As we enter a new decade the way we think about our world, humanity and, in turn, the way we do business seems to be under attack from all angles. In this article we will reflect on
"how the change of the past decade can set the scene for an optimistic outlook on the 2020’s for the sporting goods industry and, indeed, any other product led business, if it’s willing to embrace a new way of thinking."
In the 2020’s it’s time for the teenager to face life in the real world, learn from the lessons of the past and build on the foundation that has been created. As we see it, there are two key macro pillars to success in the next decade. The first is tackling the self inflicted challenges of climate change. The second is dealing with the fast moving technology landscape.
Both these challenges are changing the attitudes, wants and needs of consumers and both forcing and enabling the disruption of industry models that have up until now been taken for granted. To adapt to this we need to look at the big picture, see that they are intimately linked and find ways to approach not only meeting the challenges we face but also how to take advantage of what is available and what has already been created.
Sustainability 5.0
Sustainability. The hottest of topics and one that has become central to the marketing machine that is the sporting goods industry. From adidas’s Parley shoe made from ocean plastic and their loop project focused on fully recyclable shoes and the circular economy, to Patagonia’s worn wear project that sells refurbished second hand garments, to Reebok’s Vegan shoe, to nike’s move to Zero project. Every brand has and says something and some are certainly more “real” and altruistic than others. It’s to the point though at which it feels cliché. As if it’s the thing to do in marketing right now because it’s what the consumer wants, not what the planet needs.
It feels like if the consumer perception changed so would the way the brand behaves. To this end one cannot help but feel a lot of brands say things to create a perception of sustainability rather than really, truly doing it at scale. As we see it, the industry in general needs to stop using the word sustainability just to sell more products. There, we said it. This is not to say progress is not being made though, and indeed any step towards a sustainable future is a positive one. We are currently seeing several overlapping phases of increasingly sustainable practices compound to make it a driving force in the industry. From making things cleaner and using less chemicals and water to increasingly transparent supply chains, to using recyclable materials to a focus on the circular economy. They’re all happening.
"The fifth phase however, is going to be the hardest for industry to get it’s stubborn little head around, reduction."
Drastically reducing the absolute amount of products the industry produces. It’s counterintuitive to the model of sell more to make more but the reality is it has to happen.
What’s been happening thus far is certainly a step in the right direction but at the same time it’s almost counterproductive and does not go far enough. Right now it all still seems to be about business, not sacrifice and innovation for the greater good. It’s about time we saw a brand other than Patagonia take a real stand and do something really different because the next phase of this requires brands to question everything they know about their business.
The reality of all of this is that the current model is broken. How can brands be more sustainable if their ultimate goal is still to sell more stuff? Recycling a shoe is all well and good but if it is made of materials that are damaging to the environment in the first place and to make more money they need to sell more shoes, the waste is simply being displaced and reformatted.
The problem is not being solved it’s being disguised. Ultimately the only answer is not only to recycle what is existing but to also find ways of disposing of it, taking it out of the cycle altogether and finally to focus on producing vastly less product in a way that still delivers value for the consumer.
This means that brands have to think in new ways about their products. They fundamentally need to question what a product is. They need to change the business model and find ways to deliver and receive value to and from consumers by means other than just selling product and pretending that a million views on youtube is a return on investment. The 2020’s will be about finding ways to do a lot more with a lot less which bring us to the next and related point.
Product Needs to be the Gateway not the End Point
If brands are going to produce less stuff they need to find new ways of delivering value that rely less on physical products. It means that brands need to find ways of shifting their perceived value from physical things to virtualized services and experiences that complement higher quality, longer lasting more sustainably produced and easily disposable products.
"Thinking of a branded product as the key to a portal that opens up exclusive access to valuable, virtual benefits paves the way to completely rethink the role a product plays within the business ecosystem."
Rather than being a commodity it becomes a gateway to something that can be so much more than a shoe or a football shirt or a golf club to both the brand and the consumer. If the product is not just the prize but also the key, brands can enable themselves to become something more meaningful, present and valuable in the everyday lives of their consumers.
The evolution of the physical product can be drastically slowed while its virtual benefits in the form of services and experiences can can scale to compensate. It enables the movement away from the need for new version of hardware every 12 months or significantly less in a bid to drive more sales by making people feel like they are missing out and towards differentiating through providing something more that is virtual and relies on the product as a gateway to that value.
Achieving this can only ome from embracing technology to truly become digital, end to end as a business. All brands have invested heavily in digital marketing across all the social media platforms and digital channels. All of the brands have invested heavily in digital sales mechanism through direct to consumer e-commerce sites. All brands have invested heavily in digital services, from nike+ to the acquisitions of runtastic, runkeeper and endomondo to name a few. But despite the claims none of this makes any of the brands truly digital because none have truly invested in digital product.
