Perspectives

The Generation Game. Can traditional organisations ever meet the expectations of the next generation?

The Foundation Forum. 20th April 2016. Written up with the help of Simon Caulkin.

Occasionally a brand or a business or a band or a film just nails it for a generation. It’s a social phenomenon – a whole group that gets it together, in a way where it becomes part of their own identity. And as much as it’s about what they love, it’s also about what the rest of the population doesn’t like, doesn’t understand or can’t carry off. You can sum it up in trousers – jeans that are wide, jeans that are narrow, jeans that fall down, jeans that are too short, jeans that
are ripped.

Sometimes it’s a flash in the pan, a fad that lasts a summer and then moves on, via the bargain bin and on to the embarrassed memories and photographic records of all who got caught in the crossfire.

Sometimes it’s a more skilled effort. The people behind the brand have the touch – the sense of their audience and where they’d like to be taken next. They stay half a step ahead, just enough to keep interest high and a little bit edgy, not enough to lose them and disappear into a niche for weirdos. The audience gets older, the brand people go there with them, keeping the group together and feeling good about themselves, understanding their issues and their changing lives as the years roll by.

Examples? The careers of the Rolling Stones, Bowie, Madonna, Radiohead, of Harrison Ford, John Travolta, Judi Dench, Samuel L Jackson. The brands of Mercedes (older), BMW (more racy), Audi (understated, modern), The Telegraph and The Guardian with their respective tribes and the BBC in a much broader way, Apple’s reinventions, the way Dove or Johnnie Walker or Marmite stay current and energetic.

We’re asking the question of organisations, not just of individual artists. At least with individuals the decision‑making is more straightforward and, at least from a distance, the main issue is staying tuned in to what’s constant and what needs to move with their generation as they change. With an organisation, there’s an extra challenge, the people who sit inside. Who are they? How do they span generations successfully, meeting the needs and aspirations of disparate groups so they remain on top form? And then how do they steer their oil tanker through the drifting ice bergs of inter‑generational taste and preference?

Maybe it’s not possible. Maybe the natural way is for brands to attain brilliance for some and never to transfer appeal to a generation with such different values, circumstances and identity.

This is a current debate, with Generation Z looking more different from their elders than ever. They’ve never known a time without digital media, they may be in debt for much of their lives, work means projects not careers, they’ve been shown that trusting large organisations is a bad idea, and more. Can the world on offer work for them?

All good questions, so to help us get some answers we’ve turned to three people with very different experiences and perspectives around the issue. Less a debate, more an exploration using complementary experience; one of a decisive generational shift in appeal from old to young (Capital Radio), one of staying current and embracing a wide audience as needs evolve (John Lewis), and one from a business fully committed to the newest generation, operating on principles that reflect how they in particular see the world (Livity). We featured…

  • Giles Pearman, formerly Group Director of Marketing at Global Radio where Capital came under his wing (he’s now running his own start-up mybrandtruth, helping young digital businesses grow through stronger and more  authentic brands)
  • Paula Nickolds, Commercial Director at John Lewis, responsible for their product and services offer, physical stores and commercial proposition
  • Michelle Morgan, founder and CEO at Livity, a creative agency that works with young people at its heart, creating communications that help big clients’ brands connect better with young people, while at the same time (and reflecting their central purpose) improving the lives of many of those young people themselves

So to the night in question – three ways of looking at how to, and how much it matters to, span generations.

Much of the furore around the collapse of BHS centres on the financial machinations of its previous owners. The deeper narrative, however, is an awful warning of the fate that awaits a brand that can’t or won’t renew itself. The truth is that BHS has long been in the land of the brand undead, about as relevant to today’s generations as the typewriter or fixed phone. Could it have survived? Possibly – Marmite and Bovril did. But, as a fascinated audience heard at April’s Foundation Forum, to thrive in today’s turbulent commercial world a company needs to have an acute feel for its own identity, of what’s in and what’s out, and how to adapt to keep in sight the ever receding horizon, currently personified by those known as Gen Z.

Capital Radio, John Lewis and a livewire social enterprise called Livity – the three organisations represented by the forum speakers – all had positive lessons to impart.

