Big brands appear to be embracing a bizarre new trend where they covet the intensely-pressurised and restricted business models of startups. This sounds ludicrous, but when brand behemoths like Coca-Cola jump on the bandwagon, it becomes a reality.
In November, Coca-Cola’s vice president of innovation, David Butler, said the brand is looking to the startup world for business model innovation and “Starting ‘lean’ is key, it’s critical to the future”.
Butler’s statement followed the official opening of O2’s Tech City startup incubator, Wayra. The timing could be coincidental. But it shows brands are desperate for a touch of startup stardust; something that Silicon Valley has a lot to answer for, with geekdom becoming the 21st century version of rock ‘n’ roll.
I can see Butler’s point. Brands are not immune to Darwinian evolution; they’re as vulnerable to the ‘survival of the fittest’ mantra as any other business. Developing a lean and agile business model feels apt when suffering from the hangover of recession.
But it’s ironic that big brands want to mimic startup business models, when those very same startups would kill for a slice of that big brand’s privileges. So I’m jaded by this big brand rhetoric. If Butler et al really mean what they say, how about a month-long amnesty where they swap their unrivalled cash-flow for the startups’ habit of giving time away for free and worrying about how to pay staff wages? I’m game if you are, Mr Butler.
Putting aside the questionable rational, it’s not even possible for big brands to act like startups. It would involve choking-off resources, finances, distribution networks and reach. Surely no right-thinking global enterprise would take these risks when there’s potential to upset shareholders, restrict cash flow or jeopardise prized staff with zero-hours contract.
Every brand and agency, both small and large, has a role to play in making the system work. If all businesses involved in brand world began acting like startups, we’d become a homogenous bunch and few would retain stand-out.
Perhaps this desire to stand-out is partly where the trend stems from. Because, granted, taking startup-style risks helps cut-through. Red Bull is a case in point. Run by an eccentric Austrian doctor, personal profit is reinvested in the brand’s marketing via brave and bold schemes like the Stratos Space Jump and F1 partnership.
But the key difference is that Red Bull can afford to think like a startup because it’s a privately-owned company that’s not answerable to shareholders. Where private companies can afford to have a ‘gamble’ attitude, most big brands have to be constantly mindful of stock price and shareholders.
To say that big brands should think like start-ups is a flippant comment. Perhaps what really belies the trend is that the big boys want to engender the hunger and creativity that tend to go hand-in-hand with startups. But this hunger and creativity would be better served via the carrot, not the stick.
Big brands can nurture drive and innovation not by withdrawing the privileges that come with being a global player, but by focusing on them. So rather than mimicking the startup model of doing everything on a strangled budget, big brands should use their big advantages to develop a culture where these qualities thrive thanks to unrivalled incentives and working environments that look more like a film set from Big than the standard dreary office.
We only have to look to the likes of Facebook and Google to see how these incentives foster the creativity, innovation, drive and hunger that big brands think they can recreate through startup-like conditions. Ironically, these companies started out as lean and agile start-ups, but are now all grown-up – and not at all afraid of acting like the big brands they are.
At the other end of the spectrum is safe cosy John Lewis, an incredibly successful and well-loved brand that doesn’t seem interested in startup sexiness. In fact, FMCG and retail brands often provide a benchmark for relevant and effective marketing, with no need for startup-style risk or edginess. For proof, you only need look to the social media success of retailer Christmas campaigns. The sector is a shining example of big brands doing big and safe things, but doing them incredibly well.
Startups inevitably have to find mould-breaking solutions in order to survive the intense pressures that come from starting out. But more often than not, this level of pressure creates failure, rather than success. Perhaps this is easy to forget if you’re sitting in a big luxurious office, safe in the knowledge you have enough financial security to plan for another five years.
By trying to ape startups and their inherent financial restrictions, big brands are becoming oblivious to their privileges. Far better than turning their business models inside out, they should stay true to who they are and do their big things. They should just carry on doing them brilliantly.
By George Smart, founder of integrated creative agency, Theobald Fox