Look Outwards and Think Like a Challenger

Of course, I am officially an old fart now – so feel free to ignore this advice. This is my fourth recession. And there is a pattern. So, perhaps you will give me a hearing.

Some things have radically changed this time round. Covid-19 has produced different winners and losers. The dynamic of digital media drives the restructuring of agencies and the trend towards in-house agencies. This year, just before lockdown, I was working with Amazon – their marketing department is really an integrated media and creative agency as well. They buy in services from small creative shops and consultants like me. It’s natural to follow the lead of successful companies – so no doubt this trend will continue.

If you are running an agency, all this is very challenging – business is both down and big clients are spending less on fees. Inevitably, agency CEOs will spend a lot of time worrying about numbers and structures. It was ever thus. I speak from the experience of losing 50% of my agency revenue during the tech crash of 2002 when I was CEO of a WPP creative agency called Red Cell. I spent the next six months laying off staff and restructuring the agency. My energy and thinking turned inwards.

Yet, turning inwards is a bad idea, because you lose sight of what really matters. Agencies and their clients achieve little when they are preoccupied with restructuring. People get worried about their role (do they have a job or not?) rather than looking outwards, analysing external trends and scanning the horizon for opportunity. (NB: Agency CEOs. You may have to make staff redundant to survive as a business. It is painful. But you would be wise to do this quickly and then gather your new team around you and inspire them to focus on the bigger prize. Building back confidence after layoffs can take a while. It’s a kind of psychic scar that takes a while to heal. This was a useful piece of advice I received from Sir Martin Sorrel, my boss in 2002.) The bigger prize has not changed, however. Clients always need trusted advisers and new ideas – whose energy and imagination are focused on how to strengthen their brands.

So, here is my old-fashioned advice. Think like a challenger (even if you are the incumbent brand leader) and do regular planning. Plans may not survive contact with reality. As Mike Tyson once said, “everyone has a plan until they get punched in the face.” Planning, however, is invaluable. It helps you to explore different scenarios and develop ideas to cope and profit from them. Successful planning generates solutions and ideas. Here are good planning questions to ask:

Who is Succeeding in the Changing Landscape and Why?

Analyse the strategies of dynamic challengers in all categories (not just your immediate competitors) because they have latched onto a vector of change – such as an underserved audience, an unmet need, a new way to communicate and/or deliver services, or a radically different pricing model. Remember that true challengers are not just smaller, paler versions of the brand leader; rather, they have found a way to disrupt market norms. They are worth watching like a hawk.

Is It Likely That There Will Be Turbulence Ahead?

Youthful populations born into the digital revolution, recession and now Covid-19 are a potent and explosive cocktail. Underemployed but highly educated populations spell big trouble for governments and anyone else who is complacent. It will also produce the opportunity to do things differently and satisfy new needs. Which leads logically to my next key question

What Really Matters to My Customers Now?

Here are good themes to explore in your planning sessions. (It’s not a comprehensive list.)

1 How Can We Make Things Easier?

Ease reduces stress and strain, especially appealing at a time when people are anxious and fractious. In fact, ease is always something we want. As Daniel Kahneman explained in Thinking Fast and Slow, ease feels good and feels true. The brands that have become powerhouses over the past decade (like Amazon and Google) work hard at making their ‘user experience’ as easy and intuitive as possible. Right now, they are conducting many A/B tests to make their customers’ experience as frictionless as possible.

2 How Can We Be Generous?

Generosity breeds reciprocation – the sense of a debt to be paid. Flexible terms (like payment holidays) or reduced prices for people who are hard up are going to be welcome. But generosity does not just mean giving money. Companies have many resources they can share. For example, a new generation is worried about employment and employability. How can you help with learning and work experience?

3 What Is Our Positive Contribution to Society?

The next generation are much more ‘activist’ than their parents – and are likely to be ever more so as the issue of climate change has moved centre stage. They favour companies with high ethical standards. Commitment to, for example, sustainability and sharing the fruits of success with staff are baked into the DNA of a number of successful challengers. The contribution must be real. Yet, it can be transformative – inspiring commitment from both staff and customers in a virtuous circle.

4 Can We Radically Re-Examine Our Pricing?

There are no two ways about it – things are going to be very tight. Government furlough schemes will not last forever, incomes will be lower and unemployment will rise. There will be a huge demand for the lowest cost options – sold online or sold singly or made in a different way with different ingredients. This will certainly be a successful challenger strategy in many markets – and incumbents with legacy systems and sourcing will struggle with it.

5 How Can We Bring Some Joy and Pleasure?

Human beings can’t stand being confronted by too much reality; hence the rise of comfort TV (in the form of documentaries about nature and rural idylls) and the simple pleasures of walking the dog. Interesting fact: the cost of buying a puppy has doubled during the pandemic in the UK. The hunger for escapism is palpable, be it through a screen or out into open spaces. How can you support it? For most brands this is going to mean a partnership.

As I write, the UK is in the grip of the second peak in the pandemic. It feels like the pressure going out of an already deflated tyre; a loss of energy and dynamism is in the air. When others are quiet, those with new ideas get even more attention because people are hungry for good news and things that make them feel good. This much is evidenced by all previous economic crises and recessions. Remember that Disney first emerged as a cultural and economic force by cheering up Americans during the Great Depression. It is the perfect time for challenger thinking.

Julian Saunders is a strategist, writer and teacher. He was CEO of a creative agency (WPP’s Red Cell) and has worked for the UK government and Google. julians@joinedupcompany.com