Some were common, as in the importance of purpose as a guiding principle, the need to identify the real motivators behind consumers’ behaviour, and not least the ability to keep two opposite thoughts in mind at the same time without losing the ability to function. Michelle Morgan, co-founder of Livity, put it like this: ‘The good news is, don’t panic, nothing’s changed. The vast majority of what drives behaviour and decision-making is motivated by basic human needs, particularly teenage needs. So just use your imaginations and think back to your youth again’. Thus being accepted, being good at something so you can stand out when you want to and conform when not, experimenting with identity – all these are as salient as ever.

Startup Stock Photos

 

‘They’re a networked generation and it’s the first that doesn’t have to wait for permission from an adult world to speak to the world’

On the other hand, ‘here’s the bad news, do panic, everything’s changed! Gen Z, born after 1995, 4.5 million of them in the UK, are self-teaching, self-fundraising, self-manufacturing, self-retailing. They’re a networked generation and it’s the first that doesn’t have to wait for permission from an adult world to speak to the world, to publish, to start a business or even create change. They can just get on with it – and they do’.

‘Gen Z distrust cumbersome old institutions and hierarchies and they’re empowered by tech and each other’

Autonomous and self-determining, Gen Z distrust cumbersome old institutions and hierarchies and they’re empowered by tech and each other. (Until they aren’t: ‘I’ve honestly heard young people say, “I had to go home because my battery ran out” – not “I’d drunk too much” or “I’d run out of money, but because the battery was about to die’.) They’re ambitious, enterprising and also surprisingly sensible – a product of having to grow up fast.

Increasingly, as chairman Charlie Dawson reflected, these technology-fuelled changes of attitude and behaviour seem to stand for one of those epochal moments – pre-war to post-war, 1950s to 1960s – after which nothing is the same again. No business will be immune from the aftershocks of this sea-change – but it still has to keep a beady eye on the things that remain the same.

One version of the resulting balancing act was described by Giles Pearman, Group Marketing Director for Global Radio, one of whose brands was Capital Radio. The challenge he described was Capital’s dramatic loss of mojo in the early noughties, by which time it was distinguished mainly by an almost comical mismatch between its target demographic (young, under 35) and its actual audience (old, and in total down below 1.5m), and between both of those and its offering, which they had defined in terms of music genres.

‘if you know what the latest fashion is, the music, the tech, the bars, you’re in the in-crowd, you belong – and that’s a huge motivator for the young audience’

The beginning of the turnaround (‘we started from the heart and stopped thinking with our heads’) was a hunt for what really matter to those they wanted to listen to the station, the under 35s and ideally the younger end of that range. It wasn’t music genre. It turned out to be fear – the fear of all young people, of being excluded socially, and the biggest social currency was knowing what’s in and what’s gone. Missing something, or being slow to know its arrived, is social suicide. Knowledge is power, says Pearman, so ‘if you know what the latest fashion is, the music, the tech, the bars, you’re in the in-crowd, you belong – and that’s a huge motivator for the young audience’.

So the heart of the generational shift was being up with all things ‘now’. Which meant not only authentically talking the talk, but also walking the walk, and doing it big.

So Capital took what it was famous for in the 80’s Party in the Park, and re-invented it with 80,000 sell-out gigs at Wembley Stadium; and it hired, or rather persuaded, Rihanna to launch its network of local stations in rebranded form as a national Capital, with a name-check for every town or city that was becoming part of the story. Hearing the place you lived being recognised by a global youth hero meant young people identified with the brand wherever they lived.

Result: in recovering its raison d’être, Capital multiplied its listener numbers fivefold in five years. Among them in London alone there are over half a million Gen Zs. So for Pearman ‘the best bit is what Capital will be in three years’ time, with that sea-change of young audiences coming through. Of course, they’re not listening to the radio, they’re doing the whole thing through their phone. So Capital has reinvented itself online and particularly on mobile to be able to talk to them in the way they would want us to’.

‘The adage ‘evolve or die’ has been proved true more often than I’ve had hot dinners’

Contrast that with more stately John Lewis. There’s the same binary – the now and the permanent – but the tension plays out in a slightly different way. For commercial director Paula Nickolds, ‘Being in touch with the zeitgeist and one step ahead of the customer is what I’ve done for 20 years, it’s the life-blood of a buyer and that’s no different today… The adage ‘evolve or die’ has been proved true more often than I’ve had hot dinners’.

