The advantage of disadvantage

Each month, When Growth Stalls examines why businesses and brands struggle and how they can overcome their obstacles and resume growth. Steve McKee is the president of McKee Wallwork + Co., an advertising agency that specializes in working with stalled, stuck and stale brands. The company was recognized by Advertising Age as 2015 Southwest Small Agency of the Year. McKee is also the author of “When Growth Stalls” and “Power Branding.”

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Running an advertising agency located in an out-of-the-way place like Albuquerque, N.M., has its drawbacks.

There aren’t a lot of big-budget clients here, it’s not the place famous brands tend to look for help, and it’s generally off the beaten path. But our location also has its advantages: stunning landscapes, an amazing climate, and fabulous cuisine, to name a few. Perhaps the biggest single advantage operating our firm here provides is, oddly enough, its disadvantages. They force us to be inventive.

That’s what struck me when I visited several ad agencies in a much bigger city a few weeks ago. I was introducing to them a software tool we have developed to make our agency more productive. As I strolled the city between two of my appointments, I wondered why I was sharing my firm’s innovation with them rather than them sharing one with me. The answer was apparent: We innovated because we had to, and they didn’t because they didn’t. Advantage: disadvantage.

The eminent economist George Gilder said that "the most important feature of an information economy ... is the overthrow, not the attainment, of equilibrium.” It’s when things go wrong that people become motivated to make them right. Gilder says, “The key to economic growth is not acquisition of things by the pursuit of monetary rewards but the expansion of wealth through learning and discovery.”

Never are we in greater need of discovery than when we’re at a disadvantage.

My firm has lived this firsthand. After an initial half-decade of rapid growth, we got stuck. Really stuck. Near-death stuck. To say we were desperate for learning and discovery is an understatement. That made us willing to take a risk and spend what little cash we had to commission a sweeping study of rapidly-growing companies. We wanted to see what we could learn from their success and inadvertently ended up learning more from those that failed. That set us on a course of continued research and innovation to become our industry’s leading expert on the revitalization of struggling brands. Advantage: disadvantage.

One of the joys of working with stalled, stuck and stale organizations is their openness to change; nothing will make you open to surgery more than hemorrhaging. Because companies in decline acutely feel the disadvantaged situation in which they find themselves—whether it’s industry commoditization, shifts in the competitive landscape, tardiness to technological advancements or any one of dozens of other reasons—they’re more open to taking calculated risks.  Pain has a way of focusing their minds on seeking transformative solutions.

Sometimes those solutions involve new product development, where it also pays to seek advantage through disadvantage. Amantha Imber, CEO of an innovation consulting firm in Australia, chides companies that become enamored with “cool ideas” rather than customer pain points. Imber says innovation must begin with “things that frustrate people, that are (annoying them). This is the stuff that they will pay more money for if we can solve their frustrations.” In other words, look for advantage in your customers’ disadvantage.

We’ve applied this lesson in a fun way by creating a “What Doesn’t Work” wall, on which our staff is encouraged to post annoyances small and large as a way of coping with their own everyday irritations. Items on our wall range from titanic frustrations like the US health care system to minor annoyances like crosswalks in Italy, no-show socks and wet coasters that stick to the bottom of your glass.

The “What Doesn’t Work” wall is more for inspiration than anything, but who knows—maybe one of these days we’ll come up with a solution or two. (I have personally volunteered to study crosswalks in Italy.)

All kidding aside, finding advantage in disadvantage is a powerful way of looking at the world. A few years ago, a company came to us that was facing sudden and significant challenges, not because of its own operation but due to changing consumer dynamics that were rapidly overtaking its industry. No matter how strong the company’s competitive position, nor how well it was executed, nothing was going to save it. It was facing existential disadvantage.

Our task was, as Gilder might have described it, to find a way to overthrow the evolving industry equilibrium. We began with extensive research to explore the frustrations still being felt by the industry’s customers, of which there were many. And we recognized in those frustrations an opportunity for an entirely new business model.

Because of its acute pain, our client was willing to risk raising millions of dollars to launch a startup that would redefine its industry’s playing field. Fast forward to today, and our client’s old business model, like all of its competitors, is increasingly antiquated. But the company is in the driver’s seat of disruption rather than being run over by it.

Seeking innovation in frustration is an evergreen method of creating change. And there’s one other benefit: It keeps you from feeling sorry for yourself. When everything’s going your way, something’s bound to break. But when you’re down, whether you’re out or not is up to you. That’s a great way of looking at the world. Advantage: disadvantage.