Startup secrets from the world’s biggest businesses
We believe in the power of startups to be competitive with big businesses. While they may not have the same budget, clout or reputation as more established ones, start ups can be more personal, more agile, and can take the risks that bigger ones can’t. And one way that start ups can stay competitive is to learn from their bigger counterparts.
Virgin StartUp mentor Ross Kingsland is a serial entrepreneur who knows first-hand the challenges facing start-ups. And luckily for us, he sat down with Rory Sutherland, the Vice Chairman of Ogilvy – one of the biggest and longest-established advertising agencies in the world, pioneering a marketing approach that takes in science, research and psychology – to discover his tips on how to be successful, no matter what your business’s size.
Marketing secrets of big brands
“Some big brands and very, very large organization have been around a hundred years or more. In fact, if you look at the period of genesis of the big household brands - whether it’s Coca Cola, Procter and Gamble, or so forth - what you’ll see is that there was a period where a lot of those brands effectively orginated, in the late 19th century.
This repeated in the late 1990s where there seemed to be a moment in time when you could create one of those spectacular successes - a Google, an eBay, an Amazon - because the conditions were perfect. Their timing was just right. And so copying their strategies might not necessarily be appropriate for entrepreneurs and startups. Perhaps the better approach is to ask the question: what can’t you do?
What you have to do is be better, but it isn’t all that easy in itself, particularly if you got something like eBay where there is a network effect. The other thing you have to understand is that deep, deep embedded in human behavior are some default behaviours - one of which is habit. The other ones include social copying and herd instinct.
We feel inordinately more comfortable in doing something we have done before. It must be painless, effortless, almost second nature."
Secrets of the big food and drink brands
"I actually drink Dr Pepper, not Coca Cola. It may be true that Coke has a certain magical properties that makes it successful, one of which is that everyone has been drinking it - a lot - so they know exactly what to expect. One of the properties that I’ll argue about Coca Cola is that no one really dislikes it. Now, a drink like Dr Pepper is massively divisive - my children and wife regard it as practically poisonous.
Ray Kroc, the founder of McDonalds, understood that people don’t want the best burger in the world. They want a burger that they had just like that last time, and to a great extent one of the reasons that we go back to McDonalds over and over again is because of something called “satisficing”. This is the human’s brain idea of best, but it isn’t necessarily the mathematician’s idea of best. It isn’t the optimal thing. When we satisfice, we go for something that we know is definitely going to be pretty good. It’s got to be reliable and unlikely to disappoint, and McDonald’s is exactly that. At McDonald’s the food is always been exactly the same, because of the way they train their staff. You don’t toast the bun for 68 seconds or 74; you toast it for 71. You’re never disappointed because it’s exactly as you expect it."
The importance of luck
"The vital thing to remember about entrepreneurs is that nearly all successful businesses are built in on the back of nine people who failed - a point put across by statistician Nassim Taleb, who has this beautiful phrase “An entrepreneur who fails in business should be treated as no less of a hero than a soldier who dies in battle”. The timings were slightly wrong, they got the products slightly wrong, the got the pricings slightly wrong, and eventually someone else succeeds. And it’s actually a bit unfair.
A successful restaurant generally emerges because of someone who had tried Thai, tried Sushi, then tried something else. Then they tried something which was too off-market, and then someone just gets it right - and that’s a huge chunk of luck and huge chunk of bravery. The natural tendency of most people is cautious and defensive decision-making; doing whatever everybody else does.
When you decide to do something really new, the chance of failure is quite high. The difference is that the rewards, if you do succeed, are also high."
Education, education, education
"I think anybody starting a business should just spend a bit of time reading a few books in behavioral economics, and a few books in complexity theory or game theory, because to understand social behavior and markets is vital. It’s not enough to understand ‘business school economics’. I think this on its own is a bad guide to really understanding your market. First of all, it fetishizes price and things like that. It doesn’t understand habit, it doesn’t understand loyalty, it doesn’t understand trust, it doesn’t understand ethics."
Secret testing strategies
"One of my little mantras is “Test counterintuitive things”. Two points: in business you don’t have to be right. In fact, there is no right or wrong. The second thing is that you should test counterintuitive things because your competitors won’t. If you stumble on something that’s successful and defies logic you might actually find yourself in an area with not much competition, because nobody really understands what going on!"
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