Strategy beyond the ad brief

(upbeat music) - Hello, welcome to the Walk Podcast. I'm Lena Rowland, Content Director at Walk. Today we're talking about the future of strategy. This episode is one of four that is dedicated to this theme. Every year, we ask the local strategists how they're feeling about the state of their discipline and about the opportunities and challenges they expect to face over the coming 12 months. We turn those survey findings into a report which is supported by opinion pieces from strategy readers around the world. Now, we've been running the survey and report for over a decade and walk listeners may recall that last year's survey was particularly gloomy and with good reason, agency consolidation, falling head count and the rise of AI created a lot of uncertainty. Strategists, particularly those working in agencies had to brace themselves for a bumpy ride. Well, 12 months on, this year's survey suggests the mood is more upbeat. With 66% of strategists agreeing there are clear reasons to be optimistic. And the data suggests head count has bottomed out. Our survey also indicates the demand for strategy is high. A huge 93% of strategists agree that clients need upstream thinking now more than ever. And 83% expect their remit to increasingly involve shaping business strategy not just comms. 50% of respondents say strategy has gained influence with clients over the past year, up from 41% in 2025. That's a nine percentage point hike. Now, for this year's report, we did an interview with Stacey Taffet, CMO at the Hershey Company. She shares examples of what strategic influence looks like in practice. There's lots more in the report. We look at how strategies are working with AI, why strategies must be the guardians of reality and how they can clarify and prove their value. Head over to walk.com to read all about it. But today, we're talking about how strategies are finding opportunities upstream, moving beyond the brief and addressing the issues that matter most to CMOs. Some are applying grand strategy fundamentals to help solve the two audience problem. Others are developing new frameworks for a radically changing media environment. And some are looking beyond existing categories altogether, identifying demand spaces that unlock the next wave of growth. And that's what we're going to talk about today. This is the sponsor. Most contagious is returning to London on the 1st December and tickets are on sale now. Stila Marge on 2027 by learning the secrets behind this year's most creative and effective brands and campaigns, as well as discovering the most important trends set to influence the year ahead. If you give us a day, we'll give you a year's worth of insights and inspiration. Just search most contagious event to find out more. My guest is Dr Eric Jochamstina, founder and CEO of the Valdi. Eric has spent much of his career working at that upstream level, devising strategies for growth, business transformation, customer needs and competitive advantage. He has written extensively about demand spaces, including a piece for our report. Eric, I'm delighted to have you with me today. Welcome to the walk podcast. Thank you so much. Much of my career, I liked it. All right, Eric, let's get into it. In your article, you argue that AI gives companies access to increasingly powerful tools for optimization and execution. So where does the competitive advantage come from then? Well, I believe that AI is leveling the playing field. A lot of the things that we do is that we trash are identifying category entry points, search, optimizing search, optimizing media. A lot of the work that marketing and marketers are doing is actually going to be commoditized. And I think that a competitive advantage is moving upstream. And you argue that the answer is to look for new sources of demand and potentially demand that sits outside the category that a company currently competes in. That's right. My research shows that demand, new demand, forms outside of a category. And when you work inside just inside the category, you're basically serving an existing market that is very difficult to grow. And I guess a lot of business leaders become siloed in that particular category because they're so busy, they're meeting quarterly reporting demands. So it's almost like a blind spot that they're not looking beyond their category. The category is comforting. The category has metrics. The category has data. The category is structured. We taught marketers for years, decades now, that the category is a starting point. And that is exactly where I think it's a problem. Because if you compete in the category, you're competing for sameness. Yeah. And do you want to talk about that 7% figure that McKinsey research found? Yes, there is a research. I have referred to a number of times. The research started somewhere in the 2000s, 2006, 2007. It was revised again and researched by McKinsey. And it shows that market share growth is only 7% of total growth. So as long as you're competing inside a category, you're actually only driving 7% of growth. 