Advertising 101: Be 'Disruptive,' Get Consumers To 'Hire Your Brand'
That's what Harvard Business School's Clayton Christensen calls the "innovator's dilemma," an organization that does everything right - listens to customers, keeps a close eye on the competitors, and invests heavily in technological advancements - but one that may get blindsided by "disruptive innovations" in the form of new products, services, or business models that initially target small, seemingly unprofitable customer segments.
"Disruption" occurs when transistors begin to replace vacuum tubes and small companies like Sony (in 1955 at least) takes on the RCA's of the world and beats them, despite the millions spent by industry leaders to anticipate and co-opt new technologies. Sony was able to take lead because it aimed low: at teenagers who accepted a cheap product with poor quality. Teens in the Fifties embraced lousy transistor radios because they wanted to "hire" a product that would provide noisy (in 1955 at least) rock music away from the earshot of their parent. RCA and Zenith, meanwhile, were thinking of expensive high-end items like TVs and missed the teen market completely, setting the stage for Sony to eventually "disrupt" and dominate the electronics marketplace.
"Disruption inevitably leads to growth - you just need to be on the right side of the disruptive path in order to capture it," Christensen said, speaking at "re:think! 2005," the 51st ARF Annual Convention, a two-day conference held in New York City on Monday.
In terms of applying this to the advertising industry, a panel that included Charlie Rutman, the CEO of Havas' MPG, questioned whether the business model lent itself to such comparisons.
"We offer intellectual capacity, not tangible products, so it's hard to formulate disruption theory to our business," Rutman said.
Christensen responded by saying that people "hire brands to do a job" and suggested that, in helping clients figure out how to do that, agency professionals needed to be there at the beginning to help move development of new products and services in directions.
Rob Scalea, chief strategy officer for WPP Group's J. Walter Thompson, noted that the issue could help shed light on the debate over whether clients decide to have more research in-house or outside. Panelists discussed the position of the agency executive as a "trusted advisor" to the company, and noted that the idea of placing agency people on the boards of directors like in the old days was due for a comeback.
"That was the model 60 years ago," Scalea said, "and I think it's a good idea that we went back to that."