30 Jun 2022
All businesses go through four phases in their lifecycle: start-up, growth, maturity and re-birth/renewal (or closure). Knowing which phase you are in should influence the strategy and decisions you make as a business.
As any market matures, the same challenges re-appear with maybe a few differences here and there. Every brand comes under attack as it achieves maturity, and as people spot cracks in the proposition that they feel they can exploit, by identifying a new un-met need.
But today the competition seems to get faster and fiercer by the year, and not just in the classic battle between the start-up and the mature brand but also amongst challengers themselves. Cinch, Cazoo, Motorway etc. are all fighting each other as much as they are the establishment.
I’ve worked at Royal Mail sorting offices over several Christmases in past lives and what was most striking on the last occasion was the noticeable increase in parcels and, in particular, the branding on the boxes: Amazon. That was nearly twenty years ago, and Royal Mail has been struggling ever since to adapt its magnificent network built for letters to meet the new demand; so much so that we now have a plethora of delivery companies all vying to get you what you want as fast as you want it.
This lifecycle of a business is exactly that: cyclical. As such, you’d think the lessons of the past would help by offering, if nothing else, a starting point to strategy. Royal Mail failed to recognise that it was time for renewal, instead continuing to invest in technology to sort letters faster and better, despite the data starting to tell us that mobile phones and email messaging were emerging as a way for people to communicate one-to-one over distance.
UPS on the other hand, who are still very good at delivering parcels, did realise this and have successfully pivoted into logistics for a world moving towards globalisation. Many column inches have been written about the sad demise of businesses due to their inability to recognise and plan for their renewal phase, so what can today’s start-ups learn by looking back?
For many, the phases of the lifecycle feel much shorter in duration than before. No longer do start-ups seem to have the luxury to slowly build and establish a business over time in relative isolation from any competitors, other than in some far-flung market, perhaps. The world is global and so is the competition. Think of the battle going on between Deliveroo, Just Eat and Uber Eats - which is now reaching a global level - on the one hand, while Gorillas focuses on very locally targeted ads on the other.
Are Just Eat going to have a problem with that word ‘Eat’ in years to come, when they need to think about renewal and diversification? If you recall, Amazon started with just books but quickly realised, they were actually in the business of delivery. Tripadvisor started as a peer-to-peer research company and now they sell hotel rooms like many others. Will they survive?
If the fundamental role of marketing is to help a business better connect with its customers, does it too need to change and be reinvented to support this high-speed environment? Some would say ‘no’. The 4P’s that comprise the marketing mix will not fundamentally change, but the elements within them will continue to evolve as we move forward, as you’d expect.
Back in 1923 Coca-Cola famously stated that consumers should be no more ‘than an arms-length from desire’, clearly focussing on the P of ‘Place’ - a strategy it has followed ever since. Today that strategy is being championed by Amazon et al, leveraging technology and amazing logistics.
When you look at the established brands, long gone are the days when the 4P’s sat under one person’s remit; therefore, transforming a business to compete with this generation of challengers is all the more difficult. Hence the age of the consultants!
However, one very big change is the relentless way start-ups seek to scale quickly, and the resulting impact this is having on the strategies employed as they go through the early phases. It is almost as if the founders have sold the promise of future success to ‘Gamblers’ under the guise of VC and PE funds, rather than leverage the lessons of the past.
The consequences of this are that instead of building a solid foundation for a business to evolve into a brand where you can charge a premium, there is a strong focus on short term return on their investment. Not every business can work to a rigid four-to-five-year cycle and, sadly, many businesses are failing because of this approach.
If I was to choose one area to focus on it would be positioning, because it helps customers put your product or service into a context where they understand why it is of value to them. So many businesses understandably start with the product features, and we can see these feature wars being played out everywhere – how many ads are we going to see with nappies being needed as an emergency purchase, to prompt contacting one of many 10 minute delivery companies? But as any parent will tell you, you never run out of nappies!
Positioning done well reframes how you solve a problem versus how a competitor might do so. If you both solve the same problem the same way, then it will come down to price and place and there is often only one winner in the end.
The words of Winston Churchill resonate even more today given the obsession with short-termism, because we know what is coming for many of these businesses. They need to look back and start using the insight this offers, to look further forward than they currently are.