The CMO's Guide to the Disruption of Products and Brands

The disruption of mass media and entertainment is old news ' but do you realize that the same phenomenon is already nibbling at consumer and industrial products and the brands they support?

Media firm executives and marketers had the unfortunate fate to be on the tip of the 'Here Comes Everybody' spear, and countless media brands have disappeared or been bought for a song in the last few years.  However, the same fate awaits products firms and brands whose leaders don't get in front of it.  Read on for a practical guide to gracefully navigating these rapids while most of your competitors' rafts break up on the rocks.

You Must Be Joking

It always begins the same way ' with an outrageous idea that everyone sees and subsequently rejects as preposterous.

Please insert 'you must be joking' after each of these statements:  Individuals providing photos for global news stories?  'Rogue' reviewers destroying potential blockbuster movies by slamming them on opening weekend?  Individuals' videos getting more views than nationally syndicated TV programs?'That's what happened to media conglomerates who, if they haven't expired already, have been in the ICU for years now.  The market forces of a similar dynamic have configured around mass-produced product firms, but smart CMOs will learn from media and move now to position their brands to revitalize themselves by harmonizing with this trend. This post offers a high-level blueprint.

Consumerization of Product Design, Fabrication, and Distribution

Bear with me for a fast rewind of the disruption of mass media, as I'll draw out parallels with products that most execs don't perceive yet.

In mass media markets, life was simple:  producers produced and consumers consumed.  The Internet, personal computers, and cable didn't exist, and there were few TV channels.  People watched movies at the drive-in or the theater.  People listened to music on the radio or vinyl.  They got 'the news' through TV or one or two town or national newspapers.  Then, the tools for the consumerization of media emerged serially.

• So-called 'personal' computers began slowly with games and 'office productivity' programs, but their capabilities grew steadily, so amateur users, although lacking the 'professional training and experience' of media companies, came to manipulate and create photos, films, audio, and all kinds of media 'content' for fun.
• The Internet became the digital infrastructure for learning and sharing.
• Social networks were a tipping point because they made it much easier and more rewarding to share, so far more people did.
• Let's call this process the 'consumerization of media.'    

[Click on chart to enlarge]                                         

Mass products are already seeing the same dynamics because amateurs are designing all kinds of products, from chairs and sweaters to automobiles. Examples below and inline.

• 3D printing or 'additive' manufacturing fabricates physical objects from digital models. 3D 'printers' use material (resins, composites, metals) to 'build' entire objects, one layer at a time, very precisely. The point is people can now use software to model objects very precisely.  Other software simulates the usage of the modeled object, so the creator can iterate the design extensively before committing to fabricating it.
• You are familiar with geeks or 'tech nerds' (substitute other name), who are famous for their passion for technology, their creativity and their motivation.  They are the source for many of the disruptions.  Products have theirs, too, and a key group is called The Maker Movement which empowers professionals, amateurs, and hobbyists to make physical objects from digital designs. Makers are already a global multidisciplinary innovation network.
• Hackerspaces are collective machine shops and fabs that often have a membership model; members gain access to all the equipment for a low monthly fee, which lowers the cost of participation remarkably.  Hackerspaces (also Makerspaces) are a combination of a maker clubs and small factories.  Makers congregate and collaborate on vision, design, and fabrication of products.
• Machine- and web-based software for designing, prototyping, and testing designs is mushrooming.  Not only that, people are designing and sharing design templates for all kinds of products (AtFAB).  Makers leverage open source and Agile methods.
• Online communities serve as markets for B2B and B2C buyers and sellers of products to do business.

Yes, But We're a Global Brand'

Having advised enterprises on disruption for over 25 years, I have repeatedly seen this pattern, which was observed and described by Schopenhauer:

'All truth passes through three stages.  First, it is ridiculed.  Second, it is violently opposed.  Third, it is accepted as being self-evident.'

The first mistake leaders make is they reject the innocuous disruption, which always requires some incubation time to develop its enabling ecosystem.  The second mistake is leaders assume that disruptions will 'compete against' the status quo, but this is almost entirely false.  Disruptions change the rules, most often by changing customers' expectations in ways that established leaders cannot easily accommodate.

Let's fast-forward to see how the consumerization of products will affect mass market product brands.

• Do you realize that people currently accept products that are impersonal?  Would you prefer a suit off the rack or a bespoke (custom made) suit ' but for the same price?
• Individuals can now develop their own 'lines' of chairs, party napkins, shaving cream, dresses, mustards, motorcycles'
• What would you do if you were a furniture brand and the hottest new thing for newlyweds was custom designed kitchen and bedroom furniture at a mass-produced price?  Memes like this will soon be commonplace.
• Extreme personalization of products will trump price in a big way ' especially for certain categories.  Imagine beds for people who sleep with their dogs'couches that fit perfectly under the window because they only have one 'arm''fruit/herb scented candles (you pick the combination). Custom baby furniture.  Kitchens for retirees with special needs.
• Amazon disrupted the entire retail model.  People used to accept relatively poor selection at retail because it was too much of a pain to 'keep looking.'  Now, choice is infinite.
• It will start slowly; small brands of small run, special use products or products for fun.  Brands will be in trouble when customer expectations tip, when they start rejecting the concept of mass produced products.  That is not imminent in 2013, but I'll argue that it will be in 2020 for some product categories.
• As with bloggers and amateur video makers, huge numbers of people will be involved.  Most 'makers' will remain hobbyists, but a certain portion will build businesses around their products. Of these, some will directly challenge product brands.  But this is not the main threat:  all the customization will change expectations away from mass-produced products.  Mass-produced, undifferentiated products will become analogous to generic grocery items.

