Jumping across the chasm from business-to-business component supplier to branded, finished goods marketer is a risky business. Not only do you find yourself playing in a radically different game, where consumer engagement drives your success, but you also must contend with the fact that your current OEM customers – the ones keeping your company afloat while you embark on this adventure – now become your competitors. They usually don’t take this very well, in my experience. This is what makes shoe sole maker Vibram so interesting.
I had a great time talking to Vibram USA CEO Tony Post and marketing manager Georgia Shaw a few weeks ago on a project and got a first person look at how a very interesting company navigated this tricky maneuver. The Vibram story does more than just give us a blueprint on moving from OEM to branded product: it gives us a distilled story on how any brand can successfully compete in the face of opposition from “friends” – be they channel partners, customers or other people technically on our side of the table.
When you cast your mind into the world of OEM shoe soles, what comes to mind? Exactly. That’s the problem CEO Tony was wrestling with. The business was increasingly commoditized and innovation was first and foremost on his mind. Following a series of strategic moves to increase the brand’s connection with a younger and more active market – connecting with branded players like Burton, Shimano and Uggs, a young designer in Italy pitched a radical concept to Vibram’s Chairman, Mario Bramani, resulting in preparation meeting opportunity. The result of this collaboration was dubbed Five Fingers, an athletic shoe with five “fingers” for your toes and a thin, barely there, 2 millimeter sole. Research sponsored by Harvard validated the neurological and physiological benefits of what soon became referred to as “barefoot running.” The shoe – while being a bit of a head turner by virtue of its unusual design – is rapidly gaining a rabid fan base (Facebook fans now number over 49,000).
The lesson, however, is how Vibram launched the product. They pitched this outlandish design to their customers, all of whom did what big companies do when faced with innovation beyond their immediate comfort zone. They saw everything wrong with it. It isn’t commercial. No one will know how to put it on. It’s just too out there. We’ll pass. This gave Vibram the green light to move forward with branding it and launching their first finished shoe.
Think this through for a moment – what would a tier 1 athletic shoe maker think when presented with a minimalist design that conforms to the human foot like the Five Fingers? It would invalidate millions upon millions of dollars in research and development – not to mention advertising. It would be an admission that all the over-built product that has been causing chronic knee pain for so many years is the wrong thing to do. In short, Five Fingers would be an unthinkable product for them to carry and they’d prefer to ignore it and marginalize it to the best of their abilities.
This is a perfect situation for Vibram – an uncontested space, an unthinkable option for their “competitors,” and a clear conscience in their on-going OEM business relationships.
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. Do the unthinkable. What products or solutions would be so against the written and unwritten mores of your partners that accepting your offer would be unthinkable?
. The Eigen Value of the Five Fingers. Remember the idea of the Eigen Value? “This sentence has five words” – the statement is the definition. Well, “this sole has five fingers” is just as true – and as Vibram is a shoe sole manufacturer, and as Five Fingers is essentially a shoe sole you wear on your bare foot, who else would have launched it? It makes sense for Vibram to launch this product! It’s who they are. And if it came from someone else, it wouldn’t have made as much sense. It wouldn’t have been believable.
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I’ve come across this problem before, where the CEO is deathly afraid of doing anything that may possibly irritate a larger and more ponderous partner – an OEM customer or a channel partner, for example. Where the CEO loses his or her nerve, company growth stalls and opportunity is lost. Vibram navigated this leap with dexterity.
Tony told me when we first met that “there weren’t many case studies out there for us.” Thankfully, he and his team at Vibram have blazed a path for others.