93% is actually where the larger growth opportunities reside. But our tools in marketing, our approaches tends to be focusing on the category. Eric, that's fascinating, is it? That's 7%. So your call to action is start clanging that 93% space, which is where you'll unlock that new growth. Exactly. We'll get on to how to do that later on. This idea of demand space is, how is that different from traditional market segmentation? How does it differ from portfolio extension or devising new use situations, that kind of thing? See, the typical way to think about growth is you think about categories. And then you think about the products in those categories. And when you think about the products in those categories, you think about fundamentally from a supply side perspective, not from a demand side perspective. And then what you do is you say, let's segment the consumers. And what you do is you segment consumers into categories. They call them segments, right, or groups. And then once you do this segmentation, you say, is there an opportunity of targeting maybe one segment or the other? But when you think about demand spaces, you don't segment consumers. You're looking at use situations. You're looking at moments, episodes, goals that consumers like to achieve in their daily life. Think of coffee, Fultures and Maxwell compete in the same category. But the growth opportunities, doesn't lie in the category of Fultures and Maxwell, let's say on the coffee side. It lies in latte and hour later in demand spaces, the same consumer, the same person, let's see me. But it has a Fultures coffee in the morning, let's say, or another coffee brand in the morning. But a few hours later, I go to Starbucks and I buy a seven dollar coffee latte. That's the difference between demand spaces and segments. - So is it fair to say that segmentation asks who are the customers in this market? Whereas demand space thinking asks, what are people trying to achieve that the market may not currently be solving? - Exactly, exactly. - And that changes the starting point for strategy, right? As you said, instead of asking, how do we grow this brand or extend this portfolio, you're asking what is changing in people's lives that existing categories aren't solving? - That's right. And if you start there, if you start with consumers and you dissect the lives of consumers, are the episodes, the moments, the situations, they want to achieve, you can identify opportunities that are simply not in plain sight when you look from a category perspective. - So staying close to consumer sentiment, identifying those unmet needs is obviously essential in this area. - Yes, that's essential. And a typical example, think about goodles. Those are macaroni and cheese. - Right. - The category has defined macaroni and cheese as a kids' food. And therefore, it is craft has a playful packaging and competes with a handful of other macaroni and cheese. Things, if you look at the life of consumers, consumers like me, I actually like macaroni. I don't want the kids to treat, but I still like ones in a wild display of my life. Yeah, some people love it as comfort food or nostalgia. There we go. Yeah. That's nostalgia. When you research consumers from the outside, you realize that it's not just kids. It's also adults ones in a while. And they created goodles, which became one of the major brands in macaroni and cheese. Again, the market did not find or the goodles did not find success in the category. They found success in the lives of consumers. Okay. So the real opportunity is not necessary to find a better way of competing inside a category, but to question whether the category itself is still the right unit of competition. Exactly. That is a real problem. We tend to start because of the systems, the processes that exist in marketing. The way we've been taught, we always start with the product first. We start looking almost from the inside out. We say, you know, what is our product relative to competitors? Our product has decent disadvantages. What do customers really want from our products? And then what you do is is you're looking for ways to extending that product into wow. We could have you to extend here over there, and that is how you stay with in the category rather than define new demand opportunities. Yeah, fascinating. Okay. That's quite a shift, isn't it? Erica wants to talk about what demand space looks like in practice. In the article you wrote for war, you use road skin care as a particularly interesting example. Now, it's tempting to explain its success through Hayley Bieber, social media and cultural relevance, but you argue that there was something deeper going on. What demand did road identify that traditional skin care segmentation might have missed? If you look at the entire category of skin care is focused on products. They are focused on the routine of skin care. And they divided the process of skin care into 20, 30 different products that you have in your shell. Helping. Yes. Everybody focuses on that. And when a new brand comes around, they say, well, we also, we should start with this product and then we can extend it into that product because after moisturizer, you also need a lignify. I, all of these things, talk to things like that. And Hayley Bieber, she has obviously a famous celebrity being married to Justin Bieber. But to me, the success of the road is really not explained by Justin's celebrity because a lot of celebrity brands actually start with the same, hey, we can also do skin care or we can also do a product, we can also do a fashion, a fashion. And they all usually tend to be not that successful. She found actually an ender that the company in itself, they found that in that routine of that morning routine that actually consumers want to have just the opposite. They want to have a simplified routine that gets you almost, we call this the glazed donut look. It's a healthy, fresh look that finishes with lips that gives you this glow and glaze if you admit that she is in a way became famous for. And instead of solving for, you know, what products could I sell along and how can I expand my product. She was solving that routine through a very simple, so she identified the demand space. I want to be done quickly. I don't want to follow this routine, my older sister or my mother is pursuing for so many years now. I want to get done, I want to look fresh, healthy and I