How to turn your weakness into your best solution
Or as we like to call it, the “Spatula Job.”
When Facebook shelled out a cool $19 billion to buy WhatsApp, they showed the world that they had a wake-up call. In a time when Facebook’s user growth was slowing down, they were being highly scrutinized for monetization on mobile, and competitive social networks were popping up in new markets, Facebook saw a rising competitor that could also bolster their positioning. So Mark Zuckerberg wrote a big check to a visionary upstart to make up ground. It’s a great case study for a particular innovation approach that’s worth pursuing when growing a business.
Strategically speaking, call this growth strategy an inversion. Or more casually, perhaps, a spatula job.
An inversion takes the most glaring flaw in a strategic solution or weakness in a company portfolio strategy or category-established paradigm and flips it on its head, creating a new competitive advantage.
Even though WhatsApp was only five years old at the time, the small company founded by Jan Koum and Brian Acton had collected 450 million active users by the end of 2013. They reached that faster than any other company in history — all without spending a single dollar on marketing. Zuckerberg commented on WhatsApp’s growth in press conference call, saying that “no one in the history of the world has done anything like that.”
At the time, Zuckerberg also knew that Facebook was falling behind on messaging, which had become a major demand among Facebook’s users. Acquiring disruptors to help manage disruption is nothing new.
On the more urgent end of the spectrum, when Avis acquired Zipcar for $500 million, they were making up for lost time in an already disrupted industry. Barring the occasional dirty ashtray, the defining negative characteristic in the age-old rental car experience has had nothing to do with the car or the trip you needed it for. It’s the trip to get the car. For the urban consumer, renting a car was a trip before the trip. It required premeditation, a pricey cab ride, and either lugging your luggage to the rental office, or looping back home and dodging the meter patrol long enough to load and go.
Zipcar pulled off a beautiful inversion. Where incumbents in the category have focused on iterative improvements to make the trip to the rental office slightly less painful, Zipcar did away with the pre-trip trip altogether. Wrap it in a membership fee business model and fractional, hourly pricing, and you’ve got a superior new paradigm that makes you wonder how we ever put up with the old one for so long. This move not only created differentiation, it also allowed new category-building consumer behavior to come into play.
Instead of a purely premeditated behavior (popping by the rental office without calling to check availability was always a risky bet), grabbing a car could now happen on impulse. Fractional pricing meant that those quick-dash occasions that never seemed worth a full day rental suddenly came into play to grow the category. And the prospect of paying membership fees for the privilege of accessing a rental instantly went from inconceivable to downright attractive.
This brilliant inversion was pulled off by an upstart, a nimble new entrant to the category able to write its own rules and unencumbered by legacies of entrenched infrastructure, business models, or the mind-numbing blight of paradigm creep. But what about the big incumbents?
Is it easier for upstarts? Only sort of. It’s easier for them to be different, but harder to get noticed and succeed at it. Within big incumbent players, the barriers to creating that level of disruption are often internal rather than external, but they can be overcome.
Starwood Hotels’ rewards program, Starwood Preferred Guest, had long enjoyed a leadership position among hospitality loyalty programs, having bravely toppled paradigms like the much-despised blackout date.
But me-too competitors had eroded their edge over time. Starwood’s leadership wanted to re-open the competitive gap and did it via a powerful inversion that flipped a glaring category negative into a new competitive edge.
In a collaborative body of work with Fahrenheit 212, Starwood developed an innovation that challenged a prevailing dynamic of the loyalty paradigm that was a source of immense customer frustration. While the primary role of a loyalty programs is to bestow benefits on customers for extended periods of high activity, there’s a dark side.
They punish long-time, high-value customers if their activity drops off in a given period — which is often a function of professional or personal life changes, rather than a sign of defection to competitors. Heaping pain on your most profitable customers is rarely a winning formula, but that’s what everyone in the category had been doing on an annual basis. Starwood toppled that paradigm with a classic inversion, embodied in a new program called SPG Lifetime.
By replacing traditional 12-month visitation metrics with new ones based on lifetime cumulative customer value, Starwood became the first hospitality brand whose loyalty program reflects the true meaning of loyalty — an enduring mutual commitment — ensuring that a high-value customer’s status would never be diminished by short term fluctuations in their visitation.
The pain point of the downgrade is flipped on its head by a new paradigm that says once you’ve earned your way up our program, we’ll be loyal to you for life.
Starwood was an established category leader innovating within its core business, but there’s another context where an inversion can have big impact — cases where a big company is looking for a way to enter a business it’s not in today.
Last but not least, we can’t help but give a nod to the inversion Apple pulled off. Forgotten in the parade of stunning successes that commenced with Steve Jobs’ second coming at Apple is the string of failures and near bankruptcy of the prior decade, both of which were largely attributable to Apple’s greatest weakness as a computer company — a staunch insistence that they maintain 100% control over every aspect of both the hardware and software. In the computer business, that was a near fatal flaw, as it gave them an untenable cost structure, sluggishness in responding to leaps in technology, and troubled relationships with retailers and developers.
The inversion came about when they set their sights on markets beyond computers where the integration they had long obsessed over would actually have enduring value. Where controlling both the hardware and software was a flaw for a computer company, it became an advantage when igniting seamless, category-defining, new-to-the-world user experiences in new markets like music players, smart phones, and tablets.
When viewed through the right lens, the glaring gaps and weaknesses of your business or your category can provide a fertile ground for breakthrough innovation.
Here’s a handy six-pack of ways to help bring the power of inversions to your innovation efforts:
1. Know that small improvements on your category’s weaknesses will at best yield a less irritated customer. Aim higher with the knowledge that if you pull off an inversion, you’ll be rolling in new differentiation, customer bliss, and market power.
2. List out the most glaring negatives associated with your business or your category today. Start applying the mental spatula, looking for the flip. Ask how that negative can be flipped to an amazing new positive.
3. Ask yourself what “late mover” advantage looks like in your business, even if you’re the big incumbent. It’s Innovation 101, but ask yourself and your innovation team that classic question — if we were starting this business today, would it look anything like the way it looks now? How would it be different? The answer may point to a great opportunity to turn the paradigm upside down.
4. Know that the big flip rarely happens by accident… it’s far more likely if you’re actively looking for it. Glaring category negatives are often hidden in plain sight or accepted as incontrovertible givens. Look hardest at the things you most take for granted. You’ll be amazed by what you see.
5. Don’t be afraid to have your future compete with your present. Assume that somebody in your business (or someone jumping in later) will fix what’s fundamentally broken. It might as well be you. A healthy disrespect for present reality is an innovator’s best friend, and the key to winning in the long run.
6. With all due respect to the importance of core competencies, don’t neglect the potency of core incompetencies. The things you do worst may hold the keys to your next great leap. Give them some high-quality consideration time at the fuzzy front end. You’ll be amazed what possibilities come into view.
Go grab the spatula, roll that wrist, and watch big new possibilities come into view.
