Open up your mind and say, ahh...

Part of an unpublished appendix for The End of Business as Usual…

Think of your favorite brand, and the first thing to come to mind is likely a logo, such as the Coca-Cola scripting, a tag-line, such as Nike’s “Just do it,” or a jingle – remember the Oscar Meyer Wiener song? These may be the aspects of a brand you remember, but they are no longer the most important aspects of branding today. Identity, persona, essence and promise, are the new kings and queens of the branding kingdom, thanks to technology and the deeper connections it opens up between brands and consumers.

Markets, consumer behavior and how businesses connect with customers are all directly impacted by technology. Looking at the rapid erosion of Blockbuster’s business model, it’s clear to see the impact that technology can have on consumer behavior. During Blockbuster’s initial bankruptcy filing, CNBC’s The Faber Report summarized it this way, “At the end of the day, this is one of those bankruptcies that’s not really about a financial situation as much as it’s about seminal changes in how people ultimately watch video.”

The increasingly important role of technology, combined with global economic unrest, means a company’s brand is more important today than it has ever been. Consumers, in search of certainty, rely heavily on a brand’s symbolism and significance. We don’t have to look much further than Netflix for a recent example of what happens when executives misread the impact of technology and consumer demand and in turn, make decisions that have negative effects on the business and the brand. In this case Reed Hastings and company raised prices, which sent customers in an uproar. Feeling the effects of negative sentiment from a full-blown PR crisis and a declining stock price, Netflix opted to divide the company into two entities, Qwikster would handle DVDs and Netflix would focus on digital and streaming. The company caved to consumer and investor pressure however and folded the two entities back under Netflix, killing off Qwikster as quickly as it introduced it. Netflix customers weren’t ready for such a bold move toward a new direction. But, any form of market research that studied conversations in social networks or quite simply, a customer engagement program would have revealed the state of consumer needs. Netflix now must focus on rebuilding its brand to earn and re-earn trust before it can take another aggressive move into the future.

Brands that fail to instill this level of confidence in consumers run the risk of falling to digital Darwinism. The brands that survive this era of economic disruption, will be the ones that are best able to evolve because they recognize the need and opportunity to do so, before their competitors .

Survival of the Fitting

Digital Darwinism is the evolution of consumer behavior when society and technology evolve faster than some companies’ ability to adapt.

The point of natural selection is that not every business will make it. As Edward Lawler and Christopher Worley note in their book Built to Change, “An analysis of Fortune 1000 corporations shows that between 1973 and 1983, 35% of companies in the top 20 were new.” Their work showed that the number of new companies rose to 45 percent between 1983 and 1993. That number increased to 60 percent between 1993 and 2003. And, as they so appropriately asked, “Any bets [as] to where it will be between 2003 and 2013?”

To further their point, a recent ad produced by Babson College cited a rather humbling statistic; “Over 40% of the companies that were at the top of the Fortune 500 in 2000 were no longer there in 2010.”

We’ve witnessed the demise of seemingly invincible brands in the U.S., such as Circuit City, Borders Books, Wherehouse, Tower Records, Pontiac, Saturn, and Palm among others. Meanwhile, grim predictions show that the pattern has no end in sight. In June, 24/7 Wall St. published its annual list of “Ten Brands That Will Disappear in 2012.” The publication predicts the demise of some of the world’s most recognizable brands, including Sony Pictures, American Apparel and Nokia.

What separates brands that falls to digital evolution from those that excel is the ability to recognize the need for change and the vision to blaze a path toward renewed relevance among a new generation of consumers.

Branding is More Important Than Ever before

In 1984, Apple stunned the world with its now iconic “1984” commercial. It firmly established Apple’s brand and ultimately set the stage for the company’s significance in the emerging personal computers market. The commercial attained legendary status, but Apple, like every brand, would still need to relentlessly compete for attention and relevance.

A year later, Apple attempted to match its previous success with “Lemmings,” a commercial that dramatized the lemming-like behavior of the PC-based workforce. The ad, while arguably brilliant, was widely considered a flop, since following the image of businessmen following one another over a cliff confused customers. Over time, Apple’s brand slowly degraded, losing touch with its core audience and missing an opportunity to connect with the growing base of consumers seeking personal computers.

