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    (Podcast) Threats & Opportunities - COVID’s Brand Impact with business author, Adam Morgan

    By ZAGENO Team - 12 minutes read

    Today we're joined by Adam Morgan, the founder and partner of eat big fish, a consultancy whose mission it is to assist challenger brands in competing with brand leaders. 

    Welcome, Adam. 

    Thank you, Greg. 

     

    It's been about 20 years since the first publishing of your book, Eating The Big Fish, which I have to admit has been a great career companion to me ever since I owned my copy.

    And I remember a little side story of losing a copy and feeling a bit adrift until I got a replacement. There's some lucky person who has it on a bookshelf.

    I love that, excellent. 

     

    More recently you have released Overthrow and Overthrow II, which you co-authored with Malcolm Devoy, the chief strategy officer from PhD EMEA.

    Yep. 

     

    And do you have your own podcast - aptly named Overthrow II, which is advancing the ideas and the conclusions of the book. 

    Something I heard that you discussed, in that, was that in the months and the year to come, brands will face a choice between a focus on efficiency and retaining sales levels or seeking a purpose that is practical or useful. That fascinated me and I was hoping you could elaborate a bit on this. 

    ...when COVID struck everybody kind of froze and then all the kind of long term brand building activity was put to one side and people said, first of all, we need to get through this… how do we get through this? Let's be practical and helpful with our customers and let's make sure we're there for them… let's make sure they can get what they need when they need it.

    Yeah, I think my observations of kind of clients around me, both clients that I had and just what was going on in the world and based in the UK, but looking at slightly broader was, when COVID struck everybody kind of froze and then all the kind of long term brand building activity was put to one side and people said, first of all, we need to get through this… how do we get through this? Let's be practical and helpful with our customers and let's make sure we're there for them… let's make sure they can get what they need when they need it.

    All of those absolutely the right things to do. 

    And as we come out of it or appear to be coming out a bit, or at least the first wave of it, understandably, a lot of businesses are still struggling. Not all of them, of course, but the businesses are struggling and so there's a natural shift down from long term brand building and business building into the kind of short term that's fixed the short term that drives sales.

    And there's a practical question about when are people going to look up again? When are we going to just lose the kind of short term one month, two months horizon and actually look up again and say, no, there is a return to business. And actually that kind of long term purpose, that long term brand building needs to kick-in again. 

    Malcolm, my co-author and indeed the person I was speaking to on the first podcast, was referencing a book by Orlando Wood who is a kind of a researcher who's looked at the effect of short termism on business success. 

    And he just makes the point that actually, to a very large degree, for most brands, that are spending behind their brands - spending marketing behind their brands - next year's success will be driven by the quality and the quantity of your marketing communication, this year.

    So that actually in taking that very short term view, we are going to compromise next year and that in turn will lead to a kind of convulsive cutting down and short term. So there's a danger that we'd reduce ourselves to this constant short term cycle rather than lifting up our heads and getting back to business again.

    And that I think is one of the big challenges and questions for leaders. And of course their CFOs. 

     

    Listeners may be surprised to think of older, more established companies as being challengers. How might this advice, this idea of a focus on efficiency or purpose apply to mature brands who may be existing through COVID-19 thanks to reductions in force, shutting offices, or leaning heavily on their working capital reserves?

    First of all, I think being a challenger is not really a state of market. It's not really about the size.  It's about the mindset that you bring to it. So being challengers primarily are mindset, and there are some quite large organizations that are quite openly, but large legacy organizations, quite openly saying, we need to take much more of a challenge of mindset in what we're doing. And in fact, a lot of our clients… quite big clients are in exactly that situation.

    One of our clients is a 150 year-old company... global company... that is saying we cannot continue to think of ourselves as a big international business. We have to think of ourselves to be more of a challenger of mindset because they're at a cross winds, that the new kinds of competition that we're facing demand that we reinvent and re-present ourselves and that will require all of us to challenge ourselves. 

    So, I think it is about a challenge of mindset. And I think in this particular situation that we see actually a lot of big legacy companies do have a resilience because they're bigger, they've got cash reserves, they've got more resources, they've got better relationships with distributors.

    They are able to ride perhaps much better than some of those smaller, more highly leveraged startups what's going on at the moment. 

    I was interviewing, again for the podcast, Daniel Ordóñez who is the chief growth officer for Dairy and Plant Based at Danone. Now, Danone is not a new company; Danone is a big company... big international company.

