If you’ve been wondering recently why you use so much toilet paper. Why it seems every year you’re buying more rolls than ever before. Wonder no more. As a bonus you’ll also find out with a weird example how so many industrial companies sow the seeds of their own disruption.
The first every job I held with a big company after graduating was with Kimberly Clark. An American multinational paper goods manufacturer. A big brand of theirs is Kleenex. The market leading toilet paper which we now buy giant packs of up to 24 rolls. But it wasn’t always this way. When I started working there more than 20 years ago the best selling package size of toilet paper was a 4 pack. Did we all of a sudden start going to the toilet more frequently to require more toilet paper? If not, then how is it that most families could survive on a 4 or 6 roll pack from the weekly shop and now we need to purchase to a 24 roll pack?
When I started working at Kimberly Clark most toilet rolls had between 300 and 500 sheets (paper squares) per roll. Some brands had up to 1000 sheets per roll. But what I discovered as a few years went by is that instead of raising the price, the company would simply remove 10 or 20 sheets per year. They did this as they believed that consumers are more sensitive about price than quantity. It’s a popular fast moving consumer goods ‘pricing‘ tactic to maintain profitability without changing the selling price. Kleenex Cottonelle is now down to 180 sheets per roll. In addition to this Kleenex Cottonelle is 1 ply, and the Kleenex brand it replaced was 2 ply. Some toilet papers are down to 100 sheets per roll. They even increase the size of the core of the roll to keep the same perceived roll width. So there is your answer. Each roll we buy these days has far less paper on it. Often by a factors of 4, 6 and even 10. This is why we need to buy packs which are 4x times the size. But the paper companies got what they wanted, they kept their prices per roll roughly the same.
But this goes deeper than a story of bathroom anthropology. It tells the story of how many large legacy companies are coming undone. It’s a story of their industrial mindset. And that mindset is as follows: They’d rather give their customers less for the same price than be transparent. In fact, it’s exactly what industrialists do, they want to get more for less, every single year. But in a strange kind of reversal, they end up costing themselves more and giving themselves less. Their cost per roll in distribution, and packaging goes up. And their cost per tonne of what they sell in retail margins increases. And it is of course a race to the bottom. A brand can only cut product delivery so far until the product is no longer. It also creates a worse product experience for the end consumer. I know I don’t want to carry home toilet paper packs four times the size in my trolly or buy it 4 times as frequently.
Above all of that, it shows where the focus is for these companies: On selling stuff they already sell, as cheaply as possible, using the machines they’ve already got, with a short term focus. At no point is the end user considered, or part of a strategy which doesn’t involve trickery. They have a mindset of scarcity, not abundance. On the flip side we have many startups and technology companies focused on giving more for less, and creating platforms for consumer creation and collaboration. It’s no wonder half of the the Fortune 500 lost their invitations to the party in the past 10 years.
New Book – The Great Fragmentation – out now.
The worlds richest man, Bill Gates, did something important all those years ago when he lead the personal computing revolution. He didn’t let perfection get in the way of success. In fact, he became the worlds richest man by selling a product which in many ways was well, suboptimal. His software crashed so often it was just a normal part of the product usage experience. And we accepted the situation for one simple reason: it was better than the alternatives. It was better than doing the work manually. It enabled us to create malleable work. It enabled us share information electronically. At the time this was such a shift forward in communication, the imperfections, the problems, the crashes and other stuff Microsoft became famous for still made it better than the substitutes.
This story makes clear two points when it comes to product strategy:
- Users will tolerate imperfect products that provide significant utility jumps over what they are currently using. Think game changers – Tesla short mileage range comes to mind.
- If the product is a ‘me too’ offer, then the only thing that will create success is the exact opposite: Seamless user experience, beauty, stability and reliability. The hassle of switching must be worth the effort. Instagram comes to mind.
If our startup is introducing people to a much better option, we need to move quick and fill the void, even if it has known imperfections. We shouldn’t be afraid of making it better later, once it’s already in market. But if, we are entering an established game, we better be sure it’s not full of bugs. But sometimes the hardest thing to do is not fool ourselves as to which category we are actually playing in.
New Book – The Great Fragmentation – out now.
If I was to ask you what the kids in the above picture were doing – beyond burying their faces in their smart phones, there is an almost infinite number of possible answers:
Messaging a friend, Face-timing their mum, Commenting on a blog, Snapchatting, Booking a flight, Submitting their homework, Buying a pair of sneakers, Updating their FB status, Getting directions, Sending a friend some money, Finding a cafe for lunch…. they might even be talking to directly to each other. The point is we don’t know. We can’t know by observing behaviour from the outside. Instead we need to get inside the data to find out what is actually going on.
This is a big shift in marketing and business in general. We can’t simply observe, we can’t just ask, we’ve got to mine. And while this movement might have started with the smart phone, we’re now entering an era of general purpose machinery and computing. End products which change their purpose based on who is using the technology. Malleable products like 3D printers and self drive cars will mean the only way to know what’s really going on is to match usage and observation with data. Increasingly this will need to involve collaboration, and the effective way to do that won’t be just taking the data without asking, or tricking people with hidden terms and conditions, but collaborating with it. In order to do this we need to develop a trusted relationship where we share the marketing process with our users just as if they are part of our internal team. If we do this, we can bake a bigger revenue pie where we all get a piece.
New Book – The Great Fragmentation – out now.