Debate and difference of opinion, lightly salted with an appropriate amount of passion and tenacity, can help lead to significant breakthroughs. In the world of corporate correctness we are all living in, this should be highly encouraged. I really appreciated Bob Frisch’s response to my recent article on the importance of culture. Though I think he missed the point, the overwhelming number of people who embraced the notion that culture is imperative for sustained success is an indication of the importance of this issue and the opportunity culture offers for positive change.

People matter. More than machinery, products, and real estate. People invent and build. People support and serve customers. Your people either create or undermine value, cultivate or kill relationships, drive or reduce success. A well-conceived strategy living in the hands of unhappy, misdirected, misinformed people is a sure way to a slow and painful death. There is no comparison to being in the hearts and hands of energized, informed, and motivated people.

Companies are not linear, inert systems. They are ever-changing, organic communities that are dependent on the engagement, talent, and energy of their people to operate successfully. Ignore the mental well-being of your people and culture at your own peril. Step inside of any company, no matter the size, stage of development, or level of success, and the culture is either driving the strategy or undermining it. To exist in the first place, a company must have a clear purpose, a deliberate intent, and a directive or set of ideas that it uses to pursue a clear goal, but it’s the people who have to execute it.

There is abundant evidence in every industry that the best-laid plans (or strategies) are derailed, suffocated, or eaten by cultures that either don’t understand or straight-out reject the intent. And this, in turn, slows, sucks the life out of, or sabotages the implementation or execution of the company’s strategy.

For the sake of debate, let’s assume there are two kinds of companies in the world: those driven by strategy, where culture is not a priority, and those guided by a clear strategy, where culture is highly valued and universally understood. To help clarify what’s important, let’s look at the relationship between culture and strategy.

Every company needs a clear strategy…really?

You don’t need to be told that a company must have a clear reason for being and a plan of action. But, you might be surprised by how many companies lack strategic clarity, and whose only purpose is to make a profit. To be clear, making money is absolutely imperative, but it is just one of the outcomes of a successful company.

Competitive differentiation and optimal financial performance do not come from strategy alone. To ignore the potential of a fully engaged and mobilized culture that understands, embraces, encourages, executes, and enhances strategy is negligent and a missed opportunity. It is imperative that today’s leaders not only understand and focus on the interdependence of strategy and culture, but also step back and examine their own role–it is one of the most important areas of their personal responsibility. The mental and physical health of the company in their care must be paramount for sustainable success.

Strategy is rational and culture is emotional. 

Strategy, at its core, is rational, logical, clear and simple. It should be easy to comprehend and to talk about. Without a clear strategy, a company is lost. Culture, on the other hand, means different things to different people. It is emotional, ever-changing, and complex. Culture is human, vulnerable, and as moody as the people who define it. It can be intimidating and frustrating, often leaving leaders dodging it, neglecting it, or discounting it. Because so many large companies are run by people whose expertise is heavily skewed to the rational, financial, and legal side of the equation, culture is often subordinated, misunderstood, or underappreciated.

Every company has a culture, but not every culture is healthy. 

Culture is the environment in which the intent of your company is nurtured, fueled, restricted, or suffocated. Every company has a culture and its health should be monitored and cared for. Cultures reach their full potential when the people in the trenches doing the day-to-day hard work understand the game and are fully informed and engaged. Healthy and vibrant cultures are directed, purposeful, vibrant, optimistic, and highly-successful because they are fueled by the company’s larger purpose and supported by the capability to follow through. A company with a healthy culture is able to operate at its fullest potential while one with an unhealthy culture operates far from its best.

Visionary leaders are required for successful culture. 

Like a great coach, a leader’s job is to clearly set the intent for the journey, model the correct behaviors, lead with an understood set of values, communicate clearly and with sincerity, and set clear expectations and guardrails for the culture to thrive within. It’s the team’s job to bring their best game every day and to execute the game plan to the very best of their ability. Like any great sports team, a culture is built by motivation, communication, training, encouragement, and celebrating both small and significant successes.

