Note: first written for and published in Brand Quarterly Global Edition Jul 15
How come a 6-year old company offering on-demand car service (if you haven’t heard of them, they go by the name of Uber) can be worth $40 billion? And why is Priceline worth as much as Ford Motor Company (about $60b), all within the space of a bit over a decade, yet manages to generate just about 12% of its value in revenue? The single most important reason why these phenomenal valuations are possible is hope – driven by the disruption within value chains and entire commercial eco systems.
At the heart of these early symptoms of what is yet to come lies the changing nature of customers.
As consumers we are in the driving seat more than ever before. And we are accelerating, too. The accelerator we push is called technology. In combination with the ability to process data ever more quickly, this is a powerful way to fast track the connection between a brand, a product or a service and an end-user. What is left out is the middle, so to speak. For consumers this leads to more choice of whatever you can think of, at a better availability and a lower price – always and irrespective of location. I will call this the ‘post API’ space. However, if you are either increasingly stuck in the middle or worse, positioned as ‘pre API’, then it might be high time for you to re-think your future.
The Meaning of Application Program Interface (API) in the Real World
The world we are living in is all about integration. Brand and Marketing are no exception. APIs help us to integrate quicker and with less friction. Gone are the days where this is all about your Website talking to your CRM system and vice versa. If you are a traditional Taxi Driver, Travel Agent, Hotel, Book Seller or Asset Manager you will know already what it feels like to live in a ‘post API’ world. APIs increasingly connect the world of products and services with the end-consumer without anyone or anything in the middle. This is what is disrupting traditional value chains. This is what fuels the greed and hope of future returns: the assumption that large parts of the middle will be cut out.
So what is the meaning for Brands and their guardians?
For simplicity, let us adopt quite a binary perspective: in order to emerge as a winner in a post API world, you will have few strategic choices. Either you scale and become so large that you can survive with ever-thinner margins. Or you differentiate and specialize. Whichever strategic context works better for you, the world will be ever less forgiving for imperfect products or brands that over-promise and under-deliver. Quite Darwinian. The stronger and better will survive and the weaker will be condemned to the evolutionary past, driven into extinction by an omni-connected consumer who trades his opinion as a currency.
The Solution: building better products and deliver on - or beyond - your promise.
It’s that simple. Einstein said that we should “learn the rules of the game – and then simply play better”. But the game is changing and sadly the world is full of examples where entire industries were too blind to recognize it in time. From the ice-trade in the 1880ies adopting electricity to build conveyer belts to transport ice quicker instead of understanding the impact of the nascent technology we now call a fridge, to the more recent deaths of your local DVD rental corner shop, adding soda drinks and popcorn to their offerings whilst you started subscribing to Netflix. There is no space for brands and products left in the middle. Or is there?
Differentiating through Brand
The golden nugget is to create a position in the hearts and minds of your customers that is so strong that they will love you no matter what – or almost. A good case in point is Harley-Davidson. It is no coincidence that you no longer buy a Harley to go from A to B, but for anything and everything in between. The destination and life itself is the journey. The brand has become synonymous with delivering on that promise, including every bit of adventure that goes with it. However, if you were an executive at Harley-Davidson Motor Company in the mid 1920ies, you would probably have had quite a different perspective on the future. You would have been stuck in the middle – consumers would choose to satisfy their needs of transportations through pretty much anything else but a motorcycle. With retail prices for cars dropping below the yearly earnings of USD 438 annually for an average American, the name of the game was now to own a car. And if you didn’t own one, you were for sure aspiring to do so. All brought to us by Henry Ford and his Model T, introducing the era of scale that delivered automotive affordability to the masses. In a sense, Harley was quickly becoming a post API player of the day.
If you go for Differentiation, look for the 3rd place
Harley’s strategic choice to escape the middle in the early 30ies was powerful yet pragmatic. They took a bold decision and positioned themselves as a Lifestyle Brand, offering a way to spend leisure time – away from home, and not at your place of work. An idea that has worked brilliantly for the last 80 years and is still going strong. Other companies started adopting this concept of offering an ‘in-the-middle-place’, too – think of Starbucks, for example. A great place to socialize, to meet people and feel well; or plug in and work for a couple of hours. Not your home, not your office either – it’s your 3rd place in a post API environment.
Soul Search before embarking on a Positioning Journey
Who was the first man to set foot on the moon? Neil Armstrong, of course! … And who was second? What’s the highest mountain on earth? Of course … and which one is the second highest? Never mind that Buzz Aldrin set foot on the moon only minutes after Neil Armstrong on July 21 in 1969, or that Mount Everest is only higher by a few hundred meters than K2. The point is clear: be first or suffer a life in the shadow. This also goes for the concept of becoming a 3rd place destination in your customers mind.
Who are you? And where do you go?
In the era of millions being spent on consumer advertising to make sure the perceptions we generate for our brand’s and product’s become a reality for our customers (mind you, pretty much regardless of whether it delivers on its promise or not), these questions were left too long unanswered. Today, your Brand becomes the bridge between what you have on offer and who buys it (or not) more than ever before - because there is simply less and less that clutters the middle. No car dealer that can take the blow when things go wrong and you bought your Hyundai through the Rockar Digital Dealership in Bluewater (London), no concierge that can smoothen your mood when the room you booked through Airbnb is not quite what you expected. As a brand, you are responsible for the promise and the delivery, without any short cuts. The connective tissue that glues this together is the purpose and meaning you add for anyone engaged with your brand - staff, suppliers and customers. If you in addition can make it a place where they can all meet and feel well (physically and mentally), then the power unleashed by offering a 3rd place fuelled by purpose will yield benefits beyond your wildest imagination.Note: first written for and published in Brand Quarterly Global Edition Jul 15 ---
- Al Ries and Jack Trout: Positioning, the battle for your mind, 2001 Image: http://www.estestinc.com/third-place-singular-space/