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Reporting in from the 2003 CIES World Food Business Summit…by Kevin Coupe
BARCELONA -- In a compelling presentation entitled "Eating The Big Fish," consultant and advertising executive Adam Morgan detailed to the 2003 CIES World Food Business Summit the "challenger brand" strategies that could be used to compete effectively in the marketplace. It is critical, he said, to always think like a challenge - regardless of your market position. "You become a market leader by being a successful challenger," he said. "you can't lose that way of thinking."

Morgan pointed to three companies - Microsoft, Intel, and Nike - that embody this philosophy. At the latter company, he said, chairman Phil Knight maintains that "we are Goliath, but we need to think like David."

In making his case, Morgan outlined four credos that challengers need to live by:

  • Intelligent naivety. "The really interesting thing about people who shake up categories is not how much they know, but how little they know," Morgan said, noting that used correctly, ignorance can be "a dynamic force for change." Executives such as Herb Kelleher, Wayne Huizenga, Michael Dell and Jeff Bezos have been successful in their chosen fields (air travel, video rentals, computers, and online retailing) because their lack of experience allowed them to challenge conventional wisdom and accepted business practices. "Richard Branson knows nothing about anything, but he always has a go at it anyway," he said.

    Main point: "Why can't your category play by the rules of a completely different category?"

  • Build a "lighthouse identity." "Understanding the consumer is not the same as showing consumers that you understand them," Morgan said. It is critical, he said, to clearly define what your company stands for in simple terms, and then projecting that message to consumers consistently and relentlessly.

    Morgan used as an example of a "lighthouse identity" Steve Jobs, the chairman and founder of Apple Computers. When he returned to the company several years ago, Jobs cut its development projects from 130 to three -- and then created a marketing campaign that didn’t sell computers as much as it communicated the message that "people with passion can change the world for the better." The result has been a reborn company.

    Main point: A brand, successfully created and communicated, sells the consumer not just the product but the brand's "personal culture."

  • Thought leadership. "It is critical to assume thought leadership of the category," Morgan said, noting that thought leadership is very different than market leadership.

    Main point: "Thought leadership lies in breaking with what the consumer expects," in terms of what you say, where you say it, and how you say it.

  • Making choices. Once you've established a "lighthouse identity" and "thought leadership," Morgan said, it is time to do the one thing that is most difficult for brands - choose which consumers you don’t want to appeal to.

    "Our only currency as a challenger is preference," Morgan said, noting that the consumers who fuel a challenger's business are those with a strong preference for the challenger's product. When Chrysler started developing the PT Cruiser, it discovered that 41 percent of consumers loved it, and 29 percent hated it. In the past, he said, the fact that almost a third of consumers hated a car's design would have been enough to send the company back to the drawing board, but in the current environment, the company realized that is was acceptable, since there are more than 320 models of cars to choose from. The result, Morgan said, has been a car that is a hit.

    Main point: "The greatest danger to a challenger is not rejection," Morgan said. 'It is indifference. Because indifference always favors the status quo."

"Challenger is not a state of market," Morgan concluded. 'It is a state of mind."

Leadership of a different kind was urged by Jeremy Rifkin, president of The Foundation on Economic Trends, who addressed the issues of both obesity and genetically modified foods.

In the case of the latter, Rifkin told the assembled executives, "You can be the bridge between industry and communities" on the issue of GMOs, noting that "this industry is more sensitive top the consumer" because people have more intimate interactions with the products it sells.

And, he painted a fascinating picture of the biotechnology business, saying that the problems inherent in GMOs are far more significant than have been described to this point. It isn’t so much just the genetically modified seed that one has to be concerned about, but the bird or the insect that eats the modified seed, therefore setting in motion a genetic domino effect that we can neither predict not control. "In a global market that moves at the speed of light, wrong decisions can have extraordinary ramifications."

Rifkin congratulated European governments and companies "for resisting moves to genetically modified foods,' and he urged them to "take the leadership you showed in Europe and extend it to the rest of the world."

On the subject of obesity, Rifkin half-joked that all of the Europeans in the audience know other Europeans who, when they come back from visits to the US, joke about all the fat people they saw. But he cautioned them that it would be an expanding problem in Europe as well.

"Move to the center," Rifkin said. "Don't wait for the litigation. Lower the sugar content in your foods, and make them less processed and more healthy."

We'll have more on Monday from Barcelona, as MNB continues to be the only US food retailing publication on location at the CIES Summit.
KC's View:
Whether or not the challenges made to the retailers in the audience are taken to heart, these presentations were terrific - provocative and even a bit controversial.

Morgan had a great phrase to describe entrenched companies with ingrained, intractable ways of doing business: Big Dumb Companies, or BDC's.

And it struck us that one of the things that BDC's in the food industry do is allow the competition to define them - most specifically, to allow big box competitors to establish the rules and the playing field on which they will compete. It’s like gambling in Vegas when you do that - the house always wins.

And by the way, you don’t have to be a big company to be a BDC. Sometimes you just have to act that way. We used to work at a place that could best be described as "the smallest big company on the planet," which isn't a compliment. We didn’t known it at the time, but it was a BDC in everything but size.

We all have experiences like that, and they should serve as a warning for the future.