Disruptive Marketing

Why play by the rules when you can make new ones?

While conventional marketing targets consumers, disruptive marketing creates them.  It’s exciting, very profitable and even one big success can make your career.  Nevertheless, most efforts go towards conventional marketing and with good reason.

Knowing when to be conventional and when to be disruptive can make the difference between an innovative coup and a huge flameout.

Morning Milkshakes

Clayton Christensen describes disruptive marketing in this article (pdf), in which he points out that marketers often fall into the trap of exclusively marketing to segments without thinking about why people use products in the first place.  He argues that people hire a brand to “do a job.”  In effect, products have a purpose and that’s often lost in all the talk about targeting.

In one of his favorite examples (he uses it in both his books and his lectures), he describes a fast food restaurant where researchers found adults buying a lot of milkshakes in the early morning.  It turned out that these were commuters that needed a morning snack that they could easily drive with.

This was much different from what we normally think of the “job” a milkshake might do, such as an afternoon snack or a reward that parents give their children for being good.  Moreover, this job had a different competitive set.  Rather than positioned against sodas or desserts, milkshakes were positioned against bagels and doughnuts and required different actions to promote them.

Clearly, marketing towards “jobs” consumers is a different way of looking at things.  It’s geared toward unlocking new value, not optimizing an existing customer base.

Disruptive Marketing and Disruptive Innovation

Christensen’s ideas about marketing come straight from his research into innovation, which he first chronicled in his book, The Innovator’s Dilemma.  He found that successful companies sometimes failed because they followed the rules:  They listened to their customers, invested in R&D and followed accepted management practices.

However, sometimes the rules change.  This could be because there is a shift in market structure or because technology gets so good that it becomes much better than people really need.  In these cases, new competitors arise that kill the incumbents business.  Christensen called this disruptive innovation.

What’s interesting about disruptive innovation is that it usually isn’t a very good idea. Most of the time, companies succeed by making their products better (Christensen calls this sustaining innovation).  Disruptive innovations often make them worse, as when Canon and Ricoh nearly bankrupted Xerox by making cheap copiers that did less.

A counter example is Apple, which is largely (and surprisingly) not a disruptive innovator, but a sustaining one.  They’re successful not by coming up with new ideas that appeal to new consumers, but by taking old ideas and making them better (and radically so).

Sustainable Marketing

Just like opportunities for disruptive innovation are rare, so it is with disruptive marketing.  Usually, the best strategy is to segment consumers, buy a lot of TV and watch the profits roll in.

To understand why, let’s return to Christensen’s example.  He pointed out that by finding a new “job” for milkshakes, the restaurant unlocked a whole set of new opportunities.  However, it also identified a new consumer segment (morning commuters).  Once that segment is identified, marketing to them becomes a fairly conventional exercise.

Disruptive and sustaining practices aren’t necessarily mutually exclusive.  As I mentioned above, Apple isn’t a disruptive innovator in the technology sector (i.e. iPod was really just an improved MP3 player) but they were in the music industry (i.e. iTunes was truly a new way to sell music).

Anomaly Driven Insights

So the question isn’t whether disruptive marketing is better than conventional marketing or the other way around, the question is how do we identify unconventional opportunities?  The answer is that you simply look for data that doesn’t make any sense.

In the milkshake example, the initial insight was that 40% of milkshakes were sold in the morning and that was surprising.  So much so that the researchers followed up by interviewing customers, which is how they found out that they wanted something that they could eat easily while driving.

And therein lies the true lesson.  We often get data that contradicts our normal view of the world.  With a (very) little effort we can explain it away: small sample size, bad methodology, respondents didn’t understand the question, whatever.  What takes much more effort is to chase down the anomaly and try to understand it.

Disruptive opportunities are usually hidden in plain sight, but ignored.  Unlocking them often has more to do with diligence than brilliance.

– Greg