Culture is the field on which the strategy plays. A vibrant and functional culture is like a blanket that embraces, protects, and nurtures the strategy. A company without a strategy lacks direction. A strategy without a culture that understands or embraces it is like a sports team without spirit.

Understanding the relationship between culture and strategy. 

1. Strategy drives focus and direction while culture is the emotional, organic habitat in which a company’s strategy lives or dies.

2. Strategy is just the headline on the company’s story–culture needs a clearly understood common language to embrace and tell the story that includes mission, vision, values, and clear expectations.

3. Strategy is about intent and ingenuity and culture determines and measures desire, engagement, and execution.

4. Strategy lays down the rules for playing the game, and culture fuels the spirit for how the game will be played.

5. Strategy is imperative for differentiation but a vibrant culture delivers the strategic advantage.

6. Culture is built or eroded every day. How you climb the hill and whether it’s painful, fun, positive, or negative defines the journey.

7. When culture embraces strategy, execution is scalable, repeatable, and sustainable.

8. Culture is a clear competitive advantage.

9. Culture must be monitored to understand the health and engagement of your organization.

10. Strategy and culture both require the clarity and power of brand to bring them seamlessly together.

Image: Flickr user certifiable.nl

Believe it or not, at one point we actually fed our pets real food. That was, until people-food companies realized they could maximize their resources by mashing together all of their scrap meat, leftover grains, eggshells, and bones, injecting some vitamins, and cooking it up into “kibble.”

Lucy Postins, founder of the human-grade whole-food pet food company, The Honest Kitchen, set out to change all of that, nearly a decade ago. Her line of dehydrated pet food is vibrant with colors from real, whole foods–green spinach, orange carrots, yellow bananas, red cranberries–and packed with protein from healthy and ethically raised animals, such as chicken, turkey, beef, and haddock. Additionally, she has a set of morals that drive everything she does: The Honest Kitchen won’t sell to any pet store that sells puppies, in an effort to fight against puppy mills, and she’s said no thanks to some of the big-box retailers as well in an effort to support independents.

What she didn’t realize in those early days as she sat cooking up homemade dog food in her Southern California kitchen, was that she was about to shake the pet food industry to its core, creating a disruptive ripple effect. I recently sat down with her to learn more about how she puts principles over profits. Here’s what she had to say.

In your mind, what is disruptive innovation, and are you using it to transform the pet food industry?

I think of disruptive innovation as creating something that consumers didn’t realize they needed; it’s developing a product that changes the status quo and refreshes the set of options consumers have, with something new that makes the old options (which they previously thought were fine) suddenly seem dull or flawed.

What advice would you give to other entrepreneurs who are striving to change an industry?

I think one of the main tasks for the innovator is often the communication. Since you’re creating a product that meets a new need, there’s work involved in explaining exactly what you’ve created and how it’s better than what people are in the habit of using. The great thing with this task, of course, is that you’re telling a story that’s true and meaningful, as opposed to coming up with gimmicky messaging to try and differentiate yourself. With our products, once we put them to market, we found consumers were choosing to use them for a really wide array of reasons, so it’s been challenging to articulate our messaging in a way that’s concise but sufficiently explanatory, to every type of consumer who’s interested in the food.

The thing that’s helped us a lot in this is the fact that we are our own consumer. We’re a company of animal lovers, making products we believe in that are good enough for our own pets to eat. That means we can connect with our customers at a deep level and have an empathetic way to tell our story.

On a practical level, besides staying true to your mission and values, I think listening to your gut is one of the most important things you can do as an entrepreneur. I’m a pretty intuitive person (and quite stubborn, too) and I think if you really believe in an idea or know in your heart that something’s going to work, you should just go for it and not waste loads of time analyzing the numbers. It’s equally important to have the freedom to fail and to know when to stop something if it isn’t working out; I can think of a couple of occasions where I’ve failed to follow through on what my instinct has told me, particularly when it comes to employees not working out, and not severing ties quickly enough.

What has been the hardest part of going up against major brands with multi-million-dollar budgets in pursuit of what you believe is right?

