“Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible.” It is often the case that a context is best described by borrowing from very distant sources – in this case Francis of Assisi, the 12th century mystic and founder of the Franciscan order.
In their sharp simplicity, Francis’s words are a powerful – if unlikely – encapsulation of the paradigm at the heart of many of the world’s influential and prosperous businesses. Here are two stories by way of explanation.
In 2019, Facebook announced the launch of a consortium-backed digital currency, Libra. Six months later, a cover of Wired magazine’s UK edition portraying Mark Zuckerberg read, ‘Would you trust this man with your money?’ In late 2021, after eighteen months of regulatory, political and public backlash, the project – by then renamed Diem – quietly folded. Unsuccess.
In the same year, Apple had launched an Apple credit card, causing no scandal or, indeed, surprise. In April 2023, the company launched an Apple Card savings account, in partnership with Goldman Sachs. Within the space of thirteen weeks, it had hit $10bn in deposits, with a number of banks reporting concerning outflows of deposits as a result. Success.
Yes, the parallelism is imperfect: starting a digital currency is altogether different from launching a high interest savings account. Still, it’s hard not to pick up on an analogy and a difference. The analogy: two US tech behemoths – an ‘A’ and the ‘F’ in GAFA – venturing into a new space, consumer finance.
The difference: in 2019, following repeated scandals around user privacy, Facebook was, as the FT put it, ‘the black sheep of Silicon Valley’. Conversely, by 2023, Apple – the world’s most valuable brand – had widely cast privacy as one of its core principles and promises. Is the difference primarily about trust?
The comparison seems to suggest that – to Francis’s point – the necessary does lead to the possible: build trust around your core business (arguably necessary), and you might earn the permission to go into new categories (the possible).
But is trust all there is to a business’s leap into new categories? Interbrand’s near 25-year longitudinal study of the world’s most valuable global brands offers a more complex and – thankfully – more compelling understanding of how businesses grow.
Our analysis shows the ‘necessary’ to have expanded from trust to leadership; and the possible from categories to arenas.
Leadership matters more
Start with leadership. As traditional sources of authority such as media, governments and institutions come under scrutiny, people are looking to companies and brands for leadership: they are expected not just to follow the rules, but lead with principles. For instance, it’s one thing to stick to (possibly inadequate) privacy regulations. It’s another to be seen as questioning and raising the standards.
At a time of leadership deficit, businesses that are seen to do things right and do the right thing, forge a special connection with their customers – who, in turn, want them to play a bigger role in their lives. How? That takes us to the ‘possible’ – and to the idea of arenas.
Death of the category
Traditionally, competition was viewed through the lens of categories, defined by products or services. Apple is in consumer electronics. Amazon? Retail. Nike is in the sportswear category, and Ferrari in automotive.
Except they aren’t – not really. I’m writing this shortly after a run that’s been scrutinised by my Nike app, Apple Music playing in the background. I’m partly distracted by the latest from Prime Video and by images from Ferrari’s latest fashion show.
If categories fall short of making sense of the current situation, things become clearer if we shift our perspective from inside out to outside in – and rather than focus on what brands do, question what they help customers do. For example, Apple helps many of us play, connect, do, thrive (the latest Apple Watch was pitched as a health device), fund (that account – again) and more. Ferrari helps us play, move and express who we are. Amazon helps us get, play, thrive – and more.
By implication, Apple, Ferrari (through e-sports and F1), Amazon, Netflix and many others compete in the play arena – vying for the same time, money and attention, and addressing the same fundamental motivation – or ‘job to be done’, to use Clayton Christensen’s term.
Thinking in terms of arenas rather than categories is a powerful antidote against competitive blind spots: as camera manufacturers know, threats may well come from outside your category. It is also a powerful platform for customer centric innovation and growth. While traditional diversification hinges on competences and assets – ‘if we do this, we might do that too’, arena-based growth starts from relationships – ‘if you feel good about us, here’s what else we might help you do.’
What these organisations see as their ‘necessary’ is not just product, but most importantly brand leadership. Rather than build their brand around a business, they build businesses around their brand. After all, true leadership is currently a scarcer asset than technology, competences or quality.
As doing things right and doing the right thing becomes Francis’s ‘necessary’, and arenas expand the realm of the ‘possible’, what could the ‘impossible’ be?
Ask your customers. In the course of a global research a few months ago, a US consumer talked enthusiastically about Nike’s products and stances, eventually concluding how wonderful the Nike Heart Clinic would be.
Manfredi Ricca is Interbrand’s global chief strategy officer.
Picture from Getty Images / We Are