I used to chair a marketing business called Loewy Group. Its original industrial-design operation was founded by a brilliant Frenchman called Raymond Loewy in 1930.
Loewy died in 1986, but decades earlier, he wrote an excellent autobiography called Never Leave Well Enough Alone. In it he describes how his agency designed the likes of the Lucky Strike cigarette packet, the Greyhound bus and the Exxon logo. Like the French inventor of venture capital, Georges Doriot, Loewy had to leave his mother country and go to America to succeed — and he became so famous he appeared on the front cover of Time magazine.
Now he is one of the pioneering heroes of a perceptive new book called Hit Makers: How Things Become Popular, by Derek Thompson. The book’s subject matter has fascinated me for decades. Why do particular toys and games become sensations? Why do certain restaurant chains succeed, while others fade away? What confluence of circumstances arises to enable certain songs and films to become worldwide smashes? The author attempts to answer this conundrum.
Loewy believed that, in Thompson’s words: “Consumers are torn between two opposing forces: neophilia, a curiosity about new things; and neophobia, a fear of anything new.” His answer was to deliver goods that were “most advanced yet acceptable”. In other words, familiar but surprising.
At what point were drones sufficiently widely understood to become a viable consumer product category? Each innovation needs to combine with a sense of familiarity, together with sufficient margin and a means of distribution in order for companies to profit from the market opening.
Hollywood understands the power of “pre-awareness” very well. It is why franchises such as Star Wars, James Bond and Harry Potter are such blockbusters. Audiences like characters and plots they know well, even though such formulae hardly stretch the imagination. Brands in general sell because of similar emotional responses from customers. They trigger a sensation of trust, which is why widely recognised brands are so valuable.
Yet we can all get bored after a while. We crave a bit of newness. And we know that the world constantly changes. Most of us can detect big trends — the rise of populism, the growth in digital technology, the ageing of populations, for example. We can also identify specific new technologies — virtual reality, the Internet of Things and smartwatches, say. But how do companies capitalise on these shifts? And even when one has thought of a new product or service, timing the launch right can be everything.
Microsoft offers a classic case study. It invented the tablet computer a decade before Apple, with a touch input device in 2000 and a Fujitsu Windows XP tablet in 2002. But Steve Jobs’s 2010 product was better designed, engineered, marketed and timed — partly thanks to industrial designer Sir Jony Ive — a Brit. It became the most successful computer launch this century.
Another book on this topic is Amy Webb’s The Signals Are Talking: Why Tomorrow’s Fringe is Today’s Mainstream. It provides guidance on the difference between short-term fads and transformations that really matter.
The author is a futurist who uses data to predict the probabilities of various scenarios before they unfold. She attempts to formulate models and systems to evaluate new technologies and spot the opportunities and threats for business.
Creativity and originality are all very well, but execution and a degree of existing exposure matter a great deal as well. If an idea is too radical and introduced before its time, it is likely to fail.
I part-owned a chain of women-only gyms that catered for the over-50s market — a notoriously unfit segment who should have been keen on a facility dedicated exclusively to them. We provided unique, patented exercise machines that were semi-automated. But the concept was too novel and the business never really took off, despite opening more than 30 sites. Markets mostly advance incrementally, not through dramatic revolutions.
The phenomenon of “optimal newness” applies to investments as well.
Venture capitalists prefer start-ups that are a variation of an existing winner, rather than something wholly new.
So Airbnb was “eBay for homes” and Uber was “Airbnb for cars”. We obtain reassurance from a business plan that is neither too similar nor too different to existing successes.
Everything is derivative to an extent; the blend of distinctiveness is what marks out genius.
Concentrating very hard on what is cool is best left to certain industries, such as showbusiness or the rag trade. In hospitality, for example, while trendy cocktails, chic decor and an ultra-hip soundtrack help, the mass market enjoys menu classics and basics, such as good service.
Technology plays a part as the sector evolves, but it is not transforming it. Recognisable quality will trump the latest fashion over the longer run. I see a lot of hot bars and restaurants in London come and go. I favour ventures that can endure and go mainstream, appealing to a broad range of customers. Those are what I call real hits.