The breakfast session, hosted by brand experience agency Rufus Leonard, featured a panel of disruptive brands including The House of St Barnabas, Birchbox, and Kaido. It opened with a presentation from Charlotte Beckett, senior strategist at Rufus Leonard, on “The DNA of Disruption”, the four main components being “The Individual”, “The Team”, “The Organisation”, and “The Consumer”.
First, though, some context. As a trusted adviser to some of the UK’s most established brands, Rufus Leonard is fascinated in disruption and understanding the ways in which learning from the disruptors can help these brands avoid being disrupted while disrupting categories themselves.
A year ago, the agency set out in its attempt to measure brand experience with the first Brand Experience Index, which enables brands to calculate their total impact on customers across touchpoints compared to their competitors. Rufus Leonard is launching the second wave in the coming weeks, which will combine the agency’s interest in disruptors with that of brand experience.
Rufus Leonard started with a hypothesis in mind – that the disruptors in each sector would score well on practical, active measures such as “Do” and “Purpose” but were surprised that, in fact, brands including Airbnb, Netflix, and Uber, posted higher Brand Experience Index scores in the three more emotional facets: “Feel”, “Sense”, and “Connect”.
This highlights that for a brand or a business to truly disrupt a market it can’t just engage with people in rational terms, it has to engage on an emotional level as well – winning people’s hearts and minds.
The DNA of a Disruptive Organisation
Charlotte Beckett, senior strategist, Rufus Leonard
In terms of providing a definition, disruption is changing consumer behaviours and industry practices, not just innovating products and services. It involves totally changing your category.
To understand how organisations and brands achieve this, it’s worth focusing on the DNA of what makes up a disruptive organisation. This breaks down into four main areas, embracing the individual, the team, the organisation, and the consumer.
The Individual. Apple’s Steve Jobs famously described disruptive individuals with his “Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in square holes” comments. Disruptive individuals tend to be defined in psychological terms as “productive narcissists”. Behavioural traits often common to founders who lead these businesses are that they are free thinkers, want to create – not understand – the future, visionary leaders, they’re proud of their accomplishments, and make use of humour, often in a self-deprecating way. However, they don’t always consider others and, while they’re great on the big picture, they’re not so hot on the detailed analysis. And, be warned, there can also be a dark side to these individuals. Just look at Donald Trump.
The Team. Disruptive teams feature people with distinct skills. They need to be filled with people with a range of qualities: disruptive thinkers, results drivers, pragmatists, rule followers, and relationship managers. Teams with this blend of skills, people who are good at building social capital and process as well as the providing the disruptive thinking, are more able to deliver, because the foundations needed for disruption rely on social connections and a shared vision, which in turn lead to trust, making it easier to collaborate on areas and, ultimately, to deliver innovation and market disruption.
The Organisation. Disruptive cultures are based on creating psychological safety so that people can be themselves without fear of negative consequence. They need to be able to question and not always agree. This is proven to boost employee engagement, collective learning, innovation, productivity and success. Research from Google found that sales teams that feel psychologically safe deliver results that are 17 per cent ahead of target.
The Consumer. Some 40 to 90 per cent of innovations never become a commercial success. This is because disruption means change, and consumer resistance to change is human nature. Disruption can conflict with beliefs and socially accepted behaviours, and many people tend to be happy with the status quo, so the ability to persuade people to change their habits is an important part of any disruptive organisation’s DNA.
The true disruptors excel in each of these four areas and Rufus Leonard’s own Brand Experience Index research shows that disruption through brand experience depends on a balance of brand, services, and people.
The audience then heard from the three disruptors in turn, before Charlotte Beckett hosted a question and answer session around the key themes of disruption.
Janis Thomas, marketing director, Birchbox UK
Janis’ theme was “Breaking Down the Walls of Traditional Retail”. She explained the US origins of Birchbox, the beauty subscription service, and the company’s three-stage model of offering consumers the chance to Try, Learn, and Buy.
Much of Birchbox’s success – it has reached 1 million subscribers worldwide and is set to hit 160,000 subscribers in the UK by the end of the year – comes down to understanding the consumer: “Within beauty, consumer choice is overwhelming. What we do differently is the consumer. Prestige beauty retailers target the devoted, high spending customer, and that’s 20 per cent of the population. Our different approach is that we talk to the ‘beauty majority’, the 70 per cent of the population who have a demanding life and don’t have two hours to spend getting ready.”
A considerable factor in Birchbox’s success is its ability to contribute incremental sales for the beauty industry: “After a year, Birchbox customers increase their spend in prestige beauty by 87 per cent. That’s a significant amount for the industry because we’re growing consumer spend not just moving it across. We drive traffic and sales for other retailers too.”
