inside the driving forces of disruptive innovation

Shaping and Scaling a Whole New World

Inside the Driving Forces of Disruptive Innovation

Numbers that define todays

transformative world

549mWeChat users in China

7millionApple smart watches sold

(Global Equities Research)

85mViews of #LikeAGirl

since June 2014

23.8mVirtual reality devices

sold by 2018

75%Of all mobile messaging traffic by 2018 will be via

messaging apps

450mPeople using mobile payments by 2017

$53.2bnValue of wearables

market by 2019(Juniper Research)

$500mUbers annual revenues

in San Francisco

$45 billion Valuation of three year

old Chinese smartphone maker Xiaomi

$120billion

Value of augmented reality market

by 2020

$7.1 trillion Worldwide market of

The Internet of Things by 2020

The C-suites topic-du-jour, disruptive innovation, is leading to thrilling, seismic shifts across the worlds industries and markets. At the same time, its sending shivers down the spines of slow-adapting players who cling to models from a by-gone era and live in paralysing fear of being Netflixed. And its not only the client-side riding the disruption wave. As technological change continues apace, creative, media and PR agencies have had to invest time and money to meet the challenges thrown up by disruptive innovation, to ensure theyre offering clients true market-changing thinking based on technological expertise, rich insights, innovative communications and breakthrough creative ideas.

Successful marketing in the digital age has become a magic, heady mix of inputs such as storytelling, influencer relationship-building, employee advocacy, multi-stakeholder messaging, online community management, amplification of third party endorsement. These are all elements that we believe have always been at the very core of PR. Combine these inputs with outstanding, heart-stopping creativity and highly targeted media buying and, together, its a potent force. Success for brands today lies in a seamless amalgam of activities, separated not by disciplines, but instead bound by a focus on people, and how best to communicate with them. There was never more impetus for greater integration between marketing, and communications.

Was there ever a more exciting or challenging time in business than today?

At MSLGROUP, we work with a number of well-recognized disruptive companies and brands around the world, as well as companies with rich heritage who are now retooling for the future. We also work with dynamic Asian brands taking pole position on todays global stage and pioneering tech start-ups who we are increasingly connecting with many of the global brands we represent. To all these clients we promise a deep understanding of how to build connections between technical innovation, brand marketing and people-centric communications.

In this short publication, we touch upon, among others, some of these clients stories and share our perspective on how disruption plays out as a force within markets: the creative process, technology and communications. And to the marketing communications industry, we lay down the gauntlet: disruptive innovation offers us all an opening to embrace the polar shift towards a greater integration combining dissimilar currents into explosive ideas, the chance to help create ever-more meaningful partnerships for our clients, and the prospect of delivering insight-fueled foresight to help companies predict whats over the horizon. The speed of change has never been faster. The bar has never been higher, the opportunity has never been greater. We hope you enjoy the read.

Trudi HarrisChief Communications Officer,MSLGROUP

Shaping and Scaling a Whole New World / Inside the Driving Forces of Disruptive Innovation 01

The combined forces of techs rapid advance and our chronic addiction to smartphones have made it easier for digital challenger brands to transform our behaviour in fundamental ways. Look at how platforms like Kickstarter have democratised investing, enabling anyone to own a stake in products or projects. Take TV. Its no coincidence that the term binge-watching entered the Oxford English Dictionary in 2013, the same year as TV streaming service Netflix unleashed its incredibly binge-worthy House of Cards. Think of the range of accommodation we can select on Airbnb when we go on holiday. And, in an example of innovative disruption thats been so phenomenal that its brand name has become a byword for it, Uber has transformed how we get around. As Renee Wilson, chief client officer at MSLGROUP, and chair of the PR Lions jury in Cannes in 2014 observes: Brands like Netflix, Uber and Airbnb have completely changed the game for consumers and the industry alike through their growth and massive uptake. Things will never go back to the traditional marketplaces that they were. Never.

02 Shaping and Scaling a Whole New World / Inside the Driving Forces of Disruptive Innovation


MarketDisruption

Todays consumer wants convenience and personalisation

and if they dont get it from your brand, theyll look elsewhere.

Renee Wilson,Chief Client Officer, MSLGROUP

While some industries remain ripe for disruption, others have already experienced more than their fair share. The music industry has been repeatedly disrupted over the last few decades: the decline of hard copy sales was then succeeded by more people accessing music via streaming. Apple, having played a key part in changing our music consumption habits, is now itself on the receiving end of innovative disruption from, among others, Chinese smartphone brand Xiaomi. This three-year old company is currently valued at $45bn yes, even more than Uber making it one of the most valuable private tech companies in the world. Not content with stealing Apples lunch, Xiaomi has also launched competitively priced rivals to GoPro and Jawbone products.

