear of reputational – or even career – consequences. But do we really want employees to idolize those who don’t accomplish what they set out to do? Although provocative, a broad policy like “celebrate failure” can be misleading and create unintended problems.

What companies should be celebrating is the learning derived from failure, not failure itself. To illustrate the difference, putting the focus on failure raises post-mortem questions like “Now that we’ve failed, what worked well?”, “what did we learn from this?”, “how might we do better?” This retroactive approach is better than nothing, but it’s in no way sufficient.

When the goal shifts to maximize learning, it invites key questions at the beginning of the process, like “what might we learn from this activity?”, “what key assumptions could we test?”, and “how might we modify the idea so that we learn even more?” As you can see, this proactive approach can guide and influence activities from early stages in a direction that prevents future failure (or at least the sheer quantity and size of failures before realizing success).

Used in combination with a project debrief, this tactic can be used as part of a powerful learning strategy, ensuring that you get the very most of your innovation activities, independent of failure or success. And that’s certainly worth celebrating.

How do these issues show up in your organization? Does your company embrace failure or learning? Do you conduct structured “after action” analyses of major initiatives to facilitate learning?  We’d be pleased if you would share your ideas, stories, rants, insights, and responses in the comments below.

Andy Cole is a consultant for South Street Strategy Group where we use a multi-method approach to identify and test growth and innovation strategies for increased commercialization success. 

When Redbox, the movie rental kiosk company, raised their prices 25%, many analysts saw the move as desperate—predicting significant losses to market share in 2015 and 2016. At the same time, the company’s stock rose, with investors expecting customers to adapt to the higher prices. So who’s right?  I have some predictions, but we’ll leave those for another blog. Today, I want to write about some of the fundamental questions companies need to ask before they embark on a new pricing strategy.

If you think pricing isn’t all that important, here’s something to ponder: a 1% increase in prices of Wal-Mart products ($10 on a $1,000 TV), assuming a demand around existing levels, would increase operating profits by about 20% and add about $48 billion to Wal-Mart’s market cap.

Companies rarely approach pricing from a “value to customers” perspective. Even when they do, they don’t fully exploit the potential of value based pricing for fear of backlash. For decades, airlines have understood the importance of pricing, and, in my opinion, outside of CPG companies (and some new tech entrants) have best implemented and used pricing as a tool for competitive advantage.

For any pricing strategy to succeed, you need a well thought out plan. Answer the following questions to get started:

1. Who is the customer?

a. While you might have customers you've served for a long time, you still need to ask yourself how people interact with your products. Are there touch points you’re currently ignoring? Are your current customers the ones you should be serving?

• How can you answer these questions? Start by observing and getting these discussions going.
• When’s the last time you did a Segmentation? If it’s been more than 2-3 years, that’s another potential starting place.

2. What are the closest competitive offerings?

3. What is the monetary value of your product to the market?

a. Think of this in terms of the savings your product could offer customers over competitor products. This doesn’t automatically mean a lower price. A higher priced product could offer savings in multiple forms—a few examples include a lower cost of ownership, lower maintenance costs, and peace of mind. 

4. How are the different product features valued?

a. To figure this out, you can conduct choice exercises that replicate the market behavior of consumers. A good choice exercise must include, at a minimum, products that together control 60% of the market. Here’s another tip: make sure you also include future offerings and even some potentially ridiculous products you would never offer. 

5. Based on the above steps, are there different customer segments? If yes, what are the optimal product and pricing tactics for each segment?

a. You also need to consider whether there are psychological price barriers for different customer segments that must be kept in mind.

Answering the above questions is a battle half won. For pricing to be truly successful, you need to go beyond coming up with tactics. Answering the next set of questions can be the difference between a good strategy and a great strategy.

1. What is the messaging and communication strategy for...?

a. Product value?

b. Pricing?

2. Is the above pricing strategy feasible? Think:

a. How crowded is the marketplace?

b. Is there a clear market leader?

c. How mature is the market?

d. Is your organization trying to maximize profits, gain a foothold in the market, or maximize share?

3. What is the action plan to react to competitive moves in the marketplace?

4. How do you plan on approaching end-of-life pricing for your products and services?

As you can see, building a thorough pricing strategy is not an easy task. At CMB and South Street Strategy Group, we take our pricing research seriously. We're experts at not only conducting research but also helping clients with rollout plans, and we have a lot of experience guiding clients from a wide range of industries through these steps.

If you’re interested in reading about this further, I’d highly recommend Thomas Nagle’s The Strategy and Tactics of Pricing and Rafi Mohammed’s The 1% Windfall. And, of course, I’d be more than happy to chat with you about pricing structures in the comments! 

Abe is a Senior Project Manager, strategy junkie, and CrossFit enthusiast. He's recently taken up snowboarding so watch out if you're headed to the slopes.