For brands to make it….

At #SBS2013 Jeff Dachis posed an interesting thought, captured by Gautam in this tweet.

“The shift is also going to be from “owning” to “sharing” goods and services, don’t know what it means for brands” – @jeffdachis #SBS2013

— Gautam Ghosh (@GautamGhosh) May 23, 2013

Both Gautam and Haroon then shared interesting links in this context – content from Jeremiah Owyang and Loic Le Meur respectively. (had not seen the first one before) The ‘lunch conversation’ didn’t really happen around this, so I thought I’ll share my thoughts here. 🙂

Jeremiah’s post also has a link that shows how fast this collaborative economy is growing. Recently, he also wrote a post on the ‘maker movement’, and his experiences at a fair he attended. It also had a short note on how brands could leverage the movement – become enablers, building a marketplace around themselves, and offer customised products directly to individuals.

At #SBS2013, as part of my presentation on ‘The Currencies of Engagement @ Scale‘ I’d shared a rendition of Maslow’s Hierarchy of Needs to show how engagement should be scaled to (also) satisfy the needs (of a user from a brand) at the top of the pyramid. (slide 17 here) It had both collaborative consumption and co-creation listed as narratives because they traded in the currencies of community and esteem respectively.

At this stage, I thinks brands have a great chance of being a significant part of the ‘maker movement’ if they can change the outlook of their business processes – from production to marketing. After all, they’re makers too, except that when they attained massive scale, they moved more and more towards a one-size-to-fit-everyone approach, pursuing efficiency @ scale. Again, it is not as though brands who do not change will suddenly cease to exist – it’s just that their narratives won’t be strong enough for any affinity. As I said in  the presentation, there is a limit to the currencies of efficiency narratives – cheaper, faster etc – because once a better player comes along, a switch is imminent.

In the medium term, these brands will exist because not everyone has the same involvement with every category. Let’s take the example of an automobile. I still ride a two-wheeler, because for me the narrative is a very functional one – move from Point A to Point B. When I do buy a car, it will continue to exist in the functionality narrative, but I know several for whom the car is a reflection of their achievements in life. Just like the t-shirts I wear are a representation of my philosophies. For those several, a t-shirt might just be another garment they wear, or again, a representation of their material possessions – easily captured by wearing a costly brand with little involvement in the design. My belief is that in every domain, there’ll be enough consumers who buy a brand for the currencies they offer at lower levels, (price, convenience etc) and that will continue to be the short head. (in the long tail concept) But as time passes, the economics won’t work out because the resources a brand has to spend to keep its consumers would prove to be far more than the money it makes out of them.

At this point, all the narratives at the higher levels of the pyramid (co-creation, collaborative consumption) are in the long tail, but brands will soon realise that with evolving technology dynamics, it will have to learn to cater to the long tail, where the currencies will be different. This is most definitely an evolution and not a sudden shift. For starters, brands would have to learn the new dynamics of production and distribution and the impact on their balance sheets. They will have to learn balancing acts. Imagine a branded retail store that allows you to buy their regular products as well as make your own versions (which are also branded – hello NikeID) at various levels of customisation. In terms of economies of scale, the former would be better off with traditional mass production and the latter with a technology like 3D Printing. The online version of this store would also have both, and probably the ability to buy the materials and print it yourself as well.

It is not just the production side which will require a balancing act, think of what the brand stands for. It needs to speak different languages to different kinds of consumers – from the guy who wants a convenient off-the-shelf purchase to the guy who wants every-part-customised, so that both feel they’ll get value from the brand. There are nuances as well – sometimes my association with the brand is not because it allows co-creation or collaborative consumption, it is only because I identify and relate to other things they stand for – and my consumption of them deals with the currencies in community or esteem. In short, what does it mean for brands? Exactly what’s happening to everything else – massive disruption. The way to tackle it is to try and get a bearing of the narratives your brand should be part of, (oh yes, Big Data and predictive analytics can help) because no brand can compete for every consumer with every maker.

until next time, break first, then make

Bonus Read: Emerging Bets at the Intersection of Technology & Culture