Innovation strategy and the politics of marketing.

Next time you go for a walk around a pond you’ll notice all the action is at the edge, what anthropologists call the ‘contested space’. In 1869 Matthew Arnold, in his essay “Culture and Anarchy”, defined culture as, “the best that has been thought and said”. Fast forward to 1952, lexicographers conducted a study of the word culture and found one hundred and sixty separate definitions in use. It is, as Raymond Williams wrote, one of the most complicated words in the language; noun, process, product, and where its adjectival form cultural is only available once culture becomes understood.

From an original usage relating to growth (horticulture), it has come to mean a general process of lasting improvement, of becoming more intelligent and appreciative of human creativity, a particular way of life, an ideology, independent artistic activity, the search for imaginative truth, or more vaguely “the arts”, which is obviously flawed today because it excludes science and technology.

It’s mutable, difficult to grasp, complicated and the scene of class conflict. Great! That means mainstream business will never get it.

In his lifetime Shakespeare’s plays were the popular entertainment of the day, and his audience were predominantly illiterate. The Elizabethan elite were rather contemptuous of him, today’s cultural elite flock to him.

Ruskin said that it wasn’t people’s labor that was stolen, it was their creativity. Maybe, but today the metabolism of culture is so fast, it vanishes.

Bordieu pointed out people accumulate cultural capital as a means to, in their minds, elevate themselves above the common herd. i.e. “authenticity” is the current clichememe for the velvet rope, guest list and bouncer at the entrance to the cultural elites self-appointed club. No, me neither.

And then on top of all this, is the tension culture has always had with commerce, which explains why cultural (brand) strategies might put people on edge. Can this be assuaged? Perhaps it can, depending on who’s doing it.

It’s tricky. Bearing all this in mind, I’d advocate a contemporary working definition of culture as the best of everything we do collectively.

This draws on Arnold’s original definition while guarding against the inevitable tendency to use culture as a weapon in the arms race for individual social distinction. It privileges a culture where you desire for someone else what they desire for themselves, as opposed to wanting what someone else wants because they want it and therefore you must have it too.

All well and good in theory, but as someone said to me soon after I moved to America, “never forget this country is Protestant and above all, pragmatic”.

Two stellar long term case studies of cultural strategy in action, and fuel for entrepreneurs pioneering the new economy, are Fat Tire beer, made by New Belgium Brewery, which became worker-owned in 2013, and, the non-profit Freelancers Union. Both of them are also B-corps.

In 2003 Fat Tire was a successful grassroots brand in the Rocky Mountain’s micro-brewery market, a couple of years later, on minimal marketing resources it was #3 craft beer in the USA.

Successful entrepreneurial businesses often create a local niche but struggle to go mass, how did they do it? Roughly, there are four stages.

First chart in detail the cultural orthodoxy and narratives of the category. In this case the micro-beer market, summarized here as, eco-epicurean-artisanal-cosmopolitan-connoisseurship. What often happens is businesses get caught up in their product benefits — provenance, ingredients, how its made etc. This approach is rooted deep in the American psyche because Claude Hopkins put it there; coincidentally one example is this ad he wrote for Schlitz beer, in 1908.

Second, the ideological opportunity. In the late 1990’s there was an inflection point around the ideology of vocation. Hung-over from the avaricious ‘80’s and precariously employed during the (first) dot-com bust, there was an emerging desire amongst middle-class young professionals, particularly on the west coast, to do something more meaningful with their lives. But, they were then, as they are today, trapped within the web of status and prestige that they had weaved. Torn between the security of a great paycheck, the compromises it comes with, and the dream of a freer bohemian life, with all its indescribable and uncertain promise, they ultimately bank the former and live their desires vicariously through locally grown food, weekends in the country and outdoor enthusiasms.

Third look carefully at the company culture. New Belgium Brewing had qualities that matched the ideological opportunity. For instance, the owners themselves had packed in traditional careers to pursue their brewing dream, they had a familial humane management approach, (I’m speculating this is the foundation on which years later they became worker-owned, for contrast read “Uncanny Valley” in this months N+1), and somewhat fortuitously, a bohemian design icon as their label, a fixie.

Fourth, the messy and chaotic creative development process which brought to life the strategy “pastoral amateur avocations” in all sorts of interesting creative expressions in all sorts of interesting places.

This film encapsulates the idea https://vimeo.com/31586954 which is also helpfully deconstructed in the book.

In review, does this strategic process produce anything that couldn’t be done with more traditional approaches? No. Prior to this work there were two unsuccessful rounds of industry standard research to define “emotional territories” for Fat Tire, within its category. And, the book devotes a chapter to eviscerating the tragicomic farce of MBA style “sciency” brand management, that anyone who has had to work with Unilever’s “brand key”, or variations thereof, will recognize and find mordantly amusing.

Did they just get lucky? Perhaps. Of course it plays a part, right time, right place and so on, but the rigorous process is also the means by which the team builds trust, sufficient to navigate the turbulent waters of creative development. Getting together for thought-showers hoping to roll a six, will result in crappy stunts, at best.

Does it work in some fundamentally different way to contemporary marketing and advertising? Cold War warrior Ernest Dichter defined the brand as the site of symbolic exchange, where the customer is “creator, maker and investor in the soul of the product”, but then he fell out of favor in around 1960, for no particular reason, in my opinion. Or, as they write in the book, “alchemy happens when the company converts an ideologically charged element of the sub-cultural experience into a marketplace myth to be enjoyed ritually by the mass market”. Okay. Well, perhaps it works because it’s just quite charming too.