Pitching is one of those things that some of us love and and some of us hate. But, we all know it is a necessary part of startups and economic life in general. Here’s something many people don’t know – everyone is good at pitching, everyone is doing it everyday, and in fact, it was the very first thing we did the moment we were born. Yep, the first thing you did as a human being was pitch. Here’s how it went:
You were born into the world scared and alone as you exited the womb. You desperately wanted to stay alive, and immediately went into pitch mode. You cried for your mother to hold you, cuddle and warm you, to provide your first taste of breast milk. You put on your most adorable sad face, and used the only assets you had at your disposal – facial expressions and noise. You didn’t even have any words, but you made an immediate connection through passion and fear and hope – you connected. And it worked – you are here.
It goes further than that. You probably pitched a few times already today – proposing what to have for dinner, which movie to watch with your partner, or what to do on the weekend. You may have pitched to a work colleague on which place to get a coffee in the morning or what time to go and why. Proposing ideas, suggesting activities, it’s all a manner of pitching. And once we start to pay attention to the fact we are constantly pitching, then we can start to understand our own technique and bring it into the more formal circumstances. The best type of pitching we can do, is to bring our casual daily approach – the same approach that helped us survive in life up until now – into our business life. We need to take our natural style into those formal pitch moments. When we do this we become more endearing, believable and affable. The trick is that we need to be our natural selves. We need to embrace our natural style and personality – that same one that helped you make friends.
If you want to learn to pitch, then the best thing you can do is pay attention to the pitches you’re already doing. Take note of yourself and then take your existing informal method to places where it matters formally. You’re already a gun pitcher, you just need bring your subconscious behaviour to a conscious level.
Famed author and modern day renaissance man Nassim Taleb talks about Extremistan. While his analysis refers to black swan events, randomness and outliers in the economic world, it seems as though pop culture is on a similar trajectory.
Tattoos used to be an extreme thing in themselves. Now real tattoo people have to differentiate through full body cover and face tattoos. Extreme Sports used to mean things beyond golf, football and athletics like motocross. Now they look more like base jumping, jetpack flying and cave diving. Game Shows used to be about trivia and family fun guessing answers to win cars. Now they involve near death experiences on tropical islands to win millions of dollars and potential reality stardom. Travel Stories used to be interesting enough when someone visited far flung Asia or eastern Europe. Now hardcore globe trotters visit Afghanistan and Honduras to ensure their story gathers more kudos.
I’m sure you can think of another zillion examples of the progression towards our culture of extremistan. It is a clear reminder we are in a world which is so connected and immediate that most things have already been seen and done. What used to be unusual is just the new normal. There’s very little scarcity when it comes to ‘things and activities’. And because one of the only things that is scarce these days is attention, many people are literally risking their lives to get it. This tells us much about the human condition. We crave attention. But attention is really just a proxy for something much more human. We want to be recognised and acknowledged, and maybe deep down we just want to feel loved.
What an opportunity. To pay attention to everyone, and not just those who will go to the extreme to get it. Genuinely caring about people and making them feel your love might be the best low cost strategy we can find these days.
New Book – The Great Fragmentation – out now!
There are very few people in the world who know how the thing in the picture above actually works. Yet, there are also very few people in the developed world who have not been a major beneficiary, and even a driver of this complex technology. There is not generally a fear of the technology that makes cars do what they do. Instead we embrace the benefits they deliver and use them in every way we can. They changed where we live, how we travel, our leisure patterns, the structure of living spaces and cities, they changed the world more than anything that came before them. They totally transformed our culture.
And it is happening again. A new set of tech tools are providing both fear and opportunity. I wasn’t around when cars became common place, but I imagine there was as much fear of the unknown then, as there is now. There was probably talk of jobs evaporating and the end of economics as we know it. And yet, it was the bellwhether for the greatest period of prosperity in human history. While it’s impossible to know how most anything works these days (division of labour), it’s very easy get behind the power technology provides to win in business. In fact, it’s probably easier to win because fear of the technology is holding so many people back. We don’t need to know how something works, we just need to know that it does. And once we embrace that fact, it will reshape our perspective and quite possibly our fortune.
Many of the economic ideologies we learned in business school are turning upside down. What once worked, now doesn’t. What was expensive, is now cheap. What was impossible, is now humdrum. But unless we stop, consider and look, we just might miss some of these changes in what is true. Capital used to be expensive, and labour used to be cheap. Now it’s moving in the opposite direction. We used to think that the accumulation of capital was the key to success. But we forget it was a substitute to try and uncover intrinsic value. Thankfully we are starting to remember money is a tool, and not an end. Creativity used to be chosen by gatekeepers, now it’s chosen by us through sharing. We got tricked into believing that we should leave creative pursuits to others in the media, in the movies, and to the rock bands with recording contracts. To those who got picked. But now we know that was just because they owned expensive tools and could afford to buy our attention. We’ve now proved there is no monopoly on art, we’re all artists. Technology used to be expensive, and walled behind industrial barriers. We could only experiment with it while ensconced in corporate quarters building things for them as employees. Now we have NASA in our Pocket, maker spaces and collaborative tools to make better tech than those who gave us the tools to do it. The best tech now comes from hacking entrepreneurs because it’s accessible to all now, at disposable price points. The challenge most established businesses face isn’t technology, or ideas but belief systems. They develop a culture that makes them fall in love with what made them successful. It’s why big business is being disrupted after years of relative stability. Sometimes the most important thing ‘Big Co’ can do is forget what they know, and maybe even burn the map that got them to their current destination. New Book – The Great Fragmentation – out now!