President & CEO, Traeger Grills.
Iconic brands rise by disrupting a category and fall by growing a “dad bod.” After giving birth to their brainchild, founders often cede power to a veteran CEO who fills out the company’s waistline with a bureaucracy staffed by risk-averse bureaucrats. This system assumes that future innovations are dangerous to past innovations, which must be protected at all costs.
Once a lean, feisty, daring organization, what I call the “dad bod” brand settles for safety, security and steadiness. Why do brands pull off one disruption and then settle? Is it destiny or a choice that can be made differently?
I realize the irony of talking about dad bods when my team at Traeger Grills gets people to smoke briskets, ribs and even chocolate chip cookies. Still, there are important lessons here for companies that risk losing the innovative culture that made them successful in the first place.
The Story Journalists Won’t Hear
“Dad bod” brands have a cultural problem. They’ve stopped rewarding risk and started punishing failure. The media can’t see this from the outside, so they don’t report it. You must be immersed in corporate politics to know who rises and falls, whose budget grows and whose shrinks, who gets the cushy assignments and who gets shipped off to Siberia.
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Dad bod brands don’t share these stories with the media. Rather, these brands try extra hard to convince the public that they’re innovative. They’re “cutting edge” because their marketing says so.
I was there once. After building a company on a disruptive idea — that headphones could be a fashion statement rather than an ugly chunk of plastic — the brand grew a dad bod. As one of the most shorted stocks on the NASDAQ, the company felt pressure to impress investors with predictable returns. This effort to grow profits in the short term led to average product experiences in the long term. New ideas were dragged through a gauntlet of cost analysis and risk mitigation.
Once risk-taking becomes culturally unacceptable, new ventures are subjected to as many checks and approvals as possible. That way, no individuals are responsible for failure. With luck, a competitor will test the idea first and prove it safe. Dad bod brands follow the path of least resistance.
These lessons changed my approach here at Traeger Grills. The founder created the category of wood-fired grills, which was disruptive because the grills were easy to use and introduced new flavors into home cooking. My company has further disrupted the category by adding Wi-Fi technology to control and monitor the product from anywhere and to enable smart grills that make cooking easier.
The product isn’t the whole experience, though. The community of brand enthusiasts who trade recipes and tips, help new users and even meet up in person have also transformed the category. The value of repeat disruptions is hard to overstate, as I’ve seen with a number of other brands.
Why One Disruption Isn’t Enough
What if Netflix had never gone into streaming? Recall that when Netflix launched in 1997, its disruptive idea was to semi-digitize Blockbuster. You picked DVDs on the Netflix website and received them in the mail. Not until 2007 did Netflix launch its streaming service, which Amazon, Apple, Disney and others eventually copied.
Netflix could have doubled down on DVD rentals by mail. It could have sold to Blockbuster in 2000. Had Netflix wanted to take the safe route, it could have hired a consulting firm to analyze (i.e., justify) a descent into “dad bod-ism.”
What if Netflix had gone into streaming but thought it too risky to produce content? Again, that would have been easy to justify. Making movies and TV shows is ridiculously expensive, and the return on investment is difficult to calculate when you run a subscription model.
Had Netflix deemed production too risky, it would have been a sitting duck when Disney, NBC and AT&T yanked their content from the platform and launched their own streaming services. In other words, Netflix’s $216 billion market cap is an improbable outcome. It had to execute at least three disruptions, and in doing so, Netflix didn’t succumb to the couch.
The Portfolio Method Of Disruption
Perception of disruptive innovation is skewed by the one-timers, the venture-backed startups that swing for the fences and spend every last dollar. They are the wrong model for established companies like Netflix.
A 21st-century tech startup is an all-or-none endeavor. Investors expect the startup to either fail or deliver a 30x return. If it works, the founders and investors become mega-wealthy. If it fails, another company in the portfolio can still make the investors’ decade.
Companies with a clear business model need a portfolio of ventures rather than one make-or-break idea. They need to place small bets, test rigorously and fail failures fast. Maybe they bat .200 on new ideas, but a disproportionate number of those hits turn into home runs.
If this sounds obvious, ask yourself: Who at your company can spend $1 million in “seed” money, fail and still have a job? If the answer is no one, your brand is at risk of growing a dad bod, or it already has one.
Numerators Versus Denominators
The late Clayton Christensen, who coined the term “disruptive innovation,” believed our economy is in trouble because not enough brands take risks to grow and innovate. They create value by playing with the denominator instead of the numerator. They reduce costs, optimize processes and congratulate themselves for not making costly mistakes.
Meanwhile, their startup competitors plot coups. They wait for the “dad bod” brand to calcify, to complain about its lower back, to plop on the leather sofa and never stand back up, except to grab another bag of potato chips. They take advantage of its complacency.
This is not destiny, but it is the path of least resistance. Unless you build a culture of risk-taking and support a portfolio that can bat .200 (at best), your brand will settle for safety. Maybe it already has.