Rich Westman, founder, Kaido
Rich Westman launched Kaido, which uses technology to track people’s healthcare data, a year ago. A sports scientist with experience working with rugby union teams Leicester Tigers and Worcester Warriors, he started out thinking he’d create a health data app but “the reality couldn’t be more different”. Instead Kaido has built a cloud-based platform to aggregate people’s health data from multiple devices, and taken a business-to-business route of offering its service to people through their employers.
Westman said that an open and collaborative approach has proved vital. While remaining independent, Kaido has since partnered with Microsoft: “Start-ups want to protect their IP but working with Microsoft obliterated the original business plan and we came out in a position to be disruptive – so don’t protect your ideas as a small company, if you share you can grow an awful lot quicker.”
Sandra Schembri, chief encouragement officer, The House of St Barnabas
Sandra Schembri joined The House of St Barnabas, the London charity that helps the homeless get back into work, nine years ago. Since then, it has radically changed its model based around a members club located in its Georgian house in Soho. This exists to make a profit for the charity, making The House of St Barnabas a genuine social business.
Schembri said that disruption came from “understanding our own culture and what we wanted to create.” This isn’t always easy: “We created a bag of tension… but it gives people permission to try, maybe not always succeed, and share their learning.”
“This is built into our structures – giving people permission is not enough, you have to build it into their work day. So we stole the idea from Google that, for 12 days a year, people can do whatever they want as long as it works towards operational goal, and this activity has to be outside their usual area.”
What’s next for disruption?
What are some of the challenges that disruptors face? Lack of linear business growth emerged as a key issue in terms of a start-up scaling its business.
“Growth isn’t in a straight line, even today the vast majority of consumers haven’t heard of us or even of subscription boxes. So it’s about educating people to think differently and that takes time, and it also takes trust,“ said Birchbox’s Thomas.
Sandra Schembri of The House of St Barnabas shared that growth and the changing nature of her organisation has led to a need for a “major culture shift”: “I have to over-communicate, and we have to stop being a team and become a team of teams. We have to empower, and that means me letting go of power, which is quite an emotional journey.”
“We’ve gone from two to 11 people, and gone back down again. In a way, getting cash was a big hindrance, because I recruited quickly and had no work for them,’ said Kaido’s Westman. “We had to let people go because I wasn’t in a position to know which was the best direction for them. I was told speed was everything, but this can only come when there is absolute clarity in the founder as to where you’re going. Now we’re on the way back up.”
He then talked about the issue of winning consumer trust, especially when it comes to sharing data: “People are happy to share data if they get value at the end. That’s what we hang everything on. If we provide a personalised experience as a result of the data, then hopefully people will be more inclined over time to share data with us. But we’re a startup company, so people ask ‘why should we share data with you?’ That’s why partnering with Microsoft has proved so important – we can say the data will never leave these shores and we’re not going to sell your data, I just want to provide a service to you.”
And Janis Thomas brought up the importance of Birchbox recognising and valuing its most important customers as time goes on, even if this means changes to the service that will alienate other shoppers: “We asked the questions ‘Who do we want our customer to be long-term?’ and ‘Who do we deliver the most value to?’ Our new programme rewards the type of customer we want to have far more of. Less lucrative customers might not entirely be happy with it, but the people who will add most value to our business long-term are actually very happy.”
The disruptors also discussed whether size matters, if large companies can be truly disruptive in markets. While Thomas said that “culture and vision are more important than the size of a company”, Westman shared that, in a market such as health, size can prove restrictive: “Health insurance, for instance, is a massive market, and is just doing the same year after year. And speed of innovation is hard if, say, you’re the NHS and have multiple layers to get through to make decisions. I can make a decision in five minutes and get it done in one hour. This comes back to culture – big businesses are big for a reason but they do have barriers to doing things in new ways.”
The breakfast concluded with each of the disruptors predicting which business categories are ripe for future disruption.
Janis Thomas: “With the rise of ecommerce, the delivery is still not there. There’s opportunity around how do you get goods to a consumer in a timely and cost-effective way.”
Sandra Schembri: “Housing. It’s starting to change but there are exciting things on the horizon due to cultural shifts.”
Rich Westman: “Finance. The rise in fintech is astronomical, companies looking to disrupt business models that have existed ever since the banks were formed.”
In conclusion, the event highlighted that disruptive innovation that lacks the support of teamwork and organisational structures rarely achieves consumer acceptance. Beyond this, it became clear that understanding the consumer, and their various interactions with a product or brand, provides the necessary social currency for a disruptive innovation to be a success in its market.
Teamwork, organisational structures, and understanding the consumer, are therefore as vital in determining success for disruptors as the initial spark provided by the “productive narcissist”. The panel of disruptors were clear that disruption of established markets will continue, and that some big opportunities for start-ups lie ahead, providing a threat to existing players that fail to act.
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