How great brands are going sideways for growth

If you run a business, or work in one, you have two starts to a year: there is the one you celebrate with family and friends after Christmas and the one you plan for with colleagues which is financial.

They are two bookends that act like chapters in our lives. I spent my financial year-end holiday fortunate enough to make it (at long last) to King Island. In the middle of the Bass Strait, it’s full of raw beauty. It’s not what you think but is all the better for it. Fuelled by campfires, cream, long lanes of chase, and recovery straps we went to surf a famous A-frame but most of us came back with a deeper reframe on the years ahead. Moments matter but memories live forever because they shape how we see who we are.

It was a great break from the darker feeling of the mainland Delta variant. Beyond the humble brag Insta photos and LI posts of people with their sleeves rolled up ‘doing their bit’, there lies a problem our leaders need to sort in the year ahead. The business model appears broken. Nine per cent of the population is fully vaccinated. Elimination is being replaced by a damp wintry feel of suppression, slight depression and resignation. There is still a long road ahead. Coming last in the OECD in anything is not a place (outside of climate policy) in which Australia is used to being. Clearly governments work in election cycles, not financial years as I’m not sure the current C suite would survive the next board meeting. 

Racing for the bottom replaced by reaching for the sides

Much like our elimination strategy's forward indicators revealed a broken Covid model, results season in Australia also revealed interesting things about our business community who in the circumstances are going quite well. Looking beyond the results of our banks, retailers, miners, providers and makers there are some clear insights into how our business leaders are shaping their own plans for the years ahead in the new normal. The great shrink is being replaced with moves to grow fast sideways.

The process of leanness has really run its course as a competitive factor. Much like its friends "quality", "management capability" and "access to enough capital", being a "lean" organisation has become a ticket to the game. This is due to the technology dividend which has seen any enhancement in productivity through the application of capital. If the return on Joe is four times salary, the return on the machine that replaces me is ten times. Shrinking to survive in the digital age got you to the modern start line but as the old saying goes you cannot cut your way to greatness. You must find ways to grow. Just ask Kodak, Virgin, Xerox and Ford. 

As a seventeen-year-old starting business school, I always imagined business models being described in words and diagrammed as simple shapes. While none of my doodling helped me achieve a distinction in Management Theory it did help me understand the goal of any great business is simplicity. If you can’t draw a simple shape to describe your aim, it’s too hard to join the dots when you get into the finer detail. This is a simple hack I use when reviewing business plans or investor presentations. Can I draw what they are trying to do in a simple shape? If you can, it’s a pretty good indicator of a superior business model. 

What was straight is now round

Every business is trying to build its own ecosystem of co-dependency with the whole customer wallet their strategic goal. Our leading businesses today are becoming circles. The decision to make is between overlapping circles based on multiple areas of synergistic advantage or singular circles based on one narrower expertise.

Australia provides an interesting petri dish. We have tried many times to grow overseas and outside of digging for a living. We have had limited success. For every successful CSL and Smiggle I will match you an ANZ and Bunnings. Rather than try and find growth stretch internationally the game has become about stretching across the ecosystem (rather than build around a core competency). We have covered before how technology companies do this (read article here) and our leanest and fittest companies are also joining the race to build their own version of a monetising machine. Just a smaller one. Whether you are aiming for one or a few there is a formula. Core competency plus relevant adjacency equals slice of pie plus ability to command adjacency. 

Core competency: Focus on the aspect you do best. This is the easy part (hint look at the biggest and most profitable piece of your business). If you are in retail, chances are it's figuring out the best product to sell in the right location. If you are a service business, chances are it’s about a type of expertise matched to a consumer need. The real game is then figuring out what data your core model actually generates. Holding groups like Woolworths and Wesfarmers are doubling down on data to build ecosystems around their core retail businesses, Banks like NAB are exiting everything non-core and finding ways to use data to better serve home and small business owners (often one and the same). 

Adjacency: Apple did not pioneer the computer, the phone or the tablet but they did develop the app store that held it all together regardless of the device. They also handily pre-install the app store app (and a few other Apple products ) to control the resulting revenue flow. Like other brands, they have figured out that building next door to your existing business is much better than building in a new neighbourhood. Speaking of building, even John Lewis is having a dip in understanding that they, like Ikea, are a lifestyle brand that can also play at property development. 10,000 homes on their way. 

Slice of pie: It’s a simple question. Can you charge a toll? That is to say, can you charge people for accessing your ecosystem. Apple can and do, same as Amazon but so too do businesses like Woolworths. Last year even Woolies made a tidy 100 mill profit out of monetising the things around them. Their new media business Cartology being one of the fastest-growing media companies in Australia is proof positive of using data and dominance to enhance your return on investment. 

How do you brand going sideways? 

Brands are based on more of a vertical value chain (we make or we sell). So, what do brands need to think about to cope in a more circular world? Brands were built, historically, to define a position so that they could shape what people believed they stand for. There are a couple of things to focus on as you set out on your circular adventure. 

Put a stance into it: Rather than taking a stand on a universal ideals, the trick is to be more active in your point of view. Airbnb communicate you have the right to feel at home wherever you go, Commbank in a now ageless positioning always ensure they help you get to can do. Even humble old school car companies like BMW are having a crack as they move into mobility and away from ultimate driving machines. 

Put an x on it: This is the simplest way to denote a new adjacent venture. Add an undefined x. It can be x the subject matter or a stand-alone constant. Regardless, if it denotes it is a clever way to carry over implied meaning. My existing brand plus the brand of another is equal to new. Whether it is Woolies x division. Elon’s Space x or Armguard new take on the ATM with their ATM x or any diffusion line, my brand plus a new space is a great way to build brand attributes while retaining brand salience. 

Put some codes on it: Visual transference is the new black. Pioneered as FMCG businesses, consolidated large suites of brands under one unified umbrella. It is happening everywhere these days. Less was always more so think about what codes can go across all you do like Amazon has, Australia Post has tried or Walmart is seeking to do. 

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Be better to each other.