Why Microtribes Are Wrecking Company Growth Plans

Why Microtribes Are Wrecking Company Growth Plans

Across industries, leaders are recognizing that they can’t achieve outsize growth simply by drumming up mass demand through product innovation and new loyalty programs. In this article, Dev Patnaik explains how the rise of microtribes and niche preferences necessitates a fundamentally new approach to innovation.

It seems like every other day, a different Fortune 500 company announces a major round of layoffs, from Levi’s to Google to Citi. Normally, relentless cost-cutting would herald an oncoming economic downturn. 

In this case, amid cooling inflation and blowout job growth, the outlook is quite the opposite. Leaders are taking the prevailing economic optimism as motivation to optimize their budgets, scrutinize past growth strategies and completely reset their companies for a new stage of aggressive growth. In other words, they’re clearing out the old to make room for the new.

Across industries, execs are racing to find a way to drive consumer demand. Some are looking to spur enough product innovation to meet their ambitious growth goals. Others are building out new loyalty programs that will keep consumers coming back for more. For their part, B2B companies are focusing on new sales incentive programs to drive the numbers. 

But igniting outsize growth isn’t simply about drumming up mass demand. And as the first wave of results come in from these growth initiatives, some leaders are beginning to notice an underlying flaw in their assumptions. And that flaw has massive implications for how large companies think about growth. 

For decades, innovation depended on designing an offering that worked for one group of customers, and then taking that offering to the “mainstream.” Clothing companies would start (or even just notice) a cool new trend that young urbanites were wearing, and they’d mass-produce that look for everyone in suburbia. In music, a record label would discover an artist who was loved by a niche group and then take them to the masses. Amy Winehouse started out appealing to disaffected goth girls with piercings. Two years later, you could hear her songs played by soccer moms in minivans. That’s how innovation is supposed to work.

But it doesn’t seem to be working that way anymore. At least not as often. Whether in music, food, clothing or travel, consumers are spinning off into ever-smaller microtribes defined by niche preferences. And it’s making life a lot harder for the likes of Disney, Diageo, Nestle and Nike. Some music industry experts quietly wonder if Taylor Swift is actually the last great example of a phenomenon that started way back with the Beatles and the Rolling Stones. Taylor Swift started out appealing to country music fans but then quickly connected to a broader audience to become a megastar. The next Taylor Swift might not be able to expand her popularity beyond a single genre or community.

The problem is even showing up in B2B markets. Companies like SAP and Salesforce rose to prominence by establishing themselves as defacto standards in their respective verticals. Salesforce’s core Customer Relations Management product is used by everyone from oil companies to advertising agencies. Today, however, there are a host of new competitors who have been stealing market share by using a strategy of extreme focus. There’s a CRM that focuses solely on landscapers. If you’re a landscaper, you’re looking for a software platform that’s been optimized just for people like you.  

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There are, of course, multiple factors for the rise of microtribes. Increased social fragmentation and the demise of public commons have people hanging out with their own tribes. Social media platforms are designed to drive engagement by filtering people into like-minded communities. Platforms like TikTok employ algorithms to give you information tuned just for you. And technology improvements like no-code software development have dramatically reduced the cost of making a platform just for landscapers.

So what should a company do when there isn’t a definable mainstream? How do you create a music business that just caters to goth girls?

Read full article on Forbes.

Dev Patnaik

CEO

Dev Patnaik is the CEO of Jump Associates, the leading independent strategy and innovation firm. He’s a board member of Conscious Capitalism. Dev has been a trusted advisor to CEOs at some of the world’s most admired companies, including Starbucks, Target, Nike, Universal and Virgin.