Brand owners must adapt

29 August 2011

NEW YORK: Brand owners must become "adaptive" organisations that quickly respond to change, foster experimental models and implement strategy at speed, the Boston Consulting Group has argued.

"If your competitive reality is uncertain and rapidly changing, as is true in an increasing number of industries, you need a dynamic and sustainable way to stay ahead," the consultancy said in a study.

The first task for companies is to "read and act on signals", a requirement that spans everything from data mining and using real-time point of sale statistics to social listening on sites like Facebook.

One example of this is Tesco, the UK supermarket chain, which leverages data from the purchases made by its 13m Clubcard loyalty card holders to provide targeted offers and improve its ecommerce platform, as well as selling insights and services to third parties.

Google, the online giant, also boasts algorithms that update the position of ads based on their relevance and on user behaviour, all on a "split-second basis, without the intervention of human decision makers."

Experimentation is an equally vital pursuit, BCG asserted, with Procter & Gamble, the FMCG group, a leader in this area thanks to its in-house Connect + Develop open innovation programme and use of specialist external services like InnoCentive.

P&G's 3-D "virtual store" has also streamlined the market research process, and its Vocalpoint web community of mums yields crucial on-going feedback about new and existing products.

Elsewhere, Ikea, the furniture retailer, began to develop malls in Russia after discovering property prices rose in neighbourhoods where it opened stores, and derives more profit locally from real estate than its traditional activity at present.

BCG further suggested adaptive businesses "manage complex multicompany systems" and create an entire ecosystem surrounding their products, as is the case with Apple's devices, software and apps.

EBay, the online auction site, also relies on buyers rating sellers to build up trust, has its own payment service, and is helping big brands enhance their web presence. "We're a different eBay today, a global commerce company," John Donahoe, eBay's CEO, said recently.

A final characteristic of truly "adaptive" corporations is an ability to "mobilise" strategy in a targeted fashion, as shown by Cisco, which has three separate "cross functional councils" making decisions regarding its enterprise, service provider and emerging countries divisions respectively.

On a smaller scale, Whole Foods, the natural and organic grocery chain, lets teams within its individual stores, not national buyers, choose what items to stock, as well as picking who to hire.

Data sourced from Boston Consulting Group; additional content by Warc staff