Strangthen & Scale

Last week I looked at reimagining growth for a mature portfolio.  Today, I am focused on the insurgent brands.  I have learned more from Founders than any corporate leaders and have been fortunate to work with some remarkable businesses.  Yet it’s also true that there are far too many insurgents.  Many have weak business models that aren’t scalable or sustainable.  Over 95% don’t ever get to a long-term viable market share.  A true insurgent has the growth opportunity already established and so the dilemma is not about more ideas but how to realize their existing potential. So what can we learn from the success stories?

The origins of any new business should be a genuine innovation on an unmet need delivered by an outstanding product and brought to life by a vibrant brand. 

Ideas big enough to grow markets and brands strong enough to change behavior. 

Some ideas are ahead of the curve and take time to establish relevancy.  Others find a major gap that exists today, and volume develops quickly.  All will be stories of persistence, entrepreneurialism and a “get it done” culture.    It is beyond these shared characteristics that prospects tend to diverge.  The core strategy is likely to have 10-20 years growth runway if it is a serious idea.  Very few can deliberately envision a playbook spanning that time and the culture of opportunism can become a weakness.  The path to full potential is full of pitfalls.

The main dilemma is how you balance strength and scale. After initial phases of success and often with abundant access to growth capital, too many brands believe their own BS.  They confuse early adopter consumers with an almost hyperbolic belief they might take over the industry.  Thus, they rush to the potential opportunities of scale without building a strong enough foundation.  Extending the brand into new categories, sometimes several at once, and often without adequate R&D/product capability.  Chasing international volumes with enthusiastic distributors but subscale market share at home and no brand investment to support launches.  Leaving behind the customer partners that helped them establish in the race for channel expansion, putting the core at risk.  Decisions taken too rapidly on long-term business model choices like DTC or make/buy against a rapidly shifting business footprint.  Eventually the only way to make the numbers add up is to milk the core, even though it is below full potential, to prop up too many avenues of expansion. 

The success stories look at this same set of opportunities with more patience and more discipline.  They treat every dollar as a scarce resource.  The key is to use the initial growth to fund strengthening the core business and achieving a long-term sustainable market share.  Initial consumer trial is only valuable if it leads to significant repeat.  The brand needs real focus on the core and impactful marketing that simultaneously builds awareness, trial and repeat.  It takes decades to build a big brand.  Sustaining focus and investment is essential.  Once the brand gets noticed it will get copied, sometimes robustly and sometimes cosmetically.  Ensuring a meaningful superiority is maintained in the product is critical.  Thoughtful channel expansion that rewards the early partners but also aspires to make the brand available wherever the consumer shops is a long, careful transition.  Distribution expansion should be a decade long obsession, but it must achieve sustainable velocities which requires disciplined work on pack, price, assortment and promotion.  This core model needs sophisticated challenge to make sure it really is good enough and getting enough resources, judged against the leading brands and the full potential opportunity.  Objectivity matters.  Data and insights matter.  This work is the essential foundation for the scaling phase when you will consider new markets and brand extensions.  The same discipline will let you assess, select and sequence the moves that realize your full potential. 

I have found the winning insurgents never lose sight of their initial passion and ambition, but they learn to channel it into deliberate, almost patient, constant steps forward.  They build success from a business model that is crystal clear and nurtured every day.  No matter how big they get they still see resources as scarce which makes them choiceful and focused.   They take the time to strengthen before they fully scale.  Bold ambition, deliberate execution.