Artículo 18 Oct 2019

Disruption and Reputation: Tailoring Changes to Consumers

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As Pablo Picasso, one of the original disruptors in the art world, once said, “If there were only one truth, you couldn’t fill a hundred canvases with the same theme.” When thinking about disruption in the business world, the reality is similar. It is helpful to recognize that there is not only one truth, one idea or one single way to innovate.

The term “disruption” appears frequently when discussing management and business administration.

Overtime, repeated “disruptive successes” in various industries, combined with increasing public activism, have created a new environment. Companies must now respond to much more complex demands to win consumers’ hearts—namely, they must utilize their capabilities to aid and innovate regarding the current challenges facing modern society and our planet.

«Overtime, repeated “disruptive successes” in various industries, combined with increasing public activism, have created a new environment where companies must now respond to much more complex demands»

Companies that maintain a keen understanding of sustainability (beyond the financial) know how to read and respond to consumer insights and demands, even acknowledging that this could have a short-term negative impact on their bottom line. We believe this is at the heart of disruption.

Learning from prime examples

It was in this context that Patagonia launched The Footprint Chronicles initiative, enforcing total transparency regarding the origin, manufacturing process and environmental impact of each of its garments, including reasons consumers might not want to purchase them. Additionally, Patagonia puts a hefty price tag on many of its products in an attempt to force potential buyers to reflect on the necessity of their purchases. The company even offers environmentally-friendly alternatives, such as a repair service and secondhand clothing marketplace.

After launching this initiative, Patagonia not only succeeded in cementing its brand image of environmental activism, but simultaneously positioned itself as offering the most expensive—and thus highest quality—outdoor garments. Patagonia’s current estimated annual profits reach over $4 billion. 

Taking a stand on social issues

A more recent case is that of DICK’S Sporting Goods, a leading U.S. sporting goods vendor. In its lifetime, DICK’S has positioned itself as the country’s leading seller of firearms, an area that accounts for a significant portion of the company’s profits.

The last 37 years have seen 113 mass shootings in the country, sparking widespread opposition to that right. Many believe a significant part of the problem is the ease of purchasing a firearm in the country.

In the wake of this, and keeping societal pressures in mind, the company made the decision to stop selling assault-style rifles and high-capacity magazines, as well as raise its age requirement for purchasing a gun to 21. This policy went into effect in all DICK’S stores nationwide in February of last year.

By year’s end, the company’s sales had dropped by $150 million, a 1.7 percent decrease from their average annual sales. However, the brand stood firm in its decision, stating that this decision was not an economic one, reasserting its moral conviction and even calling on other companies to join the initiative.

This perseverance bore fruit. In 2019, the initial negative impact subsided and DICK’S sales began to rise significantly. The brand closed the first quarter with its highest profits in three years, outpacing its competitors by a considerable margin. DICK’S now enjoys its new position as one of the United States’ major leaders in gun control responsibility.

Understanding society and consumers

Adidas provides another notable example. The company specializes in sports and fashion wear manufacturing.

Adidas uses large quantities of unrecycled “virgin” plastic in its garments and footwear. These plastic pollution in the ocean is a major concern for conservationism.

Adidas aimed to become part of the solution and developed a new sneaker model constructed from plastic bottles salvaged from the ocean, banning plastic bags in all of its stores worldwide and declaring it would transition to utilizing only recycled plastic by 2024.

Once again, consumers responded positively to the initiative, and despite the high cost, the company sold all 5 million sneakers it produced last year.

With its newfound commitment to the environment and new product releases, Adidas has significantly increased its brand value and connected with the large number of consumers. Adidas disrupted its operations and, as a result, gained immediate popularity.

What can we learn from these companies?

It is irrefutable fact that successful, aspirational companies all share the understanding that they cannot make an impact in their fields without disruptive innovations. The major point we wish to illustrate is that attaining that “break” is no longer the sole purview of engineers. All professionals who wish to develop and manage their reputations must be prepared to make it happen themselves.

In order to design the kinds of disruptive innovations that have positive impacts on brand reputations, it is imperative to study and understand their fundamental workings. Business leaders aspiring to capture consumers’ hearts must step up and ask the question: How can my company disrupt its field to contribute to solving society’s problems and become valuable in the public consciousness?

At LLYC, we are thoroughly convinced that all companies should embrace disruption.

Alejandro Romero
Partner and CEO for the Americas at LLYC
Ever since 1997 Romero has been at the forefront of the company’s expansion processes in Latin America, starting operations in Peru, Argentina, Colombia, Panama, Ecuador, Mexico and recently, Miami. Romero has also recently led the communication processes in three of the ten most important M&A operations in the region: the selling of BellSouth operations to the Telefonica Group; SABMiller’s acquisition of the Corporate Group Bavaria and; the selling of the Financial Group Uno to Citibank. In 20 years, Romero has managed to position LLYC as the leading communication network in Latin America.
Luis Miguel Peña
Partner and Regional Managing Director at LLYC in Peru
Luis Miguel leads the company’s operation in Peru and is responsible for the Andean Region. During his time in our office in Madrid, since 2002, Luis Miguel Peña managed the Corporate Communications, Ligitation, and Organizations and Persons areas. He has more than 15 years of experience in communications consulting and has being head of several projects in areas such as corporate communications, talent engagement, competition, civil and criminal law, among others. These include clients in the financial, energy, distribution, pharmaceutical, consumer or construction sectors. Luis Miguel has a major in Business Management and Administration from the Universidad Autónoma of Madrid and a Diploma in International Business Administration from the University of California-Berkeley.
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