Involving Users Whether its a Xiaomi smartphone that resembles an iPhone but costs half the price or using Uber Rush to ship a parcel across town, disruptive innovation starts with the user experience. As Renee Wilson says: Todays consumer wants convenience and personalisation and if they dont get it from your brand, theyll look elsewhere.

People are intolerant of poor service and want reliable, usually app-based convenient services. Wilson says: If you make her life easier [with services] like finding a taxi, getting food for dinner or booking a hotel room based on smart data points like habits and preferences you will win her over.

Some disruptive businesses go further, making their users an integral part of the brand experience. Uber rates drivers and passengers, so if you misbehave in the back of an Uber car, good luck finding a driver to pick you up. Airbnb would be nothing without its community of guests and hosts who, once again, rate each other. And people have welcomed this opportunity to show off how well behaved they are: in seven years, Airbnb has established a presence in 192 countries. Hilton hotel group, a 96 year old company, is in 78.

Meanwhile, in its native San Francisco, Ubers revenues are $500 million per year, making it three times the size of the taxi market. Never mind disruptive, thats explosive.

Wilson adds that, by involving users and handling their data in a way that offers a more personalised service, disruptive businesses earn more consumer trust. That value exchange then evolves into a virtuous circle, supplying the consumer with a trusted service that theyre happy to recommend and assisting the rapid growth of the disruptor. She says: Disruptive companies use data to more precisely personalise their services which make the consumer feel like the company really understands them, and encourages trust. Because people trust the company more, they are more likely to share more data the next time they use the service/product, so the cycle starts again.


Changing the rules Many messaging apps have already been disruptive by building trust through offering convenient services like organising transport or seamless purchase and payment. Japanese messaging app Line now has 181 million active users across the globe, and users in certain territories can use it to order and pay for groceries and cabs. Globally, messaging app WhatsApp now has 800 million users and Snapchat has 100 million active daily users. Between them, messaging apps will account for 75% of all mobile messaging traffic by 2018, according to Juniper Research. Yet its Tencent-owned WeChat which has been the most disruptive, winning over 549 million Chinese smartphone owners by morphing from a messaging app into more of a life-management app, leaving a wealth of apps with singular functions in its wake.

Alice Hu, deputy Asia digital lead at MSLGROUP in Shanghai, comments: WeChat is ingrained in everyday life. Theres a service component and that ability to make your life easier has been a dramatic shift. The barriers are reduced from jumping from one app to another, so all your information is in one place under one log-in which is why its been so popular.

She continues: Throughout the day WeChat is the main source of communications: Asian messaging apps are how colleagues, friends and clients talk minute to minute. According to Hu, WeChats role as a digital companion has taken a year. And its disrupting traditional business practices too: whereas the exchange of business cards used to be an established part of making connections, that tradition is being replaced by scanning a QR code that gives new contacts your WeChat ID. The apps group chats feature has become a popular internal communications platform for Chinese enterprises. In fact, WeChat became so integrated so quickly into Chinese work culture that, in September 2014, itintroduced an Enterprise Account with business users in mind. Given WeChats exponential take-up, it was no surprise to see Apple vice president Kevin Lynch accessing it, along with Uber and Twitter, when he demonstrated the Apple Watch for the first time.

800mWhatsApp users

100mSnapchat daily active users

75%of all mobile messaging traffic by 2018


WeChat is ingrained in everyday life. Theres a service component and that ability to make your life easier has been a dramatic shift.

Alice Hu,Deputy Asia Digital Lead, MSLGROUP Shanghai

CommunicationsDisruption

If you analyse what a brand or organisation needs to deliver

marketing success in the digital age, the result is a long list of PR outputs.

James Warren,Head of Digital, UK and EMEA,

MSLGROUP


One of the biggest changes has been the changing role of PR to become much more central to a brands business strategy. As James Warren, head of digital UK and EMEA at MSLGROUP points out: If you analyse what a brand or organisation needs to deliver marketing success in the digital age, the result is a long list of PR outputs.