want to have that a lure that look that glazed look, if you will, that finishes with lipstick. And then she focused, she focused on just three products, in fact, and at the beginning. And that became the success. She created the demand space, if you will. She identified it and she created the demand space, very different from the other skin care products, effortless, no makeup look, healthy look, but still with the lips to be looking in a particular glazed way. Yeah, it's really interesting that the strategy was to launch with three products. Eric, in your piece, you described this as, you talk about something called portfolio as demand architecture. Yes. That's where the demand space determined the portfolio, rather than the portfolio determining the demand space. Why is that distinction so important? It is so important. You know, when David Arca, the professor at California Berkeley and I developed a portfolio in architecture, the model that was around 2000 or something, branded house, house of brand if you remember that. Yes. Yes. Yes. We always, what was the goal? What we had this proliferation of brands in the 1990s, 2000s, we did all of this brand extension, line extension, category extensions. And every portfolio became very complex and then we came around David Arca and I and says, how can we clarify, simplify the portfolio? And that was the first step and the next step was how do we leverage or grow that portfolio? We always start with a product perspective, we start with the portfolio perspective. Look at the book, map the portfolio, look at how they fit together and then organize your portfolio and that is the difference. You should not start with the portfolio. After working on that for so many years, I realized that you've got to start with demand spaces and that gives you a different entry point into the success. It creates some discipline that you don't have when you just look at brand extensions. The discipline is, what is the outcome I'm really solving for and if you look at road as one example, road focus on a symbol routine, one routine and it only needed three products in order to solve for the outcome that consumers are really looking for. That's very different from saying, this is my portfolio, where else can I go? Where is my stretch opportunity and where do I over stretch? Yeah, this seems to reverse the usual innovation process. So companies often start with an asset, a product, technology brand or capability and then ask where they can take it. And you're saying they should start with the consumer tension and work backwards from there. We said to consumer tension, think about how Tesla came about. You know, Tesla, if you know the story there, I don't know the person, I think it was Eberhardt was his person's name. He walked around Paolo Alto, which is around Stanford, my son actually studies there. And he walked around and he saw all of these very fancy houses and he was a photographer and he made one Saturday afternoon a lot of pictures of the driveway of consumer, of people who lived there in these fancy houses. And in every fancy house, you saw, I recall them sometimes these, the McDonald mentions or Mac mentions because they are like all very impressive buildings. There was a top of the line Mercedes or BMW and then there was a Prius and Eberhardt made those pictures, one of the founders of Tesla, made those pictures and at the end of the day, he was like, wait a moment, why is it always a luxury premium car attached to a Prius? And again, the discovery was that he realized at that time that there is demand that consumers have, that is namely sustainability, that they really like, that they cannot satisfy right now with their fancy BMWs and Mercedes Audi, if you will. And they are willing to pay any price, they have the money for that matter, but they can get it. So a Prius is considered to be a fairly ugly car, fairly low price and had the sustainability things and Tesla saw that opportunity and that's why Tesla didn't start with a low-end car. It started with a premium expensive car serving a demand that nobody saw in the car industry. I think also what you've kind of alluded to here as well is with that whole road example, we know that Roger Martin's approach to strategy is how to, a way to play and how to win, that we all know that also the art of good strategy is knowing what not to do, and perhaps those vast portfolio brand architectures and extensions is somewhat needed to say, we probably don't need to go there, we've got to keep things simple. Exactly, that the major finding also from that same thing from that McKinsey study that we mentioned earlier is that it is where to compete, not how to compete, the value creation is where to compete, and we in marketing tend to go so easily to how to compete, you know, to bring that to you. So what are ways to better campaign and so forth and so forth. And I think that the value creation lies in deciding where to compete. And if you look at the world from the category boundaries, you're bound to compete in a particular box. We are very, where you don't find growth or where it's very hard to find growth. - That segway is quite nicely onto the other example that I want it does to discuss today, which is Figma. Now you say in the piece that Figma didn't simply compete more effectively with Adobe, which was the market leader, inside that desktop design software, it actually changed the nature of the category by creating browser-based real-time collaborative design. - Same pattern, if you look within the category, and this is a B2B example, when I started with all the years ago, we had a 10-12 designers. And I always wondered, what makes you design a designer? They said, "Well, I come from past the school