What does a challenger mindset mean for legacy brands?

Episode 3, The rise of cause capital, heard Ernesto Schmitt, The Craftory’s co-founder, explore venture capitalists’ investment in challenger brands and the rise of cause as a characteristic of challengers.Episode 2, How does a brand reclaim its challenger status?, heard Kerry Chilvers, Direct Line’s brands manager, share an honest perspective on how a brand which has lost its challenger edge in a changing category can revitalise its challenger status and brand proposition. The premiere episode, The changing landscape for challenger brands, featuring PHD EMEA’s chief strategy officer, Malcolm Devoy, asks brands to honestly examine which path they’re taking at this advertising crossroads – the useful and practical, or the creative.

The beauty of deaveraging

Having lived and breathed challenger thinking since the start of his career, Daniel Ordóñez knows from experience how a challenger mindset can help legacy brands. Using his present experience as senior vice-president and chief growth officer at Danone – one of the world’s largest food companies offering plant-based alternatives – he debunks the myth that challenger thinking is only relevant to small and new brands.

“The barriers of entry have fallen,” explains Ordóñez in his conversation with Adam Morgan in episode four, highlighting that big and small brands are on a nearly level playing field. “Every small player, every small challenger, has access to the same manufacturing sites with co-manufacturing facilities; can reach the shopper with e-commerce.”

Not only do small brands have the same access to resources, but they often utilise a key differentiator – brand storytelling, in everything from the narrative behind their ingredients, to their beautiful packaging.

“Inexorably, the landscape changes. Brands have never been so interesting for people,” Ordóñez adds. “I believe that today, there is no choice but for established players to sit up, take notice and become more interesting for this younger generation of consumers.”

Morgan asks Ordóñez to further delve into the idea of becoming interesting, of ‘deaveraging’ a brand – a concept for which Ordóñez seems to have equal parts passion, knowledge and experience. From looking at Neilson and IRI reports, he says, the reality is that growth is everywhere, but you need to actively hunt for that growth space and opportunity; it can no longer be found neatly packaged in a market research report.

The beauty of deaveraging starts with observation and over the past 20 years, Ordóñez says that he’s spent a lot of time observing smaller global challenger brands, looking specifically at the techniques they deploy. The most interesting observation is that challenger brands, along with their use of storytelling, refuse to put things into boxes and follow the status quo.

A challenger mindset and behemoth companies

Morgan makes the point that large organisations can be “bureaucratic” and “matrix-driven”, which does not always lend itself to be an easy environment for challenger thinking. What does it really take to lead a challenger mindset in a large organisation?

“I would start with the humility of strategy,” says Ordóñez. “Know where you’re going but don’t be fixed and avoid the dogma. Celebrate the pivoting, celebrate the risk and the speed to market. Accept that what has to be adjusted is you and not the marketplace.”

Ordóñez concludes that you must accept the need to be polarising and that being polarising is not something that necessarily makes you very popular in large organisations. You must mind less about hierarchy and processes and display visible, committed leadership at all times.

He shares a quote from Alan Joyce, chief executive officer of Qantas, which had to undergo huge transformation: “We are transforming a business. This is not a popularity contest – what I’m doing, I believe, is right for the company and right for the company to succeed.”

Following his conversation with Ordóñez, Morgan is joined by PHD US’ Avin Narasimhan to revisit and analyse Ordóñez’s early observations of deaveraging and the marketing playbook of challenger brands.

Morgan recalls part of the conversation he had with Ordóñez about the power of challenger thinking for large organisations and observes that much of Narasimhan’s role is to reframe brands’ outlook to embrace a challenger mindset when shaping their marketing strategy.

Narasimhan agrees, adding what stood out for him most during the conversation between Morgan and Ordóñez was how often the idea of being ‘interesting’ came up. Although this may seem a little obvious, in a world where the conversation is so often dominated by tools, tech and data – it’s a good reminder that none of this matters if media agencies can’t help brands be interesting out in culture and out in the world.

Morgan revisits the notion of deaveraging and asks, how best do you help clients to deaverage? Narasimhan reiterates Ordóñez’s point that deaveraging isn’t found in a spreadsheet or report; it’s about getting out into the world, to understand through human observation and intuition.

It can be easy for large brands to rest back once they’ve reached a certain size but Narasimhan says: “I love the notion of always challenging no matter what position you’re in, even if you’re the market leader.” There will always be aspects of a brand that is average, so look between the lines and find that growth opportunity which Ordóñez so eloquently describes.

Hear the rest from Adam Morgan, Daniel Ordóñez and Avin Narasimhan with the fourth episode of ‘Overthrow II: Challenger strategies for a new era’, available on Spotify, Google, Apple Podcasts and Audioboom. To purchase a copy of Overthrow II or to find out your challenger type, click here.