Whats more, PR agencies are frequently the first agency to which a technology start-up reaches out. As these nascent companies seek to secure venture funding and publicise their story, PR agencies are often guiding them behind the scenes. That gives PR agencies something of an edge over other communications companies in terms of understanding new tech. PR is on the frontline of disruption, says Jeff Melton, SVP, global technology & platforms at MSLGROUP. He explains: Other agencies will be able to get you reach, impressions and frequency, but will people trust the message? Is it credible? Thats where PR and communications comes in: we are better at getting peoples attention. We earn trust because we bring the message of emerging companies and its much more credible. And thats probably going to be the most important thing that a young emerging disrupting company needs. They may not need mass and frequency, but they do need credibility.

The communications industry has been far from immune to the forces of innovative disruption. Its tectonic plates are constantly shifting in order to represent an evolving landscape of brands where stalwarts rub shoulders with startups.

Integrated strategy Historically, PR and other communications disciplines like advertising used to collaborate rarely on client business. But as innovative disruption has presented more challenges and opportunities, clients are requiring more integrated strategy and execution from their communications partners. Melton points out: Its less about roles and responsibilities and more about an agencys ability to put together the pieces in the smartest way. Thats what clients are seeking.


PR is on the frontline of disruption; other agencies will be able to get you reach, impressions and frequency, but will people trust the message? Is it credible? Thats where PR and communications comes in...

Jeff Melton,SVP, Global Technology & Platforms, MSLGROUP

CreativeDisruption

Consumers are taking more control of how they spend their time and where they let

brands in. Its about making your brand part of their lifestyles, not the other way around.

Renee Wilson,Chief Client Officer, MSLGROUP



Detaching from traditional roles and responsibilities can spawn incredibly creative ideas. Reflecting on her chairmanship of the PR Lions in 2014, Renee Wilson says: Last year was a real moment in time at the Cannes Lions International Festival of Creativity as it was clear there was a blurring of the lines as to what was PR versus advertising versus digital.

She makes the point that the campaigns that really stood out were those that included elements of disruptive behaviour or thinking, whether that was the computer-generated Filipino child Sweetie by Lemz in Amsterdam, an initiative which helped identify 1,000 paedophiles from 71countries, or the PR Grand Prix winning Scarecrow for restaurant chain Chipotle which combined a beautiful film with a gaming element and a mobile coupon to drive footfall in-store.

From this years Cannes entrants, the most prominent example of creative disruption is the #LikeAGirl campaign for the Procter & Gamble sanpro brand Always. Rather than showing the product and extolling its protective virtues, #LikeAGirl kicked off a conversation with a powerful piece of video by director Lauren Greenfield. This social experiment invited both women and pre-pubescent girls to undertake certain actions like run or throw a ball or kick like a girl. The women initially did it in a ridiculous way, while the young girls were strong and serious. When the women got another shot, having reconsidered the phrase like a girl, their second take was more confident and self-assured.

This social experiment has amassed a total view count of more than 85 million since #LikeAGirl launched in June 2014. Over the last year, its reached half the worlds population, generating 4.58 billion media impressions in 150 countries. Whats more, 81% of 16-24-year old women support Always in reclaiming like a girl as an inspiring statement as opposed to an insult.

With the audience #LikeAGirl is such a creative tour de force because it taps into wider current debates around gender equality and female empowerment. Brands, with the help of communications agencies who are plugged into the zeitgeist, can contribute to these discussions with a strong and potentially disruptive point of view. Andthat means not just judging the tone of the content correctly but also the context in which its being received. Pascal Beucler, senior vice president and chief strategy officer at MSLGROUP, says: We need to be on peoples timeline, we need to be in the kitchen when theyre cooking, or on the train when theyre travelling. We need to be where they are and engaging with them, matching the right content on the right channel in the right language, creating a connection and a conversation.

Audience participation characterises a landscape where disruption is becoming the norm. Just look at the amount of information people share on Airbnb about their home and its environs, or how an Uber ride can be personalised, with passengers even able to select the music they want to soundtrack their journey. People trust and support these brands because theyve been created in an authentic way, says Renee Wilson. Consumers are taking more control about how they spend their time and where they let brands in. Its about making your brand part of their lifestyles, not the other way around.

81%of 16-24-year old women support Always in reclaiming like a girl as an inspiring statement as opposed to an insult.

1000online groomers across 72 countries were identified by the computer generated Sweetie campaign

TechnologicalDisruption

If you are a tech company, what makes people interested and attracted to you is creativity. You need to connect tech and

people through emotion.

