In our fast-changing, volatile world, brands need customer-insight driven innovation. Innovation breathes life into brands. Innovation keeps brands relevant in the eyes of customers. But, not all innovations need be innovations. Some innovations can be reimagining existing processes and technologies for new uses. Innovation is the use of a better, and as a result, new idea or method. Invention is the generation of the idea or method itself. Innovation differs from improvement as innovation means doing something differently; it does not mean doing the same thing better.
Innovation is the challenge that Kirin is taking head-on. Kirin is the Japanese brewery brand with the namesake beer, Kirin Lager and another most popular Japanese brand, Ichiban Shibori. Like many Japanese firms such a Yamaha, Kirin is a huge, multi-national organization. Kirin has holdings not just in brewing but across other categories such as restaurants, agribusiness, food, healthcare, pharmaceuticals and nutrient foods. Kirin is part of the even larger conglomerate, Mitsubishi.
When it comes to its beer brewing business, Kirin is experiencing the pain of Japan’s demographic decline. The Japanese beer market is in a steep downward dive. The Japanese beer market has declined by one third since 1994. Also, coronavirus has had a negative impact on beer drinking since people did not go out to bars, restaurants, events or clubs.
Rather than continuing to focus on a declining business, Kirin is going to use its brewery knowledge to “… turn Kirin into a fermentation biotechnology company” according to a report in the Financial Times. Fermentation has health benefits and is already part of health foods such as yogurt, kimchi and kombucha. Kirin will innovate to focus on customer wellness needs. Fermentation is one of the oldest, and one of the latest, ways in which foods can become even more nutritional.
Kirin’s CEO told the Financial Times, “If the beer segment would grow forever, it would’ve been better for us to focus on it, because making a challenge in a new business is very tough.”
Tackling this head-on challenge though is an absolute necessity for keeping the Kirin brand alive and well and relevant.
One of the most troubling tendencies of brand management is believing that what worked yesterday will work today. Doing what once worked when the current landscape is different makes no sense. Thinking that yesterday’s successes will continue to propel a brand to tomorrow’s successes is inward looking. The brand misses what is happening now and what can happen down the road. And, rather than be complacent, Kirin is taking action to change its status quo.
Customers change quickly. Behaviors can change overnight if faced with new realities. Just look at the demand for delivery of restaurant meals and grocery items. And, interestingly, behaviors can reverse back quickly as well. Brands such as Zoom and Peloton have found out that their pandemic highs have reversed due to reordered, revised and reversed needs.
The poster child for holding on to what worked in the past is Kodak. There was a time when Kodak was ubiquitous. Kodak moments brought tears and joy. But, Kodak lost its footing by clinging to haloid film as the world went digital. Kodak continued to produce what it knew how to produce rather than what produce what customers wanted. Kodak defended the past and was defeated by the present. The brand declared bankruptcy in 2012.
While Kodak was doubling down on the past, its rival, Fuji Film focused on the future. Facing the same landscape of digital over haloid, Fuji saw a bigger picture. Fuji saw itself not in the “film” business per se. Film is essentially molecules and elements. Fuji decided to use his knowledge of the science of film. Fuji scientists understood that the film used in cameras comes from collagen. Collagen is big business for youthful-looking skin. Aside from skin care, Fuji scientists began working on Ebola drugs, anti-aging potions and stem cell research. All of these products benefit from the basic science of film.
Fuji reimagined how to use its knowledge base and scientific expertise to address different customer beauty and health needs. Rather than continuing to defensively focus on salvaging haloid film, Fuji took the offense and saw itself as a science company.
Kirin is taking this same approach. Kirin will be using the beer-brewing process, whereby “…sugars are converted by yeast to alcohol…” to generate biotech products. According to the Financial Times, Kirin wants to grow LC-Plasma, a proprietary ingredient used in health drinks. Kirin sees the potential for LC-Plasma for beverages and foods produced by third parties.
Additionally, Kirin has a supplement called Citicoline. Citicoline is a memory-improving supplement that is already sold globally. In a world that is growing older, especially in Japan and Europe, this supplement is a solution to an most critical customer need, remembering.
In a study (Innovation Study: Beyond the buzzword) conducted by Deloitte, the global business services firm, data show that “higher growth companies spend less time looking inward and more time responding to customer needs.” These firms lead innovation with customer needs while relying less on “internal operational needs.”
Innovation is risky. But, innovation can also be incredibly successful. However, innovation is easier said than done. The Wall Street Journal’s Heard on the Street column highlighted tech companies that are pitching major change to investors but not exactly living up to their promises. The article subtlety warns investors not to fall for the “seductive” presentations. As the sub-headline states, “Virtually every technology company will tell you it is changing. Don’t believe it until you see it.” For example, Twitter co-founder and ex-CEO Jack Dorsey said he was stepping down because he wanted Twitter to evolve. The new CEO said things would change but nothing has been implemented.
Innovative ideas are what will keep brands relevant and competitive. There is nothing more powerful than an innovation in action. But, innovative creativity takes courage.
Failure to innovate is death-wish brand management. In an ever-changing,-competitive world, brands need customer-driven innovation to stay relevant. Innovation creates new customer value through solutions that meet new needs, unarticulated needs or old customer needs in new ways. Continuous improvement is a constant brand-business essential. Innovation keeps brands relevant, differentiated and top-of-mind. Continuous innovation is an imperative for high quality revenue growth leading to enduring profitable growth.
Although innovation on the scale that Kirin is pursuing can be risky, throwing money at methods that worked yesterday is a massive miscalculation. Fortune favors the bold.
Contributed to Branding Strategy Insider by: Larry Light, CEO of Arcature
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