‘Yet something important has changed, summed up in one word: speed. In the glare of social media, brands and fashions can spring up, and also wither and die, in the blink of an eye.’

Yet something important has changed, summed up in one word: speed. In the glare of social media, brands and fashions can spring up, and also wither and die, in the blink of an eye. Three years ago Charlotte Tilbury cosmetics didn’t exist. Since then the line launched by the ‘make-up artist to the stars’ has taken the fashion world by storm, going from minnow to global force almost overnight. Of course that puts a premium on awareness and agility. But for Nickolds that may be less a question of age than of attitude. John Lewis partners come in all ages, but they share commitment to a powerful set of founding principles. ‘They are north stars, and I think a theme is emerging which is that it’s much easier to evolve if your core purpose and core principles are clearly enshrined, and you are ruthless in sticking to them. Then you can experiment and test and be agile and learn and explore, because you have a north star [to steer by]’.

Smart and switched on as they are, however, both Capital and John Lewis are maiden aunts compared with the exuberant punk of Livity. Imagine a noisy youth club inside a perky Brixton marketing agency, suggest Morgan, and you start to get a picture. Livity is a social enterprise that aims to improve young lives both through the paying campaigns it produces for the likes of Google and Barclays and by inviting youngsters into the office to share in the work. It may be the only marketing agency with a social worker and careers officer on the premises.

…above all, think brand purpose and diversity. ‘Rather than get hung up on how can I connect with the next generation, don’t worry about that. I’d say work out your purpose and embrace diversity’

As a result of this partnership, it has unrivalled experience of Gen Z aspirations to share with clients. But while (very Gen Z) Livity is in constant mutation – ‘we think that we’re pretty kind of up there in terms of where we need to be, but we know at 15 years old as we are now, we’ve got to reinvent our proposition’ – there will be no compromise with purpose.

Impressed as she is with the new generation’s entrepreneurial vigour, Morgan also notes their strong sense of purpose. Like Nickolds, she points to survey results showing that 85 per cent of youngsters would take a pay cut to work in an organisation whose values they share. So to tap into this distinctive source of renewable energy, think ‘mobile first, visual first, be useful, offer value, make it fun, be open, be honest, be fallible, be 24/7, constant access, and involve them’. But above all, think brand purpose and diversity. ‘Rather than get hung up on how can I connect with the next generation, don’t worry about that. I’d say work out your purpose and embrace diversity’.

BHS

Few will have come away from the evening believing that the consequences of the arriving sea-change will  be ephemeral. Pearman points out that the reason that Gen Z won’t put up with second best – and unfocused brands like BHS who are dead in the water – is that they have the knowledge (as do refugees from the Middle East in a different context) of what good likes like. That’s a genie that won’t go back in the bottle.

Nor will other technology-led disruptions like disintermediation – the platform economy to you and me – which infused with Gen Z attitudes could yet deliver a sharing economy worthy of the name. Take that further and suppose too, with both Nickolds and Morgan, that future generations experience not-owning, ie borrowing and renting, as liberation  gather than hardship – ‘these things are transformative for industries and many of us could wake up too late’, warns Nickolds.

And yet, and yet. Just in case you were thinking that once you had got your head round Gen Z you could sit back and relax, consider this. Of course, says Nickolds, ‘Generation Y and Z are our clients, our customers, our leaders, our elders of the future, and to be blind to their needs surely is the path to unsustainability. But 50% of the UK population is over 55, and 75% of the UK’s wealth resides in that group of people, not to mention, by the way, their disposable time. So for us to ignore that proportion of society is very much
at our peril.’

The generation game is not about to get any easier to play.

The Foundation’s View

The discussion took us in some unexpected directions. Here are three of the big points that emerged:

1.