Pascal Beucler,Chief Strategy Officer, MSLGROUP


Tangible Disruption In the coming years, this will happen when people try a holiday before they book it using virtual reality headsets like Facebook-owned Oculus Rift, which will start shipping in early 2016. Its already starting to happen in the automotive industry, with car brands using virtual reality to help potential buyers get a sense of a car before taking it for a real test drive. And brands continue to work with augmented reality specialists such as Blippar that enable those whove downloaded an app to access an additional layer of content to further engagement. Blippar, which raised $45m from US fund Qualcomm Ventures in March, has apparently been downloaded onto the screens of more than 25% of the UKs smartphone-owners. Such companies will be at the forefront of the augmented reality market which is predicted to be worth $120bn by 2020, according to Digi-Capital.

Companies in the virtual/augmented reality space will undoubtedly disrupt more conventional brand selection and purchasing patterns in increasingly sophisticated ways. Yet some of the most disruptive tech can also belong to the Internet of Things. In other words, its a physical product thats connected to the internet. The Internet of Things is estimated to be worth $7.1 trillion by 2020, according to IDC, and its no surprise to see one of retails most disruptive forces, Amazon, at its helm.

Emerging tech such as wearables, artificial intelligence and virtual reality will mean new dynamics in disruption in the coming years.

Analyst firm Global Equities Research claims that Apple has sold seven million smart watches so far and the wearables market, according to Juniper Research, will reach $53.2 billion by 2019. Meanwhile, 2015 sales of virtual reality devices are forecasted at 5.7m units for 2015, rising to 23.8m in 2018, according to KZero, a consulting firm specialising in the virtual space. At the same time, artificial intelligence will evolve from Google Now, Siri or Cortana on your smartphone to next-generation systems supplied by companies such as IBM alongside startups like Scaled Inference and MetaMind Inc. Facebook, Google, Baidu and Chinese ecommerce giant Alibaba are among those investing in the tech.

Branding, not bandwagon-jumping For brands, technological disruption means identifying appropriate partnerships that help communicate something about their brand as opposed to jumping on the latest bandwagon. Oreos Trending Vending Machine at SXSW Interactive in 2014, for instance, invited attendees to create, print, and eat customised Oreos that were based on trending Twitter conversations. A vending machine, created by Maya Design, enabled people tocustomise their Oreo using a technique similar to a 3D printer. The Oreo Trending Vending Lounge says something powerful about Oreo, that its listening, its interested in what its audience has to say and is able to react to it.

$53.2 bnreached in 2019 by the wearables market

7 millionApple Watches claimed to have been sold by Apple



The Amazon Button enables people to touch a connected branded button (for instance, for Bounty kitchen towel or Tide detergent) to re-order it, eliminating the need for either written or digital shopping lists and making people brand-loyal at the same time. Thats every packaged goods marketers dream and its already here. And even that tech is likely to be disrupted as Amazons Dash Replenishment Service (DRS) will one day be integrated into household appliances. Amazon is apparently already working with Whirlpool on a washer dryer that automatically orders detergent when supplies run low, while Brother is building a printer that can automatically order ink. Amazon is innovating so rapidly, its disrupting itself as it goes.

Disrupting the disruptors One final note, however. While its easy to get swept up in the tidal wave of love and affection for the disruptors that make our lives easier, more enjoyable or entertaining, its worth remembering that they are at constant risk of disruption themselves. Firstly, with a renewed focus on user experience (and some smart tech hires), interesting reinventions are underway. For instance, far from Marriott licking its wounds as holiday-makers use Airbnb and business travellers try new services such as Breather, it is now enabling people

to communicate with hotel staff via a messaging app prior to and during their stay. It also invested in a turbo-charged Oculus Rift experience to sell not just particular destinations but also a glimpse of grandeur synonymous with a stay in a Marriott, reminding people about what they like about staying in a hotel. Secondly, new tech will come along which will unnerve the disruptors. What will happen to Uber drivers when driverless cars become more commonplace? And as the most popular aspect of disruptive dating app Tinder, the swiping, has now been emulated by a range of copycats including crowd-funding app Tendr, the novelty is starting to wane.

We are in the privileged perhaps even slightly spoilt position of witnessing so much technological advance that we now come to expect new types of service and continuous innovation, and are impatient when businesses dont understand that. As Pascal Beucler puts it: Transformation is no longer an option but an urgent necessity for clients. Its difficult to believe that we can still play the game we were playing a while ago. At some point we have to transform and change.

