How Craft Brands are Transforming Innovation

by Francesco Pagano

How Craft Brands are Transforming Innovation - Dollar Shave Club

Innovation is Dead. Long Live Innovation. This could be the meme for our current cultural schizophrenic views of this discipline.

But traditional innovation , as we know it, is no longer the same. It has been taken by storm by Technology and by what we call Craft, which are small Brands, created from scratch, and that build their fortune on social media, while challenging the product, distribution and marketing language of established Trademarks.

New players, be them from Tech or Craft’s Small Ville, apparently don’t have anything to do with the industry they attack, and yet they come in and steal market shares with an unprecedented speed. And, they use completely opposite tactics to disrupt the industry.

What does this mean for Marketing and Innovation? Spoiler alert for the rest of the article.

  • Established Brands are being stripped of their mystery, becoming  just a product
  • Technology is forcing incumbent Brands to think ‘function’ on top of story-telling
  • Finally, the good news: Marketing and Innovation as we knew them are dead or dying quickly

Let’s use the 4 P-s as our heuristic scheme to understand what’s broken forever.

Market leaders have been thriving on (1) the power of established brand names; (2) the extraordinary value for money associated to something perceived as complex to make but at a good price, all of this thanks to low operational costs; (3) a distribution with enough mark-ups for all, and some in store ‘theater’ able to perpetuate the premium; (4) a communication that relied heavily on classic media. The full value created by this whole operation is captured by Brand, Manufacturer and Trade. Added value for the final consumer is created as long as the Brand is hot. We are selling ice. We are selling love, the ultimate immaterial fuel of our arid life. Brands are the celebration of the individual utility, which is the base of modern capitalism.

Craft brands like Dollar Shave Club, Cluse, Daniel Wellington, Rosefield, Olivia Burton have paved the way to social, new Brands. They completely smash this Marketing infrastructure. Thanks to the birth of participatory media and the scale now achieved by online and alternative channels, Craft Brands refuses the clichés of established brands and builds movements, where everyone belongs, and where followers are needed, chased and nurtured. No over-priced Brand, no complex product detail, no large pipeline of new stuff is wanted nor needed for people who live the moment. No loyalty. If Brands are love stories, Craft is speed dating. If Brands are ice, this is crushed ice into small frozen margarita shots. The value is captured by its users, who demolish a convoluted supply chain, a stale theater at my mother’s stores and a communication unfit for the contemporary crowd. Craft is the minimization of Brands to their essence. It’s just a product. Cut the crap. The thrill of it is to hack the system, to create an alternative, democratic and especially cheap way into it. The revolution is to simplify the end to end value chain and celebrate the movement, the ‘us’, over the individual. We are Craft. It is process winning over the story, most often without a story, without a product, without a true Brand. The question is: what happened to Brands’ social impact? Is ‘social’ a territory unfit to nurture true Brand identity?

Now, here is the big fish called Technology, or Smart, to use a more consumer centered term. Technology & Smart usually enjoy one major advantage of any great innovator: vague financial information. If you think about it, secrecy & absence of reporting is the ultimate freedom, which another tremendous innovation powerhouse has: the military. Smart is not a story, nor a process. Smart is a revolution. Building on the continuous improvement of technology and the great advantage of being at some point attached to our body – think of heart or glucose tracking, or passwords & safety, Smart becomes a platform, which builds upon a consumer insight that is not defined, or better, ever changing. Is this good or bad? Are you buying a device for the fact of receiving notifications? Health? Control over your home or your car? Apps? You have it all, and it’s all linked to your life. Smart is innovation on steroids: it’s the fastest race. The value here is captured by the manufacturer of the hardware, and in the future of software and apps. The value added for the consumer is self-created and self-curated. All thanks to voice, which will be ‘the’ revolution of the future. If we were speed dating with Craft, here we are creating our own doubles, it’s the true selfie. If Craft is doing shots, this is being continuously drunk. This not simply a story, it is our own individual story, where the Brand is never the same for all. Smart changes our lives. Same question as before: are Brands compatible with function? Can Brands save our lives?

Wait a minute, we used to do that. There is hope.

Rewind for a moment, let’s go back in time and think of the birth of Coco Chanel’s tailleur. Yes, Coco Chanel, one of the greatest innovators of our time. When the tailleur (definition:a tailored or tailor-made costume for women) was born, it wasn’t about the looks, but it was about what it meant. It was all about the function, about freedom, about liberating women from the chains of the corset and of the life-style associated to it. The tailleur frees up all women of the world and makes them an independent, fully realized member of today’s society. The tailleur changes the world forever, thanks to function.

The case of Craft and Smart has made our supply chain, distribution and communication completely obsolete. Now, the call for action. Here are two imperatives for Brands, and actually for all Innovators out there. This is what we must keep for the future.

  • Craft is a social statement. Manifestos used to be what Brands stood for, in the world. Our Brand stories and our Retailers need to be social, first of all and forever.
  • Smart means function. Embrace it. Waste all the time in the world understanding technology and showing ‘how’ people can change their life thanks to function, thanks to what you do. Technology is finally and forever cool.

We always need stories. Today’s stories have the taste of social emancipation. Innovation has now become a continuous, community experiment. Brands are experimental. Innovation and Marketing will be made of data and technology; of research before, during and after any launch. Brands will be given away completely, or they will die young. Innovation has joined the camp of social sciences.  And if you want more real world examples, pay attention to the Craft brands.

This is the first in a series of pieces by Frances Pagano Costas Papikano on Micro-Marketing and Craft.

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Costas PapagainoCostas Papagaino is one of the founding partners of the Happen Group and since 1996 has worked across the globe in many areas of innovation, from strategy to design, from commercialization to manufacturing. He has continuously pursued the balance between technology, consumer need and business relevance, driving for the innovative leap to achieve all three. Follow him @grumpyinnovator
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Franceso PaganoFranceso Pagano is Vice President, head of Portfolio of Licenses Brands, EMEA for Fossil Inc. He is passionate about craft brands, innovation, brand management, brand communication and international business. He is always up for irresistible product concepts, ultimate communication via integrated campaigns and truly great Italian food.  

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