From “Labs” to “Core”: Transitioning from Digital Experiment to Core Business

It’s pretty clear by now that smart CMO’s are seeking ways to accelerate growth by looking at digital products and platforms to energize their product mix and boost their marketing. As they ask their team to explore faster, both CMO’s and CTO’s need to be ready for the bumps ahead as the innovations go from “experiments” to “core business”.

Often, the leaders who are being asked to lead innovation are explicitly tasked with finding new ways to work in addition to defining new product/service offerings. They might be leading Innovation, New Products, New Ventures or Business Development. So, they are expected to explore new tools, new technology, new partners or new methods for working with a goal of injecting innovation into the organization while defining new revenue streams.

But, while there is a growing set of best practices on how to invent and launch new products inside the enterprise, there aren’t as many best practices for the transition period when those products go from “innovation” into “run the core business”. Worse, few innovation leaders have a clear plan for enlisting the support of the functional leaders (IT, Product management, sales, etc.) who have to maintain and manage an innovative product once it’s launched and proven.

As a result, one of the biggest threats to capturing the benefit from innovation activities is the slow death that comes when the original strategic intent is second guessed, re-thought, and challenged by the core business.

For example, imagine a scenario where the VP of Innovation for Enormicon Inc saw a legitimate market opportunity for a new product with a different business model. Over the course of a year, his “Enormicom Labs” team moved quickly, working like an agile startup to create the first iteration of the product including customer growth, market traction, press awareness and lots of insights into how the product could succeed. But, to scale the product, Enormicon would have to move the product from the “Labs” team into the core business.

As the product moves from the “Labs” team to the mainline business, the strategic intent of the innovation project will probably clash with the functional strategies that support the business. The tech choices that were made to enable speed and quality in the “innovation” phase will probably run counter to tech strategies that guide the main business (i.e. repeatability, cost reduction, leverage core technologies, scale efficiencies). The marketing approach used to quickly gain new customers for the innovative product will probably not be supportable by the “core” marketing team’s strategies.

To successfully grow businesses via innovation, Enormicon will need support in launching innovative products, but also in re-integrating those products into the business once the new product is proven.

Innovation leaders will need strong support as they think through the start up process AND the phase of introducing their new products and services into the main business. Change leaders will need to develop stronger support for:

  • Tech Strategy – Choosing tech (the software, the programming language, the development methodology, the support model) that will work for both the start up phase (agile, fast, easy and cheap to build and support) and the re-entry phase (software that’s scaleable, supportable by the corporation, bullet-proof and fits into the rest of the company’s architecture)
  • Maintaining Strategic Support – Building the strategic rationale and the  business case for doing things differently, so functional leaders will invest the extra effort and time and money to support the experimental efforts (tech, marketing, etc.

Which Direction for Ad Agency Evolution?

This story about the mayhem in ad-land really energized me and a number of folks i work with. It probably caused some ulcer pains to the agency leaders who read it, too. There's a revolution happening right in front of our eyes, and they have to move. They can't stay still (revenues are slipping) and they know they need to evolve (because its obvious). But, it's still hard to make a decision and go forward into the future.  Here's a couple ideas for agencies that are looking to win in the future.

Find the Idea, not Create the Idea
Most agencies i've worked with pride themselves (justifiably) on being the best creative and idea shops. The big ones invest incredible sums to get the best creative talent, because in the old days, great creative talent was hard to find. Agencies could build long, long relationships with clients because of the stable of talent they had in house. And, good talent would attract more talent and cultivate the skills of the junior folks. All those things are still true,  but with tools like Poptent, Tongal, Zoopa, GeniusRocket and dozens of others, getting in touch with creatives has never been easier.

So, instead of investing future profits in tomorrow's creative talent, agencies looking to really advance would couple the talent they have in house, with a new skill that will be critical in the future: Managing the search for the best creative idea. That is, finding the idea, not creating the idea. The new value agencies can bring to clients is facilitating these global searches, managing them for quality, being good advocates for the brand, and guideing clients through this new way of getting to their campaign creative.

We're seeing test cases from the future in Victors and Spoils, Co Collective and, here in MPLS, Magnet360.  These folks are out on the edge, creating new value and getting clients to pay them for their new expertise, not just their abilities to make ads. Traditional agencies can provide the best of both worlds but they'll have to cannibalize themselves in a lot of ways to do it.

Here's two more:

  • Live in the Data, Not the Ad – There's so much data coming out of the social stream and all the digital media big brands are buying, that the analytics and insight work is getting underserved. Traditional agencies could be investing in the skills/people who could power a new service offering for their clients: advanced social media and digital media analytics.
  • Get Great at Content planning & creation – All of us brands are publishers now. When you look at great brands like Red Bull, they create as much original programming content as most mid-sized media properties. As brands need more and more content to support the relationships they are building with fans, followers, likers, etc. they'll need the skills that most custom publishers have: Planning, developing, creating and delivering small to large piece of content. A smart move from traditional agencies would be to integrate these skills into their overall mix

If you think about it, those three skills work really well to supercharge the traditional ad business:

  1. The analytics skills lead to better insights, which makes the rest of all the creative that much better
  2. The ability to navigate through the crowds to find the best creative idea makes it easier to realize the better creative that will flow from the insights.
  3. Content planning extends those great ideas out through the stream, from friend to friend, and across the web. 

 In the end, though, "traditional" agencies will probably make their digital evolution investments based on where the short term money is: Digital creative and digital production. They'll add expensive digital creatives, and hire programmers, designers and producers that will enable in-house production. That will only bring them to parity, and won't really drive any real, meaningful differentiation between them and the agency next door.