“Knowledge is knowing that a tomato is a fruit, wisdom is not putting it in a fruit salad.” – Miles Kington
Miles Kington might have been correct fifteen or twenty years ago, but I question his logic today. After all, many salads contain both the tomato and its more categorically representative tropical cousins. In business, the tomato may be your greatest asset and I would like to propose five reasons that you need to introduce the figurative tomato to your business model.
In the conservative circles of corporate boardrooms, many experienced executives still believe that exclusion leads to focus and focus leads to execution, which, in turn, leads to higher revenues, profits and, of course, boardroom bonuses.
Except that “focus” in the 21st Century may be different than it was in the 20th.
1) In a world economy, possessing just one focus may be detrimental.
Why limit your business’s potential? Line extension, the most basic way to diversify, was once thought by marketers to be a dangerous undertaking. Maybe it still is without study and preparation. After all, a negative experience with a brand that carries the line extension name of an established product could turn consumers away from both products. But case study after case study shows that consumers are open to new products that trade on older siblings. Soft drink manufacturers occasionally have run into resistance to line extension (Think “New Coke”), but failed extension launches are primarily due to the associated discontinuation of a beloved legacy product, like Coca Cola. Eventually, “Classic Coke” was reintroduced to the marketplace with even greater success…and considerably more supermarket shelf space…than it had before the New Coke introduction. In response to overwhelming consumer dissatisfaction, Coca Cola discontinued New Coke and removed the “Classic” designation from its showcase product. Even today, some food and beverage experts believe that the entire sequence of events was a well-executed marketing ploy that resulted in tremendous benefits for the Atlanta-based conglomerate. Diet Coke and Coke Zero are significant players in the reduced-calorie market, boasting plenty of shelf real estate, largely because of the name recognition. The same is true of the caffeine-reduced and natural flavored niche Coke products.
Line extension is just one growth strategy, though. Vertical expansion of similar product lines has been equally successful for many producers. Minute Maid Juices, Dasani Water, Powerade and Monster are just a few of the tremendously successful beverage products that Coca Cola produces without the word “Coke” in sight.
2) Disruptive diversification can change the world.
When we go into a client’s office, our team is often tempted to play every consultant’s favorite game “B.S. Buzzword Bingo.” “Disruption” is one of the words we look for on our cards because we know it will be brought up in the conversation. But disruption is not just jargon. It often garners huge returns.
Apple Computers is the perfect example of a disrupter. In the spirit of reducing confusion, Apple is also the reason that our orange is accompanied by a banana, instead of Eve’s dinner choice.
Apple introduced a product that didn’t just disrupt; Apple changed the world. Only a few years before, the chairman of IBM unequivocally stated that individuals would never have use for computers in their homes. Steve Jobs thought differently. Very differently. Jobs reinvented the user experience. He disrupted the paradigm in which humans acted as the conduit to provide data to the computer. Instead, Jobs envisioned the computer melding with the user.
Computing would no longer be work, it became magic. The operator created images on the screen without bulky code or previous knowledge.
Setting up an Apple was easier than balancing a turntable arm, and it came pre-loaded with cool, interactive software that worked right out of the box.
It changed the way people thought about computers and created one of the world’s most successful enterprises by creating a new market: Home Computing. Of course, Jobs’ disruptive ways continued as he employed miniaturization, unique styling and creation of a product that consumers didn’t even know they needed until they saw it.
At the MBMI Companies, we use disruption to our benefit, and you should, too. We like to imagine the looks on other media consultants’ faces when we diversified from consulting radio and online, to include representation of the finest digital lifestyle news, image and video source in the world, COVERmedia/WENN. Later, we created Maximized Brand Marketing, too, and we’re pretty certain that it was then that many consultants decided to enter the world of marketing.
Perhaps the biggest disruption we created has been in the wider entertainment business category. Valoriant Safety is a company that is unafraid to point out security failures to some very powerful leaders in the entertainment industry. They and their businesses are often totally unprotected from natural disasters, terrorists, active shooters, incompetent engineers and more. A veritable plate of safety pitfalls lurks just beyond your imagination. We combine our decades of experience in the entertainment business with real world security experience to provide an entirely new kind of security experience, both to our customers and theirs.
