Model Stretch: When, Why, and How?


Take a peek beneath the hood of any model league desk and you might discover that lots of the manufacturers listed have stretched far past their preliminary utility. Samsung began life as a grocery enterprise. Nintendo used to make taking part in playing cards. Netflix was a mail-based rental enterprise.

And it isn’t simply know-how manufacturers which have leaped nimbly from one class to a different. Toyota used to make looms for weaving. Lego began life as a carpentry workshop. Wrigley’s was a cleaning soap enterprise years earlier than it turned a gum enterprise. Manufacturers have a exceptional capability to assist companies transcend categorisation. However misadventures are as straightforward to search out as success tales: the Amazon cellphone, Colgate lasagne, the Evian bra. 

It could be cute of me to argue that nice technique is what units the success tales other than the cautionary tales: in lots of the examples above, luck, necessity and tenacity virtually actually performed a much bigger function. However companies are usually luckier and extra decided once they have the boldness of a well-conceived technique of their again pocket. And I’m a model strategist. So, I’m certain to give attention to the query of when, why and the best way to stretch a model.

The when

When to stretch is the best of the three to reply.

To paraphrase ex-GE CEO, Jack Welch: the very best time to consider stretching your model into new areas is ‘earlier than you must’. It’s bonkers to attend till your core enterprise is in decline to discover new frontiers. Development is an crucial for just about each organisation I’ve ever labored with and it’s widespread to incorporate some evaluation of stretch alternatives within the strategic planning cycle: often inside an innovation roadmap. Companies that take progress significantly (as most do) are in a relentless state of brand name stretch. Typically this includes large leaps into new areas however extra typically it’s about exploring concepts in adjoining areas. Software program companies launch their very own {hardware}. Restaurant manufacturers unveil grocery store ranges. Attire manufacturers create merchandise you need to use to decorate your own home. Stretch occurs in small steps in addition to large leaps.

This concept is most famously captured in Igor Ansoff’s eponymous matrix, which he launched in a 1957 article known as ‘Methods for Diversification’. Ansoff recognized 4 primary options for rising a enterprise: rising penetration; market improvement; product improvement; and diversification. Ansoff was notably within the ‘distinctive issues’ posed by diversification, since this includes ‘a break with previous patterns and traditions of an organization and an entry onto new and uncharted paths.’

The thought of a ‘mission’ is crucial to Ansoff’s matrix: he outlined this as an outline of the ‘job’ a product is meant to carry out (an concept that has since advanced into the idea of a ‘Job to Be Accomplished’). Ansoff’s matrix maps totally different product traces (represented by px) towards a corresponding set of product missions (represented by mx):

 When it comes to Ansoff’s matrix, a market penetration technique is an effort to develop an current product’s gross sales (p0) with out departing from its unique mission (m0). A market improvement technique extends an current product line to new missions (for instance, when Lucozade started to market itself within the Nineteen Fifties as an on a regular basis vitality drink, relatively than a approach to get better from sickness). A product improvement technique includes growing merchandise with new and related traits that higher ship on a longtime mission (for instance, when Qantas launched Enterprise Class in 1979 to higher meet the wants of company travellers). And diversification is probably the most radical of the expansion methods: a simultaneous departure from current product traces and missions.

The time period ‘model stretch’ can confer with any of the non-penetration progress methods. Many companies concurrently pursue a mix of the entire above: rising penetration of ‘core’ merchandise, balanced with current product improvement (EPD) and new product improvement (NPD). Ansoff would have accepted: a lot of his article is dedicated to the thorny situation of uncertainty. Though we have a tendency to consider our personal time as uniquely unsure, profitable companies in 1957 needed to pivot their means by way of two World Wars, the Nice Despair, the Korean Warfare, the Chilly Warfare, the proliferation of general-purpose computer systems, the de-industrialisation of Western society, the adoption of tv as a well-liked medium for communication and the rise of what we now recognise as consumerism. 

Diversification is the very best response to uncertainty: corporations that focus solely on penetration of current product traces in current missions pile all their eggs right into a basket that no person may be certain will nonetheless exist in twenty years’ time. And in line with Ansoff, diversification technique is basically about answering two questions:

  1.     How effectively will a selected transfer (whether it is profitable) meet the corporate’s broader targets?
  2.     What are the corporate’s probabilities of succeeding?