$7.1 trillionThe Internet of Things estimated worth by 2020

Transformation is no longer an option but an urgent necessity for clients. Its difficult to believe that we can still play the game we were playing a while ago. At some point we have to transform and change.

Pascal Beucler,Chief Strategy Officer, MSLGROUP

25%of UKs smartphone owners downloaded blippar onto their screens

In a social media age, disruptive ideas, products and services spread when trustworthy people recommend them. Employees are often neglected as power advocates for a brand, but PayPal grew its business substantially when it realised that many of its 15,000 employees were using cards or other payment options instead of PayPal. So it invited them to Be The Customer, challenging and urging them to be active brand advocates PayPal product users.

This long-term commitment saw employees awarded points when they used PayPal or found bugs and suggested improvements. In just nine months, nearly 7,000 employees had signed up, generating more than $22 million in payment volume. PayPal payments at employee cafeterias, which had accounted for only 13% of sales, had more than quadrupled to 66% within the first four months. Employees identified at least 300 product bugs and suggested 75% more ideas for product improvements than the previous year. In the first nine months of 2014, the company acted on these, improving the experience for 95 million customer transactions and resulting in $2.5 billion in additional revenue. Employees became so passionate about referring merchants to accept PayPal that 8,600 employees participated in PayPal It, the merchant referral programme, generating 369,000 leads and 114 new merchants who generated $6m in payment volume.

Be The Customer helped contribute to 2014 revenue growth of 19% over the same period in 2013. Be The Customer scooped a 2015 PRWeek Global award for Employee Communications and PRSA Big Apple Award for Reputation and Brand Management.

7000PayPal employees signed up

75%increase in ideas suggested by PayPal employees

95 millioncustomer transactions were improved by the additional ideas put in place

$2.5 billionadditional revenue from the customer transactions

PayPal: Be The Customer


Healthcare will go through extreme transformation. There are many problems that havent yet been solved and there are now more companies than ever that are seeing the opportunities to solve them from a tech standpoint, says Jeff Melton, SVP, global technology & platforms at MSLGROUP. Melton cites the example of Apples ResearchKit, launched in March 2015. This open source software framework is designed for medical and health research to assist doctors and scientists gather data from participants using iPhone apps. It has the potential to transform an iPhone into a powerful tool for medical research and, by launch in March 2015, it had already has already partnered specialists in asthma, cancer, cardiovascular health and Parkinsons Disease. Partnering these four incredibly reputable establishments will show how Apple devices can serve as research tools to gather data to solve problems, predicts Melton.

But healthcares transformation wont begin and end with Apple. Other players such as Google, Microsoft and IBM are all keen to enter the global healthcare industry worth $3.8 trillion, according to Plunkett Research with software that could disrupt conventional healthcare practices. Whats more, theyre jostling with thousands of startups, particularly from Asia.

Bronwen Andrews, MSLGROUPs head of EMEA business development and healthcare says: Asia didnt used to be a player in healthcare, but now there is a huge amount of innovation in healthcare in that region. South Korea in particular is a big player. That country has a huge government initiative encouraging research and development within Asia and many companies there have been enjoying double digit growth over the last five years.

Yet disruption brings with it certain issues, particularly in a sector as sensitive as health. Firstly, theres a need to balance the new and the next with respect for processes that keep us safe. Secondly, concerns over privacy are perhaps even more prominent in healthcare than in finance. Disruptive companies are fast moving companies, says Andrews. Yet how those newer companies fit into ways of working that are trusted by patients is challenging, particularly when its a company with no proven track record in Europe or North America.

She says: These companies dont want to wait around. They want partners who are their eyes and ears in the market who can offer speed and strategy. We can be influential in helping them to navigate new markets.

Healthcare: Extreme Transformation


AboutMSLGROUPMSLGROUP is Publicis Groupes strategic communications and engagement group, advisors in all aspects of communication strategy: from consumer PR to financial communications, from public affairs to reputation management and from crisis communications to experiential marketing and events.

With more than 3,000 people across close to 100 offices worldwide, MSLGROUP is also the largest PR network in Europe, fast-growing China and India. The group offers strategic planning and counsel, insight-guided thinking and big, compelling ideas followed by thorough execution.

www.mslgroup.com

MSLGROUP.COM

If you would like to talk to MSLGROUP about how we can support you in your business transformation,

please contact Trudi Harris, Chief Communications Officer, [email protected]

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