How Brands Can Harmonize and Make Consumerization Work for Them

• First, think in terms of front and backhouse innovation. Social technologies enable you to engage with various customers and 'get inside their heads' continuously and for close-to-free compared to before.  This is the front end.  Make this an imperative because it will help you gauge how to increase, or at least maintain, relevance.
• This is not social media, which talks at people and pushes product; this is nurturing customer-to-customer interactions about use cases (outcomes they want to achieve that involve your product).
• The use case is everything, but it's more specific than the demographics that marketers work with today, which are generalizations for large swathes of population; they are not granular enough to maintain your relevance.  Social technologies enable you to engage at a whole new level, for a fraction of the cost, but only when you use them in the right way.
• The use case will help you see that you are a means to an end for your customers.  When you are focused on the end, you will be aligned with customers.
• Back-end innovation involves leveraging your increasing knowledge of customer use cases into product innovation.  This will involve changing products, packaging, pricing, distribution, etc.  It's more involved, which is why you need to build front-end connections with customers first to make and validate hypotheses about how you can be more relevant.
• Engage with Makers who are relevant to use cases.  There will be collaboration opportunities. When you are focused on user use cases, you will maintain your relevance.  This becomes a win-win proposition, and you cannot be disrupted.
• You need to develop serious mass customization capability in the medium to long term.

CMO Action Steps for 2013

Mass product and service firms need to transform in two stages if they want to remain relevant in the Knowledge Economy.  Products are a far larger part of the economy than media was, so the disruption of mass-produced products will be even more disruptive.  As always, opportunity and threat move together:  firms can increase profit and competitiveness by getting in front of this.

Front End:  Use Social Business for Deep Engagement

This is not the 'social media' you are probably practicing; this is all about going back to the core proposition: how do your products add value, what kind of outcomes do your customers desire?  In general, start simply but build aggressively; you want to drive as quickly as possible toward specific use cases for your products.

1.  Audit the social ecosystem to diligent user activity in digital social venues, focusing on use cases of your most important products' customers.  You can learn very quickly about what end results your customers want.  You can start by adding value in other platforms before piloting your own.

2.  Make sure to be practical and get involved with use cases that exhibit high user engagement yet have easy-to-share knowledge from your firm's perspective.  Participation has to be efficient for your firm.  You can optimize for customer relevance and efficiency.

3.  CMOs can start by socializing findings of #1 and #2 with Chief Product Officers.

4.  Develop communities in which you nurture user to user interaction; this means getting out if the way and empowering

users with information, tools and expert participation (yours or guests). Marketing can run the communities, but the effort will be far stronger when Product Development is on board.  It's not a deal-breaker though; if they are tepid now, you can build the space and, when they see the interaction, they'll get excited.

5.  Hive off more specific communities when use cases get critical mass and increasingly specific.

Back End: Begin Preparing for Mass Customization

6.  The first step in back end innovation probably involves your policies or terms of using the product (B2B firms) ' or         packaging, pricing, green initiatives, etc. (B2C firms).  Of course, we are assuming that making changes to policy is easier than making changes in product specifications.

7. The second step in back end innovation is changing the product(s) based on interactions with users.  Note that, by now, you have already built a support group in social venues.  You can introduce and test ideas before changing the policy or making other changes.  You can create pilot programs for more (administrative/servicing/product) features.  Remember, the community of people you access in one or multiple social venues may be hundreds or thousands of people, possibly millions. Your R&D team may have ideas it wants to vet with people in social venues.8.  Reach out to makers who are active in some aspect of the use cases; test the waters about sponsoring.  Be ready to develop a thick skin because many makers have serious reservations about large brands.  This will diminish as the trend mainstreams.  Experiment with several things such as sponsoring Hackerspaces in universities which will be more open to you.8.

9.  Remember, the ultimate authority in the market is knowledge of and relevance to users (customers); disruptors usurp incumbents' authority and relevance by changing the rules.  Using social technologies to form connections with users/customers that are grounded in their use cases, not your products, is the best defense against would-be disruptors.10.  Your products are less important to user/customers than their use cases and desired outcomes.

Thoughts on Transformation

• Transformation is a relatively long process, so the more quickly you start, the more of a lead you'll develop.
• Walk the walk.  A large portion of your leadership will be overtly hostile to these ideas, and a larger portion will be tepid.  Keep the door open to them while selecting 'innovation'-oriented people to start.
• Think about it another way:  you've likely been fighting against commoditization for years or decades.  You may fear foreign competitors who have lower costs or other structural advantages. This is a way to disrupt global competitors who have less cultural knowledge than you do (assuming a large portion of global revenue in your 'home market).  Likewise, you can use the same techniques to penetrate any market.  Of course ANY competitor can use these techniques in any market.

Resources

• Report on Knowledge Economy products is a more comprehensive treatment of the root causes and developments of the consumerization of products. This includes numerous links.
• Learn more about the Maker Movement.
• Learn about Hackerspaces; these links include numerous global references.
• Cutting edge mass customization references.
• The Social Channel executive summary offers the bullet points for how brands can compete by offering a new kind of value in the Social Channel.