The Cost of Mediocrity
Is the safe option really that safe? Not if you’re a Challenger.
Susie Milburn & Anne Marie Armstrong
In tough times, most brands will tend towards path dependency. A study published in the Academy of Management Review showed that good practice quickly becomes best practice, which becomes preferred practice, which becomes locked-in practice. This kind of incumbent thinking will perhaps be even more familiar to those working in an organisation with a necessary focus on cost-cutting or short-term results or one which is battling a host of external headwinds and uncertainty.
But, this comes at an inevitable cost – if the cost of dull in advertising is estimated at £9.8m for an average UK brand, as our collaboration with Peter Field and System1 has found, the cost of incumbent thinking across all aspects of an organisation can only be more worrying. Research from Kantar also shows that the brands delivering the fastest rate of shareholder growth are in fact the ones seeking to be different, and it’s difference that allows a business to maintain price elasticity or even command a price premium when times are tough.
As Seth Matlins, MD of Forbes CMO Network told us, “Organisationally, people are a bit terrified of risk, especially in today’s climate, but the biggest risk is not taking any.” So, for Challengers with ambitions often greater than their resources, incumbency is in fact a risk. In a world where it’s never been easier to get mediocre approved, Challengers raise their ambitions and create an internal culture of bravery, determined to guide their organisations to let go of their firm grip of the status quo.
The Threat of Path Dependency
According to research from global recruitment agency Randstad, 42% of UK employees are worried about job loss, so sticking their head above the parapet is less appealing than ever. It’s no surprise then that the safe choice is often justified as the necessary one. However, in the face of uncertainty and constraints, Challengers don’t shrink back. They drive progress for their brand and beyond, into the categories they shape. And to realise those ambitions, they believe that success is predicated on creating an internal culture of bravery, as much as it is manifesting that bravery externally.
In 2018, McDonald’s identified a drift to incumbency within their organisation. The business had become increasingly operations driven, siloed and focused on short-term sales in an attempt to maintain market share position. At the same time, it was gradually losing relevance with the next generation of consumers. Acknowledging this situation, McDonald’s President and CEO Chris Kempczinski told McKinsey & Co, “We’d gotten a little complacent…we were stuck in a traditional mode, where we were more just broadcasting, as opposed to really engaging our customers in areas that they’re passionate about.”
Looking to break out of this rut and reverse market share loss, McDonald’s developed what they called the Feel-Good Marketing approach, a cultural shift which elevated creativity and broke down internal silos. In addition, embracing the Challenger principle of sacrificing to overcommit, they consolidated to just three brand stories a year, all driven by a customer or fan truth.
Travis Scott combo: Quarter Pounder with bacon, medium french fries and a Sprite
Leveraging this new programme, McDonald’s launched their Famous Orders platform in 2020 featuring big name fans’ favourite orders. For example, they partnered with rapper Travis Scott, creating the Travis Scott combo, the first celebrity-named meal since the 90’s. Inspired by social media trends, fans began ordering the meal by playing the rapper’s music. In turn, McDonald’s trained staff to respond to these new ordering conventions. A rousing success, the Travis Scott campaign alone doubled sales of the Quarter Pounder in its first week. McDonald’s also credits it with increasing month-over-month sales by five times, giving them their best monthly comparative US store sales in the last decade. Focusing on fan truths and responding in real-time to their reactions, McDonald’s was able to reverse their path dependency. As Kempczinski said, “You just have to accept the unpredictability and risk as part of the bargain to be a relevant brand today.”
Pervasive Mediocrity
Path dependency is alive and well throughout businesses as mediocre, middle-of-the-road thinking doesn’t rock the boat, whether you are in product development or marketing. But, from what we see, this type of behaviour also doesn’t reap any great rewards. This is why Challenger brands question incumbency at every level of their organisation in order to achieve their ambitions.
2023 Barbie Fashionistas Lineup
No-one will have escaped the recent buzz around Barbie, given the triumph of the eponymous movie last summer. But much of this peak in conversation is the result of Mattel’s culture of challenging incumbent thinking across the business over the last 10 years. As Lisa McKnight, Executive Vice President and Chief Brand Officer of Mattel, told Contagious, “We have to continue to take risks and get out of our comfort zone, be comfortable being uncomfortable.”
So even as the most popular doll in the world, Mattel looked to confront the way they’d always done things. “We attacked every aspect of the business, from product to communication to content to social mission,” McKnight explained. This helped them ask more upstream questions about their own incumbency – challenging themselves to think about what Barbie would look like if they designed her today and how that might change going forward.
65 years of Barbie milestones
Category Homogeneity
In every category, you can find a sea of sameness – whether that’s in advertising, product, messaging or even down to customer experience. For many brands, this provides safety in numbers – there’s a reason why all car manufacturers feature grey cars on their website and in their ads.
Fiat’s ‘Operation No Grey’ campaign
But Challengers see this category incumbency as a risk, denying them the opportunity to stand out and elevate their brand above the rest of the competition. Instead, they seek to amplify their difference – overcommitting to the things that are uniquely them. Take Fiat, symbolically choosing not to manufacture “dull, boring and un-Italian” grey cars, a necessary sacrifice in order to overcommit to their bold and vibrant vision of how a car should look.
Very often this rejection of the norm means acknowledging that what might be responsible for one brand, is in fact risky for another, and vice versa. Dove faced this very challenge at the beginning of the pandemic. With all of their competitors quickly developing and distributing hand sanitisers, Dove made what seemed like a gamble to not immediately launch a stopgap in line with the rest of the market. To them, this would have risked their brand equity around skin nourishment as most existing hand sanitisers were incredibly drying. Rather than compromising their values, they waited until they had developed a product that both sanitised and moisturised – the responsible thing to do in their eyes. Proving their wager was worth it, in a category of steady decline, Dove’s hand sanitiser sales continued to grow, doubling their share within the first 6 months of launch.
The drift to incumbency is a constant battle, even within brands where a Challenger Mindset is thriving. But recognising path dependency and the drift towards mediocrity within your organisation and category is the first step to challenging incumbency – after all, the cost of dull is a cost none of us can afford to bear.