The Disruption of Corporate Giants (and Rise of “Un-Corporate” Communities)
Some business lessons from the London Marathon 2020
The London marathon caused a lot of excitement in the running community last week. Approximately 45,000 non-elite runners were participating remotely, logging their performance on an app.
The elite runners ran a multi-lap race around a special course in St. James’s Park. Despite the pandemic, the race was viewed as a real marathon showdown. The world record holder, Eliud Kipchoge from Kenya, would run against the second-fastest marathon runner, the Ethiopian Kenenisa Bekele.
Comparisons with the boxing match between Muhammad Ali and Joe Frazier in 1971 were made — two giants of a sport going head-to-head in a once in a generation contest.
Unfortunately, the big event never occurred. Bekele withdrew from the race due to a calf injury. Surprisingly, Kipchoge then lost his 10-race win streak and finished eighth.
But these events didn’t make the marathon any less interesting At least, from a business and innovation point of view, there was much to ponder.
Before the marathon, Nike’s Air Zoom Alphafly Next% shoes took center stage. The game-changing technology used in these shoes improves running efficiency, giving elite runners (including Kipchoge) a significant advantage.
The hyper-springy foam (combined with a carbon plate) has resulted in the five fastest marathon times ever recorded, including a remarkable sub-two-hour marathon by Kipchoge in Vienna last October, albeit in heavily controlled conditions.
But, even here, things took an unexpected turn. Nike’s premier shoe didn’t dominate this time. Other brands and older — less futuristic — versions of Nike’s marathon shoes made it to the podium, leaving people to wonder whether these new shoes really delivered the claimed performance benefits.
It wasn’t all bad for Nike, however. Brigid Kosgei comfortably won the women’s elite race in a pair of Alphafly Next% shoes.
Commentators were left asking, “Is this the beginning of the end of Kipchoge’s dominance of the event? And, from a business and innovation perspective, “Is Nike pursuing the right strategy with the next generation shoe?”
The Corporate Giant’s Strategy
So, should the London marathon be a wake-up call Nike? Should it continue to focus on making the fastest running shoe ever and hooking up with the world’s fastest athletes?
For sure, it fits Nike’s mission of “bringing inspiration and innovation to every athlete in the world.” And Nike has always implemented this mission by focusing on elite athletes and then using well-executed marketing techniques to sell their shoes and other products to the crowd in the relentless pursuit of global dominance.
Clearly, this has been a hugely successful strategy that has made them the world’s premier sports shoe company for decades.
But after I watched the marathon and thought about how things unfolded during the race, it became clear to me that corporate giants may need to rethink their business models.
They should use technology to become more consumer-focused. They need to acknowledge that their current strategy of making the fastest shoe for the fastest runners and selling it to the crowd doesn’t resonate with ordinary consumers anymore.
My own “shoe story” illustrates this point.
The Un-Corporate Community
I am a non-elite ultra-runner. I run every day. I used to run on Nike and was the “proud” owner of one of its top shoes in 2018: the Nike Vaporfly 4%. The shoes were viewed as a must-have in the long-distance running community.
It was my last Nike shoe. Not because I was dissatisfied with the shoe’s performance. The shoe worked well but wasn’t for me. It often felt like the shoes were in control of the run and not me. I started to look around and became more attracted to the more consumer-focused running gear and sports brands that have emerged over the last five to ten years — companies like On, Altra, Enda.
These brands are changing the world of running. And they have done this by pursuing a very different strategy from Nike. First, they continually show that they care about me.
Their innovations are not geared towards making the fastest shoe for elite runners and then selling me a piece of “their” magic. Instead, they focus on designing and manufacturing products that help me — the non-elite runner — to run injury-free, chase personal records, and become a better version of myself.
They do this via a relentless focus on the user experience — make running “effortless” — and giving me control over my gear and how I use it.
And second, they take the idea of “co-creation” to the next level. These newer sports brands look to create open and un-corporate communities in which diverse partners — including consumers — are involved in the process of product development to ensure that their goods work for everyone.
Crucially, these new companies focus on three elements that are essential for successful co-creation.
Leverage Tech to Develop and Sell Consumer-Focused Products
The founders of these younger companies are typically experienced runners who identified essential shortcomings in the incumbents’ product designs and business models.
For instance, they saw running shoe companies selling apparel to “fill out” their product lines. Younger companies tend to do the opposite. They use technology to provide runners with superior gear that performs better, fits better, and makes running more natural and fun.
This is made possible by the reduced costs of entering the market. Technology makes developing and manufacturing new products so much easier.
The Internet, social media, and other technological innovations have also made it possible for new brands to get to market (without being squashed by incumbents). The Internet has enabled them to focus on direct sales without being hampered by the traditional “brick and mortar” supply chain.
Build Communities of Like-Minded Consumers
The young companies are also “masters” in creating communities. Some brands target both elite and non-elite ultra-runners or triathletes. Other companies have been able to resonate with the broader crowd.
Take one of the fastest-growing companies in the United Kingdom, Gymshark. They use technology, such as social media, to maintain a constant dialogue with their consumers and create a feedback loop that allows them to continuously iterate and improve their product offerings.
The company’s products aren’t only made with the input of the world’s best-trained athletes. Product development is much more inclusive, and this is highly appreciated by the younger generation.
These new companies also work hard to resonate with socially conscious consumers. Take the Swiss company “On.” Last week, I received an email in which they announced the introduction of a subscription model — Shoes as a Service — for a fully recyclable running shoe.
Offer Consumers Meaningful Choice
There was another reason why I stopped buying Nike products. The overkill of choice was confusing. It was simply too hard — or, at least, too time-consuming — to decide what to buy.
In the digital and connected world, everything needs to be about speed and simplicity, as well as quality. These younger sports companies make purchasing products so much easier. Their websites quickly guide me towards the shoe (or other product) that I need.
And because new editions/iterations of their products are community-driven, the choices that I am given make more sense. The marketing-driven iterations of the corporate giants often lead to entirely new shoes, forcing me to do a lot of additional research, instead of offering me a slightly improved version of a shoe I already love.
What makes these new companies so cool is they understand that running should be fun. They have put me — as the consumer — in control of the product.
They don’t try to impress me with an elite product, celebrity endorsements, and then tell me to “just do it.” But, more significantly, these new companies aren’t typical corporations with big brand marketing strategies. They are managed and operated as un-corporate communities.
The question is when these un-corporate communities will dominate events like the London Marathon. Perhaps, they never will — after all, they are running a different race. But, two things are certain: They can compete against the corporate giants in ways that were not possible in the past. And, they have made me a better runner.
I want them to succeed.