    And he talks about the fact that actually for a big kind of classic packaged goods company, like the Danone, what's happening is they get a little kind of bonus, at this point, because there's a retreat actually by the consumer to brands they know and brands they like, there's a kind of slight flight to conservatism. But, he says, make no mistake, all those trends that have been threatening us that have been fueling those startups that have been growing around us, those will return. So we, as a big kind of a legacy company... big establishment company, we've got a respite now. We've got a bonus amount of time to look this situation in the eye and say, if we want to come out of this more strongly, if we want to build an upward trajectory coming out of this, how do we need to challenge ourselves? What is that challenge of mindset we need to bring to ourselves, at this point?

    We're not going to call ourselves challengers; that would not seem to be right either to us or to the outside world, but we do need to bring a challenge of mindset as a cross functional team to what we're doing.

    That seems very relevant now because everything is up for grabs.

     

    Is it more fun to be a challenger?

    One of the great joys about being a challenger, of course, is you're not weighed down by the view that you have to be all things to all people. You can choose to stand for something to a certain group of people and really go along on that.

    And  there's an enormous kind of satisfaction about that. 

    One of the great joys about being a challenger, of course, is you're not weighed down by the view that you have to be all things to all people. You can choose to stand for something to a certain group of people and really go along on that. And  there's an enormous kind of satisfaction about that. 

    You can recruit a certain kind of person and reject another kind of person, because you're looking for a certain kind of attitude and a certain kind of personality. You can choose to communicate certain kinds of messages, not other kinds of messages. You can be very clear about what your innovation stream is. You can care about the experience that you offer you can sacrifice groups of people to really over commit on other kinds of relationships. So, I think there's a real joy and pleasure in that kind of focus and that exhilaration and really being able to lean into that and really go for it.

     

    Interesting. 

    Do you happen to have any examples of companies that are just as easily or perhaps more able to achieve this challenger ambition with a remote, work from home workforce? 

    I suppose there are challengers obviously that had distributed intelligence. 

    So, you look at Linux, for instance - it was a challenger to Microsoft. That was distributed intelligence, wasn't it? That was a whole bunch of people all over joined by a common challenge and a kind of common mission.

    And it's interesting, isn't it, that, of those companies that are saying perhaps, we don't need to return to offices at all anymore... companies like Twitch, for instance. I think they've made a kind of declarative statement around that. And I can understand that, for them. I think that it is perfectly possible to have a kind of communal sense of what we're here to do in a communal culture.

    When you have a bank, like Shroder's saying, I'm not sure that we need to return to work anymore at all, I find that very hard to understand because it seems to me that there is a kind of collective culture about banking. Even as banking reinvents itself, that you do need to bring people together to have that collective fabric.

    So, I think it's hard to see a lot of examples outside certain very specialist fields. 

     

    In conversations we've had over the past six months or so with businesses, experts, people in the world of venture capital, academics... we're hearing a central theme that is that there's an acceptance and an inevitability that certain businesses either because of framework or ideology, or perhaps both are facing an accelerated pandemic induced death. 

    Can you speak to the long term implications of consumerism - the high streets, the main streets - and that part of our way of life and how that might be changing as a result?

    Yeah, absolutely. There's a very interesting article I read, by, a retail expert in the UK called Mary Portas, in the FT, right at the beginning of COVID and she was talking about what's going to happen to the high street . 

    And she talked about the difference between physics and chemistry. So, a really nice, simple analogy, which I'll play out for you. So, the point she made obviously was that COVID has been an accelerator in all sorts of ways, right? So it's been a digital accelerator, digital transformation for all of us in business. But also my mum now does Zoom calls with me and my brother every Sunday night, she does her book club she's been transformed in two or three months in a way that she might have taken three years to get to. 

    So, it's been an accelerant and it's been an accelerant in the demise of these brands and companies and Mary Portas' point of view was this would have happened anyway, right?

    That there are too many, highly leveraged restaurants and restaurant chains to have survived. So they would have gone in three or four or five years time. There are too many mediocre brands and too many mediocre retailers to survive. So they would have gone at some point. Because, to her point, what they've been relying on for too long is the physics and they haven't understood the chemistry.

    So, they've been relying on proximity, being on the high street, a certain amount of convenience, being able to turn over five, six, seven seasons a year. But they haven't really understood the importance of differentiation, a better experience, a better connection and engagement with their customer.

    And so her view was that businesses that have just relied on the physics, which really is the mechanics, they will disappear. But the businesses, even in apparently unfashionable things, like the high street, which everybody's writing off left, right, and center can absolutely survive and succeed as long as they present or re-present the chemistry of the experience and the customer engagement in a new and fresh and exciting way. And I very much support that.

    I do think that for a while, the high street is going to be in some pain. I do think that bars are going to be in some pain but they will come back. We're social animals. We miss these things we'll want to return. There are some things that we can't compromise and change.