It sounds strange to say, but when I look back I don’t feel we have really struggled hugely. From the outset, we didn’t have a major plan for aggressive growth; The Honest Kitchen has grown in an organic way and charted its own course on many levels so we’ve evolved without the pressure to be a certain size at a certain time. That means we have been able to stay true to our roots and allowed our values to thrive. In turn, that’s further fueled our growth because it’s deepened our connections with our customers who then feel inspired enough to tell others.

With that all said, we have of course had our challenges over the years and probably the most prominent for me have been the regulatory challenges from FDA and various state departments of agriculture, challenging our claims that our pet foods are human grade. Dealing with government agencies is exhausting at the best of times and it really took huge time and energy to prove the legitimacy and truthfulness of our human grade claim to the FDA, but we ultimately prevailed and received a “Statement of No Objection” from them. We also ended up in a legal battle with the State of Ohio, who also disputed the claim and refused to issue us a feed license until we took them to court and the judge ruled in our favor, based on our right to truthful commercial free speech.

What makes your company different from every other pet food company trying to make a difference?

Our human-grade status is a major differentiator. Our products are made in a human food facility on the exact same equipment used to produce various foods people eat. That really strikes a chord with consumers and sets us apart from lower quality, feed-grade manufacturers.

We’re extremely selective when it comes to our suppliers, too. We’ve worked with many of the same producers since we began in 2002 and insist that all suppliers sign an annual “Vendor Pledge” to provide assurance of the quality and integrity of the ingredients we buy. We won’t use GMO or irradiated ingredients, and don’t accept any ingredients from China.

We also don’t allow our products to be sold in stores that sell puppies; I’m strongly opposed to the puppy mill trade and believe that a responsible breeder’s animals would never end up in a shop (or a shelter).

The other thing that makes us different is literally who we are as a team of people. It’s amazing how many pet food companies are owned by huge conglomerates and driven solely by the bottom line, and/or run by old men in gray suits who don’t even own a dog, let alone kick their spouse off the couch so the dog can have a comfy seat! My staff and I really put the animals first–pets before profits–on every level.

How do you believe your brand has the power to transform your section of the world? 

We, along with a handful of other great companies who are producing top quality pet products, see ourselves as part of a movement of “indie” producers working together to raise the bar within our industry. The ultimate goal among us is to make people aware of the link between pet food and pet health, and instigate an upgrade from the type of pellets most people feed, to fresher, healthier alternatives like ours. I think The Honest Kitchen was a pioneer within our specific category (dehydrated, human grade whole foods), but we’re part of a bigger movement all working together for the common good.

How do you stay focused during major challenges or when you feel like you’ve hit a wall?

Although it’s a cliché, I think the work-life balance is extremely important, especially given that my husband Charlie also works here and that we have a young family. We feel it’s important to have a good dividing line between work and home and to be as focused as possible in each area, when we’re there.

I make it a priority to hike every morning with my dogs before work, to clear my head and get my “list”organized for the day ahead. I also rely a lot on a “to do” list each day at my desk. Checking off things as you complete them is so rewarding, especially in a role where you have a very diverse set of responsibilities and loads of daily interruptions.

If I do hit a wall, I think it’s important to stop rather than try to struggle on. A quick snuggle with the office dogs (we have 10 here most days, including my two Rhodesian ridgebacks and a blind pug), taking them for a walk–or, being British, stopping to make a cup of tea–can really help to reboot the day.

What is the most valuable thing someone else told you that you’ve applied to your business?

Many years ago, I had cause to email Gary Erickson, the founder of Clif Bar & Co. I was writing to let him know how much I enjoyed his book, Raising the Bar, and offering to send some food for the dogs at their office. Gary emailed back with “….Your story is inspiring and confirming. I pray you continue to grow without losing ‘control.’ Don’t give up equity, if so to the right people.” Those words stuck with me during our three year search for the right minority investors at The Honest Kitchen and ultimately, in a strange twist, the stars aligned and Gary’s own investment firm, White Road, was one of two we took growth capital from.

Another great piece of advice from one of our shareholders was to create a program that leveraged and rewarded our most passionate customers. Word of mouth has always been fundamental to our growth and formalizing how it worked to empower customers to be our spokespeople was a really smart piece of advice. That has ultimately become our “Honest Allies” program, which will further evolve into Honest Legends this year.