In 1996, Sara Horowitz, a third generation labor activist, founded Working Today, now better known as The Freelancers Union. The first-of-its-kind insurance agency, offering health benefits at better rates to its independent worker membership through collective bargaining. As you can see from the chart this renaming transformation had a dramatic effect on revenues and Freelancers Union is one of the most famous American social innovations of the last twenty years. How did they achieve this?

As before, first identify the cultural orthodoxies. At the time, and it’s still true today even with Obamacare, the US health-care market is dominated by a small group of enormous insurance companies, all talking the same language and offering barely differentiated health plans. To illustrate the point, a relative of mine asked his family GP how he goes about choosing a health plan, to which he shrugged and said he picks one somewhere in the middle of the price range…

Second, identify the ideological opportunity. This was already apparent, Working Today was a social innovation explicitly set up to attack an economic dislocation in the labor market — outsourcing to contingent workers without paying company benefits. So why wasn’t it working? Don’t better mousetraps sell themselves?

One of Working Today’s issues was mimicking the communication orthodoxies of the insurance category; stock photos, unobtrusive artwork, “professional” jargon, all done with the right intention of appearing trustworthy and dependable.

Another issue was targeting too broadly, in this case to all and any temporary worker. Headquartered in NYC, they refined the audience to focus on commercial arts workers — writers, designers, animators, musicians, and so on, the creative precariously self-employed class, who by and large tend to be political progressives, are extremely cynical towards the incumbent health-insurance companies, and NYC is full of them.

In contrast to the audience for Fat Tire, commercial arts freelancers operate outside the constraints of mainstream corporations, they make a lot less money, but the autonomy means they can paint themselves as free-spirited mavericks living in the margins. What they miss is the camaraderie and of the workplace, and this was the opportunity, initially expressed in the creative brief as independent worker solidarity.

Third, company culture. The first decision was to change the name to Freelancers Union. This was controversial internally because it rubbed up against a belief that “independent worker” was more aspirational and professional. However within the tighter defined audience of art workers “freelancer” was a preferred term, it signified exactly what it says, freedom from corporate rules. The term “union” was even more controversial because the organization was not a union in the legal sense and calling it one would challenge labor laws dating back to the ‘30’s. It was a tough call for a third generation labor activist.

Fourth, creative development. With a hundred and fifty years of organized labor iconography for inspiration it’s obvious from the strategic process how Freelancers Union would be brought to life. The creative process is closely detailed in the book, from logo, grassroots campaigning, website design, ads, and, at the time, prototypical social media community. Looked at in the whole the cultural strategy transformed the business model way beyond a marketing campaign.

In review, the case study provides an interesting counterpoint to prevailing wisdom that says building better-mousetraps in social innovation inexorably and organically scales because they are a cheaper better solution to a social problem. The revenue chart speaks for itself.

Late last year I was in the audience at the Platform Cooperativism conference listening to a talk on how to make coops work given by Juliet Schor, doyen of consumer society criticism, when she said something that particularly caught my attention, “make sure you get your value proposition right”, and then apologized for her “businessy language”.

I thought it was interesting that she was recommending a business-as-usual innovation strategy, and of course it is true, all businesses start with someone somewhere thinking “I’ve got a better idea”.

What cultural strategy does add to this is a framework to dramatize a social change ideal, as opposed to making declarative statements of ideology, which can rile a broad audience, and is analogous to the old school ‘make and sell’ advertising of yore.

With all of the above in mind, looking ahead at a few innovations in the new economy you can begin to see the challenge they will face if they want to scale. Yes, this is top line it’s not strategic analysis, but it is any potential customer’s first impression.

Loomio is an innovation in direct democracy that came out of the Occupy experience. With a devoted user base it is used in a hundred countries in thirty-five languages. Douglas Rushkoff wrote, “Loomio unleashes the internet’s potential to bring people towards consensus rather than polarized debate”. As we drag our feet reluctantly into the oncoming general election car crash it does not take a genius to foresee the potential cultural demand! Getting under the skin of this, formulating the appropriate narrative and cultural codes then bringing that to life is a monumental challenge. However, without that and based on first impressions it is possible Loomio will hit a wall if it relies on organic growth, or, a VC funded competitor will mimic it leading to commodification.

Thinking back to how Freelancers Union (nee Working Today) initially communicated within its category codes, and at a time when confidence in American banks is 12 points lower than the historical average, you can immediately see the problem with coop and community banking.

Allow me to quote a recent Gallup survey verbatim.

“The high level of customer or member engagement at community banks and credit unions doesn’t spring from the nuts-and-bolts aspects of banking, such as rates, products, convenience or technology. Those basics are all necessary, but they don’t provide a financial institution with sustainable advantages that differentiate it from its competitors. For community banks and credit unions, a real competitive advantage comes from customer engagement, which is a result not only of the products and services they provide but also of the way they make their customers feel.”

Or take a couple of examples of innovator’s communications in the food sector.

Blue Bottle — flat, generic coffee culture iconography

Good Eggs — generic online supermarket, fresh(er), convenience, price, blah.

Meanwhile, Purple Carrot have got something going on, “the new American diet”, the sense you’re going to join an online CSA, an invitation to “open your world”, a sense of intrigue, possibility and promise.