3) Disruption can make your company better.
When you choose market disruption as your growth plan, change begins almost immediately, both internally and externally. Be prepared, it moves fast when done correctly. Often, the new evolution you experience redirects the way your employees, managers and even suppliers do business with you and each other. It can be hard to keep up and ensure that your entire organization is buying in and participating. Change can be difficult, and you must lead and exemplify it.
Try to imagine disruption that you could cause in your world. It’s a fun and productive exercise that requires as little as a pencil and a sheet of paper.
Let’s pretend we are in the taxi business and review how that business was disrupted, so that we can learn how we might disrupt business in our own sector:
Write down the minimum established requirements of a taxi business:
- Reliable automobiles with radios, GPS units and resettable odometers that register a set customer fare scale
- City licensing
- Commercial liability, property damage and collision insurance
- Drivers with special licensing
- Significant store of cash for creating change for riders, and establishment of accounting system to deter loss through employee theft
Write a basic statement about how the established business operates:
After cutting through bureaucratic red tape and acquiring insurance and vehicles, it’s time to hire employees (allowing for significant turnover due to long hours, burn out, safety issues). Then you turn drivers loose on the streets to find their own fares that wave down your drivers. In certain cases the taxi company must invest in advertising, so that customers can call with current location and destination.
Dispatchers send a specific vehicle to that location. Customers wait until car is available, and then they take what they can get, without regard for the safety of the car or the condition of the driver.
The driver knows nothing about the customer, who could be armed, may be planning to rob the driver or steal the car. The driver/customer relationship is strained from even before the trip begins. Such is the business.
It’s likely that you would design a similar service that mildly disrupts taxi companies, and such was the case in real life. The first disruption to the model came at the hands of the faux limo drivers at major airports.
The 999s and 777s became prevalent, with many riders choosing the slightly higher fares over the taxi cab lines and inherent problems.
Shortly thereafter, pick up and go rentals became the rage in bigger cities. Pick up a car, drive it to a destination, and drop it close by. Genius…until Uber.
Uber is the disruption of the taxi model that you wanted to design. Utilizing a mobile app, the service bounded onto the scene with the assistance of early adopters and tech savvy Millennials. They quickly grasped the benefits that we would have written on our exercise paper; Choices of vehicle type and fare ranges, virtually immediate and completely monitored pickup and transport, and, perhaps best of all, a pre-negotiated rate and tip. No cash needed…which comes in handy after the 4 AM hangover hash and pancakes at Mel’s Diner.
The disruptions benefited the owners, too. No car maintenance, cell phones instead of dispatchers, very few robberies, little government intervention, an abundance of drivers who make their own schedules (lowering burnout) and immediate cash from the credit card owner without concern of a driver skimming the profits. Seemingly the perfect disruptor, but you can wager there will be another behind it.
Try the exercise on other business models. You will find it frees you from your in-the-box bonds and, soon, you will try it with your business.
4) New revenues grow from what you KNOW, not what you DO.
This is a key mantra for fast moving entrepreneurs. It may require a bit more work for unwieldy organizations.
Let’s again use The MBMI Companies as an example of a company that has expanded by doing what it knows, not by growing what it does. The first company we established was MultiBrand Media International, LLC. (MBMI). Its initial purpose was to provide C-Suite level consulting to radio, television and digital interests in Europe.
The business took off, generating unforetold profits in its first year, with clients in Turkey, Serbia, Croatia, Greece and other south central European countries. The company tried to grow by adding experienced broadcasters like former CBS COO David Pearlman and Entercom’s training specialist Marijane Milton. In Europe, we brought aboard Robert Brndusic-Dedus, a well-known consultant. In Canada, we added Dennis Kutchera, an award-winning producer. While their horsepower helped our clients move forward, it did little to expand our business overall.
Then came the disruptor phase, as MBMI took on representation roles for London’s COVERmedia in North America and Premiere Networks in certain European geographies. It was an unexpected move that caught unaware other more established consultants on both sides of the pond. MBMI heavily advertised in Europe, sponsored major conventions and professional gatherings and brought radio guerrilla marketing to the Euro consulting business. But we decided we still weren’t positioned for the kind of massive growth our talent pool warranted.
