In his 2007 book ‘The Black Swan’ Nicholas Nassim Taleb predicted our current situation in a startlingly accurate manner. In laying out the conditions for ‘black swan’ events, he revealed the extreme impact of rare unexpected incidents. Covid-19 is a true ‘black swan’ – a low-probability, high-impact event with major consequences; a natural health crisis compounded by financial peril.
For most businesses this initial extreme shock should be levelling off by now. The natural fortitude of business people will now be kicking in. So the challenge switches to ‘how do we cultivate business resilience and pull ourselves through this?’. The best source of advice for this challenge can be found in one of Taleb’s later books.
In 2012’s ‘Antifragile’, he outlines the concept of things that actually benefit from shocks and thrive when exposed to volatility, disorder or stress. Like a bone growing back stronger after it has been broken, ‘antifragility’ is beyond resilience or robustness. Resilient things resist shocks and stay the same; antifragile things get better. Being ‘antifragile’ is the antidote to black swan events like the one we find ourselves in.
This should resonate with all businesses. Capitalism has always been a full contact sport with winners and losers. But at the moment, the Darwinian aspects of doing business are magnified. The smartest companies will use this time of stress and uncertainty to improve and come out stronger – to become antifragile.
For marketing departments, this could be an opportunity to step back and isolate areas of weakness to be tweaked, sharpened and improved. It could be a chance to pre-emptively build marketing muscle that can be flexed at a later date.
There are a host of pragmatic things that marketers can do right now to galvanise and prepare for an economic bounce back. Here are five places to start:
Sharpen the portfolio
The last decade has seen an explosion of choice and NPD across all categories. Some brands have bloated their portfolios by building sub-brands to target niche segments. Some have become bloated from buying competitors. This portfolio complexity can be a quiet thief of growth. Too many SKUs can result in ineffective media support levels or shopper confusion. So, see this as an opportunity to analyse what brands in your portfolio are performing. Then observe if the 80/20 rule applies (most of your profit comes from a small % of your brands). If it does, this could be a chance to simplify and re-focus on the profitable core.
Simplify your strategy
In ‘Good Strategy/Bad Strategy’, Rumelt describes how the essence of great strategy is choosing what not to do and then ruthlessly simplifying.
Getting to an elegant strategic plan is ridiculously time consuming. It’s far easier to over complicate, err on the side of quantity instead of editing down for quality. But here’s something to aim towards. General Montgomery’s D-Day plan for taking 160,000 troops across the channel on a single day boiled down to a single sheet of paper. If we can’t get a whole brand strategy into a 10 page deck, then there’s a problem. Take this as an opportunity to make hard, courageous choices that keep the company focused and in motion. It’s a chance to engage in the tough mental work that gets to a really clear, focused strategy with all the fat trimmed away.
‘Redteam’ your business
A period of mass societal change is also the perfect time to challenge the strongly held biases within your own business. One way of doing this is through ‘red-teaming’. Coined by the US Army, this exercise involves actively looking for weakness and rigorously challenging your plans or assumptions by adopting an adversarial approach. To redteam, you must get into the mind of one of your competitors and actively analyse how you would attack your own company. If you can figure out weak points before a real competitor figures them out, then you can insulate yourself.
Identify media waste
This is the biggest ‘zero based budgeting’ experiment in the history of marketing. In many categories, media spend has dropped off a cliff. But that’s also a massive opportunity. Because it creates a clean, controlled environment for testing what happens when we start to switch media back on. With all competitors in the same boat, this creates favourable conditions for tracking the real impact of our spend. Use this time as an opportunity to really understand where your media budget goes. Hone in on non-working spend and try to understand what’s good ‘wastage’ and what’s merely waste. Then start switching on channel by channel and analyse the results.
Prepare for the push to online
This pandemic is an accelerant for existing behaviour. The average person is being driven by circumstance to interact with, download, or buy from a digital service that they likely wouldn’t have otherwise. Research indicates that 1 in 3 of all online grocery shoppers since lockdown restrictions were introduced are new to online grocery. It will push businesses to speed up their digital transformation. Brands like Shopify, Amazon and other online retailers are seeing enormous increases in spend. This will dampen down slightly when physical retail re-opens but people will come out of this with a greater willingness and ability to spend money online. So take the chance now to prepare your business for this. Analyse the weak points of your digital offering and take inspiration from recent examples of offline companies that have been forced to become creative with digital delivery services.
Clearly, every business is different. But with careful analysis of these five areas, marketers can make their business antifragile. Smart companies can come out of this ‘black swan’ event sharper and leaner than their competitors, giving themselves a running start when things get back to ‘new normal’.