Or, in different phrases:

  1.     What SHOULD we do?
  2.     What COULD we be nice at doing?

Ansoff’s article wasn’t notably involved with manufacturers or branding, however these are additionally nice inquiries to reply from a model perspective. And so they relate to a central preoccupation of brand name technique–why? 

As a result of should you can articulate why your model ought to stretch, you then’re midway to figuring out when and the place it ought to and will stretch.

The why

For my cash, Jim Collins is the closest factor the model world has to a present-day Igor Ansoff. I don’t know him, I’ve by no means met him, however I discover his pondering extraordinarily seductive and, with reference to model stretch, extraordinarily useful. His books are all price studying at the least as soon as, however you’ll additionally get a useful taster of his concepts totally free on his web site. 

Two of my favorite Jim Collins articles relate to model stretch and the 2 questions above.

In It’s not what you make, it’s what you stand for, he picks up on certainly one of Ansoff’s themes: that concentrating an excessive amount of on the services and products you already promote is a entice. An organisation that defines itself as a tv producer will at all times be restricted by this perception. Then again, an organisation that makes televisions with a better objective in thoughts will be capable of discover novel methods to attain this objective, even when the marketplace for televisions declines. Though many advocates of brand name objective are drawn to Simon Sinek’s impassioned call-to-arms, I choose Jim Collins’ harder-nosed, extra industrial rationale: a model objective is greater than a approach to encourage colleagues; it’s a means to assist an organisation select which diversification alternatives to contemplate. And for the document, I don’t notably care whether or not you name this a objective, a imaginative and prescient, a mission, a positioning, a promise, or a proposition, so long as it establishes a transparent course for the organisation.

Model functions are straightforward to ridicule, notably once they err into the territory of company self-congratulation. I gained’t purpose-shame the companies that indulge on this, however there are many them. On the different finish of the dimensions are the organisations who take their missions significantly as model stretch instruments. Considered one of my favorite examples is Google: its mission is ‘to organise the world’s info and make it universally accessible and helpful.’ This has given the corporate licence to stretch far past its ‘core’ enterprise of Web search into maps, educational analysis, photos, songs, monetary indices and video. One of many acid checks of a powerful model objective is that it may be used to determine areas that an organisation ought to stretch into, and distinguish these from these the place it shouldn’t, though these may be commercially engaging.

It is a essential space of overlap between Igor Ansoff and Jim Collins: you filter alternatives based mostly in your broader technique (or objective, or mission, and many others.) earlier than you ponder industrial attractiveness. This prevents the kind of monetary opportunism that always undermines long-term brand-building: ‘exercise x doesn’t actually match with our model however it’s achievable and we are able to generate income doing it.’ And that is precisely the type of thought course of that leads to Colgate lasagne and Evian lingerie. 

In a associated article The Hedgehog Idea’, Jim Collins refers back to the ‘curse of competence’: there’ll inevitably be numerous alternatives for progress and revenue that an organisation may pivot in direction of, however pursuing these leads to manufacturers which can be ‘scattered, subtle and inconsistent’.

As an alternative, he urges model house owners and managers to behave extra like Isiah Berlin’s fabled hedgehog, which outwits a fox that is aware of many issues, just by realizing one huge factor. 

Nonetheless many classes a model stretches throughout, it ought to stay equally single-minded.

That is about extra than simply readability of objective: it’s additionally about understanding what you’re able to delivering very well (and actually profitably). Your objective (or mission, or positioning, or proposition) assertion ought to make clear what you ought to do. This can be utilized to qualify potential stretch areas. However Ansoff’s second step is simply as essential: additional qualification based mostly on what you may be nice at doing.

So, how do you’re employed out what you may be nice at? A technique is utilizing a specifically tailored Alternative Mannequin, which brings collectively inner and exterior elements right into a single framework:

Stretch alternatives may be assessed both qualitatively or quantitatively utilizing this (or an analogous) framework:

Constructing on the industrial plan:

  • How massive is the stretch alternative in monetary phrases?
  • How assured are we that we may generate incremental gross sales and translate these into accretive earnings?

Reflecting the corporate:

  • How effectively matched are our tradition and capabilities with every stretch alternative?
    (or does it present a possibility to undertake invaluable new methods of working)
  • Does the stretch alternative improve, complement, distract or detract from our current enterprise?

Connecting with prospects:

  • How glad are folks with what’s at the moment out there?
  • How robust a relationship can we have already got with these prospects?
  • How effectively does our model match with their excellent supply?