The need for speed. Many of the challenges of appealing to the next generation are the same as always. This doesn’t make them easier but at least they aren’t new. One aspect that is different has big implications for business, and is especially inconvenient for large ones. It is speed. Giles and Paula both described ways their businesses had to learn to respond, and the implications were seismic. In Capital’s case they had a guiding insight that re-framed the way they saw their world. Young people feared missing out. They have to stay in touch with what’s emerging and fresh because it’s their social currency. If they aren’t current they lose status, friends and confidence. This meant Capital’s original view of the world, through music genres and entertaining presenters completely missed the point. Instead the whole approach had to be reinvented so they were current – whatever was emerging into the lives of the under 25s had to be brought to them in part by Capital, a degree of responsiveness that challenged the business and changed the capabilities needed to succeed. In John Lewis’s case Paula described the astonishing rise of the Charlotte Tilbury cosmetics brand. Make-up artist for Kate Moss, herself a figure of enduring appeal to new generations, she launched less than three years ago and without being part of the vast marketing machinery that is usually behind success in beauty, the brand has become one of the largest in the world. The implications for stores selling cosmetics include the much more frequent need to re-evaluate and re-lay their space, and a realisation that this kind of large scale flexibility now needs to be part of their ways of working. For us this is an example of working outside-in rather than inside-out, shaping the business to provide what customers value in new and better ways rather than trying to meet needs through existing model and existing strengths.

2.

This generation will be a rare sea-change in society. Occasionally the move from one generation to the next is really significant. Pre to post war, 50s to 60s, and there is reason to believe this may be another one. The emerging generation has a lot coming together that’s fundamental not just fashion. As Michelle described, they are not just adept with technology, they are empowered by it – genuinely networked, with a DIY attitude to getting things done, post boredom because the bedroom links to the rest of the world, visual thinkers because that’s how screens work. This comes together with some serious doubts about large organisations. They expect transparency and they can impose it too, finding out what’s going on from people in and around a business. And they care immensely about why – why a business exists, why it behaves like it does and whether it even has a point of view about all this beyond making money. This feels like a potent brew and it’s highly plausible that we’ll reach a tipping point in the not too distant future.

3.

Traditional business can’t meet the needs of the next generation. Livity is not a traditional business. It is designed wholeheartedly around a purpose – improving the lives of young people – with ways of working that are open and trusting. Described as a marketing agency with a youth club at its heart, the permanent team of 70 and 1,000 young people a year work to produce advice and communications for paying clients, a magazine for a young audience and a flow of individuals with experience not otherwise available. This doesn’t mean that outwardly traditional organisations like John Lewis are dead. Far from it. There are aspects of John Lewis in particular that are perfectly attuned to this challenging future, most obviously being built around a genuinely held purpose, promoting the happiness of current and future employees of the business. But this point is about the need for large organisations to shift, to recognise unhelpful tradition and find ways of evolving so it doesn’t hold them back. It’s the traditions not the businesses that don’t meet the next generation’s needs, although we’re talking about a shift in the discourse of western business not just the adoption of instant messaging, and that won’t be easily achieved!

About The Foundation

The Foundation is a management consultancy specialising in growth. We help clients address big organic growth challenges; growing faster, growing into new markets or fending off threats to growth.

What these challenges share is the need to influence customer behaviour, but this is inherently tough. Why? Because people in any organisation naturally see the world from the inside-out, with colleagues close and customers distant, and lots of assumptions about how things work that aren’t challenged.

We help clients look from the outside-in, re-connecting them with what customers really value (the problem they want to solve, not usually what the client sells), then finding new and better ways to create this value.

This means working both as expert advisors and facilitators. The issue with simply gathering outside-in information is that it lacks impact to get senior teams to tackle inconvenient truths in what customers want, and to believe their own organisation can be different.

By using ‘Immersion’, personal conversations with customers and leaders of organisations in other sectors who have tackled parts of their challenge, we help teams get round beliefs that stand in their way. This helps them develop better answers for customers and new ways of achieving lasting success.

We most often answer three questions:

1. Developing new propositions

2. Improving customers’ experiences

3. Developing customer-led strategies for broader issues such as increasing retention or lifetime value

Our clients include HSBC, JLR, O2, M&S and eBay, with achievements including helping create Plan A at M&S, adding £100m of value to a Travelex travel money proposition, and giving Morrisons a competitive direction contributing to their return to growth. Behind our work our most distinctive characteristic is our team and their outlook. Each  individual is motivated to and experienced in crossing the border between the worlds of customers and business which often resist mixing well.

This link will take you to more information about our Forum events: http://www.the-foundation.com

Contact Details

Charlie Dawson (Founding Partner):
cdawson@the-foundation.com / +44 7785 268859

Terry Corby (Partner)
tcorby@the-foundation.com / +44 7446 173 137

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