Product, the thing they actually sell to people, the thing that their business is based upon, largely remains an analog dinosaur in an otherwise digital and hyper-connected world. Even though we have a consumer that values experience over things, brands insist on addressing this by continuing to sell things which are just poorly disguised, espoused and marketed as being experience based. They dress their products with their own hashtag on instagram rather than simply making the thing itself the experience.
"The product is and will continue to be the single most important and tangible touchpoint brands have with their consumers, but given the nature of our world and the needs and wants of the consumer, is it not logical to start looking at things differently by focusing on making that product connected, interactive and an integral part of the experience you provide as a brand?"
Augmenting that product and enhancing its value with a connection to virtualized services and experiences is the next stage of product evolution that needs to happen to survive in the coming decade.
We are seeing the beginning of this thinking starting to take hold but none of it goes so far as to actually shift value. Rather technology, as it’s currently applied, becomes an add on, a gimmick, a means by which to entice the consumer with something shiny and sell more product. This, instead of leveraging technology to change the model, find new ways of delivering value, innovate and ultimately drive more sustainable production and business practices from the consumer experience backwards.
If we looked at products like this, as a means by which to deliver value to a consumer rather than the value being the product itself, it enables a business to look at product in a different way. If it’s no longer about producing running shoes so as to sell as many of them as possible but rather to help people reach their goals with the shoe as a tool and access point to an exclusive service and experience that helps you to do so, it is a different ball game.
The value can be shifted from physical to virtual and multiplied via a number of complementary services. From access to a community to training plans, to exclusive physical spaces and preferred access to new innovations, experiences and products to provide a real, intimate, closed consumer link and relationship mechanism for feedback, collaborations and rewards that are meaningful and in context. Give people something to talk about, make it exclusive, make it human. Simple.
This type of thinking requires your product to be connected, identifiable and alive, an active part of your digital ecosystem and the journey on which you take your consumers. This enables new business models from rental to subscription in which the product becomes the gateway and the core value proposition becomes transparency, insights, service and experience.
How does this help sustainability? In more ways than you can imagine. For starters, giving individual products a digital identity allows for true transparency and traceability in terms of materials used and production practices as well as tracking products in minute detail throughout their life cycles. That forces brands into accountability for their products. We cannot hope to be circular or enable new business models if we cannot trace and authenticate everything or hold those not playing by the rules accountable.
Shifting the value from physical to virtual means brands can differentiate away from the product itself, which are all rapidly becoming commoditized anyway, and focus on the experience.
"This means they can think about higher quality, longer lasting, more sustainable, traceable products with less pressure on margin because the value exists in what the product enables not the product itself."
It requires a change in mindset that looks at a product and sees it as an actor in a grander scheme towards a better, more sustainable, more profitable and more digital future, not just something you exchange for money.
The seeds of this future have been sewn by the progress that has been made on the issue of sustainability and the capabilities afforded us by technology but a laser sharp focus is required to bring the broader more meaningful possibilities to life. Various organisations and brands are beginning to see these possibilities. From Ralph Lauren applying QR codes to every garment or Nike’s in-store digital experience that allows shoppers to scan products and have them brought to them or purchase them immediately for pick up, to H&M’s recently announced rental model being trialled in Sweden and China. All of these are steps towards this future but the benefits and rewards will be reaped by those truly bold enough to go all in and take full advantage of what is possible in a holistic manner. Those who truly face the challenges of this age by doing something drastic and meaningful at scale with a willingness to innovate, experiment and fail, in order to get it right.
It’s About Leadership, Not Technology
Gary Vaynerchuk, love him or hate him, recently posted that “people will begin to realize more and more that everything in our society is being commoditized except the ability to communicate and build human relationships. Brand will be the only thing left” This is a bold statement but it gets to the crux of what we are saying;
"it’s not about stuff anymore, it’s about being human, meaningful, authentic, safe and surviving. This is profound and something that the leaders of industry need to take note of."
Trials, pilots, one-offs and grand marketing led statements of sustainability and good intentions despite the shareholder driven reality are all fine but it’s time to walk the walk, the time for dipping your toes in is over. Disrupt yourself or die.
Recognizing that a sustainable future is essential, that connectivity is ubiquitous, that experience is the only true differentiator and that technology is the only true enabler are the keys to uccess as a business and a leader in he coming decade.
Even more essential is recognizing that orchestrating all these hings to work together is the real challenge and answer to many of the problems we ace in looking after our planet, our onsumers and our businesses. The technology is all there along with the tools o be able to pull it together. All it takes is a relentless focus and commitment to innovation, embracing digital as a tool for ood and most of all, leading people hrough this journey of change. There’s an opportunity to simultaneously start solving one of the biggest challenges facing humanity and the industry by developing ways to reduce how much stuff we make and deliver more value for all stakeholders by engaging people in new innovate and more valuable ways using technology. It entails risk, it requires hard work, it requires being truly, holistically digital in your approach and to be successful it requires people leading the charge who believe in the cause. Who believe in the potential and who are open to collaboration and new thinking. In the end it really is about people, not technology. It’s a mindset.