About two years later, we hit on the kind of expansion we wanted by bringing a banana to the table. We chose a risky move: By networking our media contacts, we tried to identify a new business model that we could create by utilizing our combined experience and knowledge, away from broadcasting. We soon found that we possessed information and skills that we used day-to-day in broadcasting, but kept hidden from our advertisers. These were skills we had learned from their businesses and applied to them. As broadcasters, we constantly employed the “steal your watch and tell you the time” broadcaster-client paradigm. Suddenly, CEOs of high-end aspirational brands sought after MBMI as the expert “go to” company that for marketing tricks that had long been used to generate radio and TV audiences. By golly, those same tactics worked to generate new consumers and drive legacy buyers back to their favorite products. Voila! The new company employed broadcasting skills to help product marketers gain market share.
The banana’s new name became Maximized Brand Marketing International, another MBMI. What a coincidence! The company took on brands like Lishinu, a $65 retail price training leash. We constructed business and marketing plans that included visible events and participation sampling. We associated ourselves with expensive watch companies and a worldwide resort operator that wanted to see his properties through our consumer oriented eyes.
The banana had earned a place in our fruit bowl, right next to the orange. But many detractors disagreed. How did these two things go together? After all, MBMI was positioned as a media consultant and content provider. How could it be involved with some of the world’s top consumer products and hotels…all very quietly and without fanfare? It just wasn’t done! It was sure to fail! There was no focus or strategic fit.
Everyone told us we were crazy. Everyone, except our clients. The CEOs of those companies just kept whispering in one another’s ears, while our competition whispered behind our backs.
One evening, I found myself at a very high-powered dinner party hosted by one of my biggest clients, a billionaire owner of a multinational conglomerate. At that dinner, I met a powerful US media executive and his equally famous wife, an acclaimed fashion designer. They were joined by the CEOs of a major international bank, a giant soft drink company and a blue chip company that’s so large that I prefer not to mention it by name. Suffice it to say that this particular CEO presides over banking, appliance manufacturing, aerospace and about twenty other companies.
After dinner, I asked the multifaceted CEO what advice he had for a late in life entrepreneur whose company was constantly accused of lacking focus or direction. His answer has become the MBMI Companies’ mantra:
“When millionaires want to borrow a half-billion dollars, they come to my company. When their airplanes need engines, they call my aerospace firm. When your wife needs a toaster, she thinks about our brand first. Perform due diligence on every idea you have. Throw the best ones against the wall to see if they stick. If they do, maximize their profitability. If not, sell them or close them. And if they’re really successful, sell them and retire. In business, it isn’t about fit, it’s about core competencies and knowing more about what you do than your competition.”
That night our companies began a permanent transformation that demands constant assessment, growth and change.
5) Get out of your comfort zone to build success based on what you know.
Our most recent venture is a company called Valoriant Safety, LLC. No MBMI attached to the name this time. Well, at least not in the beginning.
By teaming up with a former United States Secret Service Presidential Protective Division supervisor and men and women who served under him, we planned a security company that would exclusively target the needs of the entertainment industry. You may wonder why we would get into a crowded marketplace like security. It is because the MBMI staff simply knows all facets of live and broadcast entertainment and the Secret Service trained our representatives to live, eat and breathe security, emergency and counterterrorism planning, and close personal protection. We developed a business plan that would offer a one-of-a-kind training division that “gets” the unique problems of entertainment companies, while providing dignitary-level protective services. Combined, our team is a formidable force that protects major recording artists, performance venues and radio sponsored concerts…almost invisibly. Certainly profitably.
Valoriant Safety is the tomato in the fruit salad. It line extends, diversifies, disrupts and is based on expert knowledge and proprietary information that we developed. It isn’t picking songs or writing commercials, but it provides a high quality service that is driven by our knowledge and experience. Oh, and ultimately, we adjusted the name to Valoriant Safety, LLC by MBMI.
There is no fear of the tomato in the fruit salad. When tossed together, the enriched salad provides necessary nutrients when the scurvy of business has you down. Use the orange. Welcome the banana. Worship the tomato. Strategize around it. Make it a part of the air that you breathe. The tomato will widen your profit horizon and set you free.