In the last 2 weeks I’ve seen 3 blog posts talking about growth, all more or less claiming that their concept is the best or only way to grow companies in the future.
But do these concepts really work (in anything smaller than a global corporation)? And are they really new?
The first one is all about “big-enough market insights” or BEMIs¹ and is based on the argument that real, rather than incremental, top-line growth can only occur when there’s a significant change in the nature of demand.
That change is caused by either a shift in customers’ circumstances or in their thinking e.g. when the housing bubble burst or when tablets became simple, affordable tools for use at home and at work.
1. What is a BEMI?
When a business owner can see the connection between a change in demand and the lucrative market the change will eventually create she has found a BEMI.
That Insight becomes the foundation for either a blockbuster product or for a suite of offerings.
2. Identifying a BEMI
BEMIs are usually spotted first by employees at the fringe of the organization. For example in the 80’s, a Toyota executive in California saw that increasing affluence and the growing number of yuppies was creating an opening for a new kind of luxury car – the Lexus.
More recently, the Air Wick Freshmatic originated with a brand manager in Korea.
Closer to home, one of our clients realized in the late 90’s that, as cell phones began to be adopted, users would want cases, rechargers and extra batteries for them. Consumers would be more easily upsold if these accessories were packaged in a kit rather than sold as individual items.
3. Embracing a BEMI
BEMIs often face a lot of resistance from inside the company. Many critics opposed the Lexus because e.g. setting up a separate network of Lexus dealerships, had the potential to alienate existing dealers. They also attract opposition if the company doesn’t have the necessary expertise to develop the product e.g. Reckitt Benckiser had little experience with the electronic technology required for the Air Wick Freshmatic.
In the late 90’s the cellular carriers were the major distributors of accessories via their retail outlets. Our client had to overcome the carriers’ resistance to kits by acquiring the technology and resources to design, assemble and package for them.
4. Exploiting a BEMI
Pursuing a BEMI can take a lot of perseverance because they rarely lead to a surge in revenues and profits over the short term. That’s because they originate in an understanding how shifts in current trends will change markets – and using that insight to create an opportunity for the future while sidelining competition.
Pampers disposable diapers, introduced in 1961, took advantage of the growing desire for greater convenience, and the fact that women were increasingly joining the workforce. But they had to be made by hand, making them uncompetitive with diaper services. It took years before P&G could mass-produce them and that did not come cheap. However Pampers created a multi-billion dollar market.
5. So do they really work and are they new?
It took time to launch cellular accessory kits but consumers really took to them and sales took off. So I’d say that the concept works equally well in any size of organization.
However I’m not sure they’re new. I think strategists and business owners have been doing this for a long time but just calling it something else (trends analysis springs to mind).
But regardless of what you call it – it works and works well.
¹Where Top-Line Growth Really Comes From HBR, 6 Oct 11