Council Post: Creating Different Lanes Of Value: Why You Can’t Bank On Just Your Brand

Jon Bostock is the Co-Founder and CEO of Truman’s and the Best-Selling Author of The Elephant’s Dilemma.

As we enter 2021, it’s easy to assume that if you’re starting a business, the focus should be creating a strong brand. After all, we see brands being acquired every week, with the main reason for that acquisition being that the brand itself is strong.

Don’t get me wrong: Branding is important to the success of your business. It’s been a big point of emphasis for us as we’ve built Truman’s — but brand by itself has never been our aim. We have always prioritized creating different lanes of value within our company.

One of the main ways we’ve done that is by creating intellectual property. We have filed and will continue to file patents for our IP that provide us with defensible value — that is, value that differentiates us from our competition and is legally protected.

Ultimately, diversifying is about playing defense as well as offense. As 2020 showed us, if you have a single lane of value when the market suddenly shifts, you may open yourself up to a tremendous amount of risk. Last year, we saw how vital the strategy of creating alternate lanes of value was to our success. We will continue these efforts in 2021 and beyond while staying away from one dimension of value, which we consider fool’s gold. I think this is a strategy that other businesses would be wise to implement as well.

Learning From Other Successes

I’ve written before about where our focus was in the early days in terms of hiring. Another discussion that has been ongoing between my co-founder and me is around developing layers of competitive assets. This has been top of mind for me after working for two other companies that saw success in developing various lanes of value. Both companies had extensive patent portfolios and diversified business units.

During the Great Recession, for instance, certain customer segments for one of those companies got hit hard, but others saw a big lift. Having diversified products and customers helped the business weather trying economic conditions. The company has a strong brand along with other defensible characteristics, whether it’s a unique way of going to market through a B2B channel or through IP that the company develops and owns. In my time there, I saw how strategic the company’s decision makers were in executing that strategy. They wanted to build more than just a strong brand.

Advertising and branding are important to us at Truman’s, but we know there isn’t enough money in the world to advertise more than Procter & Gamble. We need another characteristic besides brand to drive value.

So we’ve focused on developing IP around product development and our supply chain — basically the entire process by which we get products from the factory to the home. Without developing that IP, defending the differentiation we’ve created in these areas would be impossible.

One Lane Of Value To Avoid

Multiple risks come with not having defensible value. For example, if you offer a “me too” product and sell in one channel — let’s say Amazon, which we sell through — that controls the way people buy, the ground could shift quickly under your feet. When I say Amazon controls people’s buying, I mean that it often determines what products you see when you search for products, and its advertising rates can directly connect with the ability to have your product be visible.

So here’s the risk you run in that scenario: Amazon could easily offer an alternative to your product via a different brand or, even worse, a house brand.

When you exist as just one option among the indistinguishable crowd, what tends to happen is that you’re forced to pursue price as a lane of value. If relying solely on one channel is a risk, trying to compete on price alone may be an even bigger risk.

Consider Walmart, a company that’s proud to say that “Every Day Low Price” is a cornerstone of its strategy. Sure, you can try to beat Walmart on price, but in the process of doing so, you’ll likely commoditize what it is that you deliver. You’ll likely use the cheapest available resources to get the job done, which means you’ll have a cleaning product that leaves streaks or a mattress that feels like a rock.

Here’s another possible negative side effect: Commoditized products are often dumbed down so much that any novel feature or variable within the product is dissolved in the race to the bottom for pricing. Nobody wins in that scenario — especially as margins are driven into the ground trying to compete with companies like Walmart that can exist on low margins because their scale is massive. When you have over 4,700 stores in the U.S., low prices can be your cornerstone.

What To Focus On Moving Forward

If you’re into idioms, the one I would use to summarize my point is, “Don’t put all your eggs in one basket.” The world is changing too fast to be reliant on one lane of value, especially if that lane is something you don’t control, like a channel, or that you can’t easily defend, like a brand.

Truman’s is not the cheapest brand for cleaning supplies because we know where things typically end when you’re competing primarily on price. To stand out, we want to drive innovation in our space by creating value-adding IP (which I’ll show you how to commercialize in a future article).

In 2021, you won’t find us debating whether to shift to a cheaper supplier or scrambling to find ways to cut costs. You’ll find us at the (virtual) whiteboard channeling our creative energy into new product designs that will help us stand out from the pack. It’s worked well for us so far, and if you channel your energy in the same direction, there’s a good chance it’ll work for you, too.

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