Why do you think your type of disruptive innovation will work? And why now?

I think it’s working because the products create a real, tangible difference in the health of pets. Improved digestion, shinier coats, better skin, and reduced ear infections are just a few of the improvements people see in their pets. It’s a natural talking point at the dog park, vet’s office, or even in the line at the grocery stores. Our products do speak for themselves, there’s a story attached and our customers are so connected that they’re only too willing to share it.

What values do you operate from, and why are they important?

I think “pets before profits” is the most important value that sits at the core of our daily decision-making; it means thinking about what’s right for the animal who is going to eat the food, often at the expense of the bottom line. Switching to 100% free range, antibiotic-free, and humanely raised chicken in our food made no sense from a fiscal standpoint, but has ultimately been good for business because it’s healthier for the pets who eat it–as well as having a positive impact on the planet and on animal welfare as a whole.

Some of our other values are:

• Act intuitively. Go with your gut and do what we believe to be right even if it doesn’t make sense to others.
• Customers guide us, not competitors. We’re 100% focused on what our customers want and expect and really try not to pay any attention to what others in our industry are doing (unless it’s something we’re collaborating with them on).
• Only incredible things will distract us. Having a very involved customer base means we get lots of suggestions and ideas thrown our way.
• Walk the talk. I think it’s essential to stay true to your values and do what you say. Our company name is our way of keeping ourselves transparent, open and honest in the way we operate.
• Respect the Earth and give back. We’ve always given a portion of our profits to charity, and based decisions on what’s right for the environment–reducing plastics, utilizing recycled and compostable, SFI-certified packaging, and upgrading to certified organic ingredients when we can. Earlier this year the USDA approved the production of genetically modified alfalfa, and we immediately made the switch to using organic alfalfa in our products (absorbing the costs internally) to ensure our finished products remain GMO free.

If you could do one other disruptive thing in the world what would it be and why?

I’d love to be able to close the gap between the animal welfare movement, and those groups who are perceived as “animal rights activists” by some people who are involved in animals as a living. There are such extreme and opposing views about what’s right and wrong, on everything from breeding to showing and other sports. There are insufficient punishments for those who do wrong by animals, and too much misunderstanding about the motives of those who are trying to protect the right of animals. Many issues are very polarizing and I’d love to be able to wave a magic wand to bring some common sense to some of the issues, make some new laws (and punishments) and find some middle ground.

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Shawn Parr is the The Guvner & CEO of Bulldog Drummond, an innovation and design consultancy headquartered in San Diego whose clients and partners have included Starbucks, Diageo, Jack in the Box, Adidas, MTV, Nestle, Pinkberry, American Eagle Outfitters, IDEO, Virgin, Disney, Nike, Mattel, Heineken, Annie’s Homegrown, The Michael J Fox Foundation for Parkinson’s Research, CleanWell, The Honest Kitchen and World Vision. Follow the conversation at @BULLDOGDRUMMOND.

On the eve of Thanksgiving, Pete Cashmore is neither basting a turkey nor preparing for football.
“It’s not my holiday,” the Scotsman remarks. Instead he’s in Vancouver, preparing for a
long weekend of R&R. Which the 26-year-old has certainly earned. Mashable, the tech-and-social site
that he launched with a blog as a 19-year-old, now attracts more than 20 million unique users a
month. “We’re a news site for the digital generation,” he says. “It’s our responsibility to show how
social and digital is changing the world.”

“All these industries are being revolutionized,” he says. “It’s come to technology first, but it
will reach every industry. You’re going to have businesses rise and fall faster than ever. I’m part
of a generation that thinks change is good or at least inevitable, so you might as well embrace it.”

Though now labeled on blogs as a tech hunk, Cashmore was sickly as a child, and turned to the
Internet both for engagement and socializing. It became a passion–and a way into the business
world. “When I started in Aberdeen, we didn’t have tech courses, it wasn’t startup land,” says
Cashmore, who finished high school two years late, due to various medical complications, and never
went to college. “I started writing about new companies, websites, and applications so I could learn
how it works and how to build companies. I didn’t know that was going to be the company.”