Distancing from the competitors:

  • What can we deliver to the stretch class that current manufacturers don’t?
  • Which class guidelines are we be capable of / ready to interrupt?

Being in tune with the context:

  • What are the social, technological, environmental, authorized and political forces shaping the way forward for our model, and the way does every stretch alternative assist us to anticipate and reply to those?

The perfect model stretch alternative will carry out effectively towards these standards, in addition to becoming together with your model objective:

The vast majority of model stretch alternatives are unlikely to be such apparent no-brainers: it’s extra seemingly that some alternatives will match effectively together with your objective, however solely be of average match with the chance mannequin (wherein case they’re worthy of additional exploration), or that others will match effectively together with your alternative mannequin however not so effectively together with your objective (wherein case a subbrand may very well be a extra acceptable approach to stretch with out diluting the model). The matrix above can be utilized to map your complete portfolio: not simply diversification alternatives however product line extensions, market developments and penetration progress alternatives. It may be used to map natural progress alternatives in addition to potential acquisition targets. Most diversification alternatives are prone to fall brief and that is the place self-discipline turns into essential: it’s higher to put money into rising your current enterprise by way of penetration and EPD than stretching into areas which have solely a weak likelihood of constructing your model or your enterprise. 

The how

To this point, I’ve focused on technique, however that’s solely the start of the story. Manufacturers which can be actually nice at stretching are likely to have a really particular fashion: they apply a standard set of ideas to any class they compete in. For a beautiful instance of this, contemplate the 40-or-so years Dieter Rams spent at Braun: a interval wherein the model launched over 500 merchandise throughout classes as numerous as whisks, pocket radios, alarm clocks, calculators and electrical shavers. As head of the design division, Rams developed a really particular philosophy of kind and performance, with a signature fashion that was systematically utilized to each side of the model expertise.

Over the Seventies, Dieter Rams crystallised this philosophy in ten ideas for good design:

  1.     Good design is revolutionary
  2.     Good design makes a product helpful
  3.     Good design is aesthetic
  4.     Good design makes a product comprehensible
  5.     Good design is unobtrusive
  6.     Good design is sincere
  7.     Good design is long-lasting
  8.     Good design is thorough all the way down to the final element
  9.     Good design is environmentally-friendly
  10. Good design is as little design as doable

These ideas have been all developed within the context of a wider guiding perception (or model objective): that good design could make lives higher, supplied it’s easy, helpful, and constructed to final. Practically half a century later, these similar ideas are evident in each product, area and expertise that carries the Braun identify. This single-mindedness of strategy is what permits manufacturers to stretch throughout seemingly unrelated classes: regardless of the place they present up, they’re at all times recognisable as a result of they bring about the identical ethos to bear. Virgin has been in a position to stretch from music into airways, gyms, banking and media as a result of it innovates with a transparent thought in thoughts: ‘altering enterprise for good.’ As a consequence, we all know what to anticipate when the Virgin model stretches into a brand new class – it doesn’t matter what the class. 

In sensible phrases, a objective or mission assertion typically isn’t sufficient: it establishes a way of an organisation’s ‘true north’, however essential nuances are tough to seize in a single assertion. This is the reason organisations (typically) set up a supporting set of ideas or ‘guardrails’ to information decision-making round model stretch and innovation. These guardrails add specificity to the model objective or mission assertion and supply a extra formal framework for guiding how the organisation ought to stretch (as soon as it has determined which areas to stretch into). Not each model has a proper set of ideas, however it’s one thing I encourage. Manufacturers which can be nice at stretching aren’t simply disciplined in deciding on when and the place to stretch: they’re additionally disciplined in how they stretch. The result’s a signature fashion that turns into extra unmistakeable with each leap into a brand new class. Over time, folks even start to anticipate how manufacturers would possibly stretch into new areas: from Apple furnishings and Bang & Olufsen smartwatches to Braun vehicles.

Nice manufacturers stretch in their very own distinctive fashion

Sadly, fashion is underrated as a enterprise instrument, with the unhappy consequence that model stretch extra typically mystifies than is sensible. When a model is obvious about why to stretch, the place to stretch and the best way to stretch, the result’s typically so apparent to potential prospects that comparatively little useful resource is required to promote them on the thought. Because the examples above reveal, if a model is single-minded sufficient in its strategy, persons are typically keen to make nice leaps of creativeness for themselves. It’s superb how far you may go together with a single-minded objective and a transparent set of guiding ideas.

Cowl picture supply: vicenola



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