Coca-Cola is a legendary company, an icon of our global culture. They spend billions of dollars a year on branding and media campaigns, driving historic growth. It’s the dream agency-of-record client for most marketing firms, but not so much for us.
This is not a Coke-bashing article. It’s about two very different approaches to growth.
Coke’s Growth Strategy
At Coca-Cola’s global scale, they succeed through incremental growth in volume and revenues. 3% growth in volume is huge for them. 6% growth in revenues is monumental.
Coke chases growth through new distribution, cost reduction, pricing and packaging adjustments, rewards programs, acquisition and…innovation. And while all these elements move the needle, they’re not aimed at what we’d call transformational growth.
As the market leader in a mature category, doubling in size or value in the near term isn’t the plan. Coke instead seeks what they call, “disciplined portfolio growth.” Their goals build on their core. And that’s perfect for them.
A Steeper Growth Curve
Compare that with some companies further down the Fortune 500 list. Some are seeking a steeper growth curve. From startups to enterprises, some companies are dedicating time and focus to that hockey stick growth line. And yes, it is very possible. As a growth agency, these are the kind of goals that get our attention and get us up before the alarm goes off to get busy. We are wide awake for this.
Three Kinds of Innovation
To create this kind of growth, a company needs net-new ideas. It needs to innovate. But not all innovation is created equal. Some cracks at innovation are close to the core business, some are adjacent, and some are transformational. What does that mean?
- Core innovations stay close to the core business, they’re incremental. They are adjustments to current operations that nudge the KPIs toward improvement – it’s that 3% to 6% range that Coke talks about.
- Adjacent innovations are a bit bolder and aim for larger rewards, either by offering new products or services to its current audience, or finding new consumers for existing products and services.
- And then there are Transformational innovations, which HBR defines as “Developing breakthroughs and inventing things for markets that don’t yet exist.” These are the things that people don’t know they want yet. They are wholly net-new ideas, creating a product, and service, and market, and model, and value, and spend.
Know What Your Company is Chasing
Coke plays in the core-slash-incremental space, and might dabble in the adjacent space.
We thrive in the adjacent space, and in the transformational spaces as well. We guide clients toward finding new markets, new models, new products and services, maximizing upside and minimizing risk.
Check out this visual, adapted from HBR/Deloitte’sA Simple Tool You Need to Manage Innovation, to see what we mean:
This isn’t a new idea. But it’s important that you know where on this chart your company is aiming to find growth. Align with your team about what kind of upside you’re seeking, and what may be potential risks. It’s even better to have a solid plan to reach the results you want.
De-Risking Bigger Swings
Transformational innovation isn’t for everyone. In the wrong hands it can take too long, and carry too many uncertainties for some companies to stomach. Adjacent innovation is more near-term, easier to find, test, and operationalize quickly – some big reasons we love playing in this space.
Here are a few tips on making it work:
- Be deliberate with your time – every meeting and workshop has a predetermined purpose.
- Move fast – you should be able to cover a lot of ground in one or two sessions.
- Go from uncertainty to certainty by gathering evidence through fast research and real user feedback.
- Get real signals of upside. De-risk new ideas with early findings, and never ask the team to blindly trust a hunch.
- Be honest with yourself about your assumptions, and how comfortable you are with your level of certainty – before spending much.
- Don’t chase buzzwords or new tech for its own sake – it’s a tempting trap.
Choose Your Trajectory
Adjacent innovation is about building on your strengths. Find an idea that is super possible, and super appealing to users. Refine it, then build it, and then launch it in the safest, fastest way possible. Transformational pursuits might seem more sexy or press-worthy, but they have a much harder time becoming real. We are looking for real, steep growth. Pursue what aligns with your business goals, culture, and climate. We never push our clients to aim higher than makes sense, and we routinely coach them down as well as up the scale. There are a lot of companies ready to get aggressive, and prudently pursue radical change. They know that if they don’t do it, their competitors might.
We love Coke. Truly can’t say enough good things about the brand, especially as Atlantans ourselves. (Personally, my go-to is Coke Zero – might even put some bourbon in it on a wild night.) Coke is absolutely doing the right things for their business, and for their stakeholders (just look at the stock’s rally since the onset of the pandemic). And, if they ever want to pursue some transformational or adjacent innovation, we have standing office hours and we invite them (or you) to have a chat. We know how we’d approach it. Quickly, safely, with eyes wide open.