    It's not to say that Apple won't be a bigger company. PayPal won't be a bigger company, Amazon won't be a much bigger company then they were even two or three years ago. But I don't want to write off too many of these things because I think they reflect what it is to be a human animal. 

     

    I'm brought back to the early to mid nineties, I was in Silicon Valley, it was pre.com, bubble bursting and attitudes about company valuation, what it took to succeed... success itself was measured very differently. You had to show up and be present and you had a really good chance to succeed. 

    Right now, it seems there's this narrative about the inevitability and the durability of e-commerce in this COVID and even the post COVID era. 

    Do you think there's a false sense of security and maybe we haven't learned the lessons from those mid nineties period about digital commerce brands?

    I think there's two or three really interesting questions in that. So let me just try and separate them out briefly in my own mind.

    So, the first is, I think that what COVID surely emphasizes above all things is that there is no kind of linear predictability about the way the world is going. What it's doing is reversing a lot of things you would have said where we're only going to go one way. 

    So, let's go back to Silicon Valley, right? Gosh, a year ago you'd have said, safe as houses - buy property, if you can, in San Francisco - it's only going to go one way. Turns out not to be the case, right? People are bleeding out of San Francisco as fast as they can because they don't have to live there anymore. The same is true of central London.

    What's happening? They're all wanting to move back and live much more in their communities. As they live back much more in their communities surely the strength of “local” is going to go up. 

    So actually just as for every action, there's an equal opposite reaction. We are going to see that the strength of digital commerce accompanied by the kind of resurgence of local, because people will be able to wander out to their local restaurants or local shops at lunchtime and make the most of that.

    We'll be much closer to... I wouldn't have to fight my way home on my commute for an hour and a half and be too exhausted to go to the bar on the way back. I can literally leave my desk… my Zoom desk at six and walk out with my partner and go to the pub around the corner. 

    So, I think these things are going to be accompanied - there's going to be more of a duality of, yes, e-commerce and convenience when I need that but the same time, the reality of my local experience because that's more available to me. 

    So, I think it's not going to be just one thing.

     

    There's a book, The Best Service is No Service...  the claim that they were making was that eliminating the need for service is the best way to satisfy customers. But things have changed. In 2020 and beyond, does this ideology work?

    ...what's happening at the moment, which is everything is up for grabs all the time.

    When you and I've talked in the past, I mentioned this quote of cognitive anthropologist, Bob Deutsch, which was originally about America and the culture of America. And now, I think it's about what's happening at the moment, which is everything is up for grabs all the time.

    So, I do think that what we're looking for is the comfort of a linear prediction about, it's all going to be about this. It's not all going to be about one thing. Several things will grow and exist in the same kind of way. If you look at, for instance, the growth of some of those giants, like for instance, Airbnb, one of the things you observe about them is the effect of unintended consequences.

    So Airbnb... admirable brand and business in many ways, and at the same time it's driven rents up. It's been accused of over tourism. It's doing things to city centers, which it didn't want to do. It's being accompanied by other kinds of effects. And I think that the same is true. here, which is we are looking for the comfort of a clear sense of what's going to happen and all the indicators to me are, we are not going to know it will just emerge. 

    We can predict some things. 

    People won't go into the office as much as they were, therefore commercial property prices in central cities will go down, so we can predict things like that. But, what will it mean for the local area, the local area that you or I live in? What it might mean actually for where we're living in five years time - where we choose to live in five years time? And therefore, what impact will that have on organizational culture? Things like distribution hubs...

    I think all of that is very much up for grabs at the moment. And in a sense that's exciting, I think. And I think we should try not to bring it down to earth too quickly. 

     

    The notion of it is exciting. Do you think it's likely that digital commerce companies will redefine what service looks like between a no service model and a halfway point to provide some level of service? 

    Yeah, I don't think digital commerce can succeed in a world where every brand is completely frictionless and utilitarian. I think that it's very hard to build a brand without some degree of friction. That's what makes you remember it and appreciate it, at some level, unless you're the only convenient, frictionless brand. But we won't be like that; there'll be lots of frictionless brands. 

    So I think what's your friction? And what value does your friction give, in the form of service or experience or other kinds of emotional reward is going to be really key. 

    And you look at B2B brands, like MailChimp, for instance, who are introducing a kind of character and personality into what they're doing. It's not increasing the friction but it is absolutely increasing the emotional hidden reward from that. And that they are functional, but they're not utilitarian. 

    ...how we build more emotional engagement and more emotional rewards into those digital e-commerce experiences is going to be a very big part of the next five years.

    I think, starting to look at how we build more emotional engagement and more emotional rewards into those digital e-commerce experiences is going to be a very big part of the next five years.

    This concludes part one of our conversation with business author, Adam Morgan.

    Click here for part 2.

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