of designers, school of visual arts." And by the way, I'm using Adobe here, look at my work. - Right, yeah. - And they would sit there by themselves and produce their work. And sometimes I go like, that's not a nice jump because you're sitting there all the time. When you look at how designers over time really worked, what demand was forming outside of the category. Inside the category, it was, oh, we have a new feature. Or you need to download the latest version of Adobe. When you look beyond that and you look at demand, you will see that designers collaborated. We have some of our designers now around the world from South Africa to Poland. In fact, in London, we have a design team. And they all collaborate together on literally the same climb in Netherlands as one good example at my company. And Figma did not compete for another feature set against Adobe. They actually solved that demand problem that came from web browsers and collaboration among designers. - That's a really fascinating example. Eric, there's quite a challenging question, I think. But how do you recognize the moment when you should stop competing harder in an existing category, which is probably your default approach and start redefining the category itself? So we have already be created our own methodology. We call it actually gross diagnostic sequence. But there are ways you can research this in very simple ways without a fancy methodology. You can look at how customers build workarounds, how they call themselves up on Skype or they call themselves up on WhatsApp and then they discuss designs. When you observe this, you realize that there is that Figma opportunity we talked about earlier. You can look at how signals converge. You can look at how the category is changing and we have something called a structural change index. We have a study done with 60 categories that accounts for most of 85% of the US GDP. And we analyzed it and looked at several dimensions of how structural change takes place. And what you see relatively maybe two 10 years ago, that today there are significant changes in every or structural changes in nearly every category. So more and more structural change taking place. That is why this demand space methodologies are so important critical today. So there are systematic ways you can actually identify in your category and say there is a change taking place in the category and we should do something about it. - Okay. That sounds like it could be a whole nother podcast itself. Erica, I want to ask you about LitQuick Dev, which I think is a useful counter example. We know that it created a hugely distinctive brand and change perceptions of bottled water. But competitors copied the codes. Does that tell us something about the limits of differentiation? Is a distinctive brand enough if the underlying demand space isn't defensible? - Yeah, well, I have to qualify that. It is not a counter example today at the bottom spaces. It's a counter example that a competitive advantage is not enduring if you focus. - Sure. - So the way I see it is a liquid death. If you know how it started, Mike Casario observed how heavy metal rock band members would take a beer or an energy drink can and put water in it. - How rock stars have changed? - Yes, they wanted to have the image of being cool. I do energy drinks, I drink beer, this is party because they drank like so much. He wondered, he's like, how is it possible that they don't have a heart attack right there? Because they consume these energy drinks like crazy. It is because they refilled it in this water. So he found, he says like there is a demand identifying that somebody wants the identity of party of enjoying themselves that heavy metal sort of identity but they wanted to drink water rather than energy drinks, they couldn't possibly. And that became the idea of liquid death, of murdering your thirst and that's why also the imagery came around it. If Mike Casario would have looked inside the category, he would have analyzed Fiji, he would have analyzed Agua Fina, he would have analyzed Evion and he would have looked at some Christ categories and Christ years, he would have never arrived at this idea of liquid death. And this is again, where did demand arrive from the consumers daily life, in this case, the rock band members? Then he created some imagery, he created the product, the can, it looks like an alcohol or energy drinks and so forth that was new to the category. What happens is, and he was very differentiated, he created what's called codes. - Yeah, a lot of humor is marketing, that kind of thing as well. - A lot of humor is marketing, but those advertising campaigns, the creative work that they did, the codes they developed for the brand to create some differentiation, that to me has some limited shelf life. It can be copied, it's not an enduring advantage and that is why I think liquid deaths has also leveled out in terms of their growth. The point I think to me is, when you start from a demand spaces perspective, then you see how demand forms, you can help shape demand and you create a brand. I used to be calling a brand of substance, much more differentiation than merely adding some codes or distinctive brand, as it some would say, to a brand in order to compete within the category. And I think that liquid deaths missed a bit at the beat in the last years or maybe they lived in a free market that competed us came and copied them. - That's really fascinating about liquid death. Eric, you also point to companies at Amazon, Alphabet and Microsoft as businesses that didn't simply take share in an established category, but identified new sources of demand and build categories around them. And we all know what happened. How broadly should we apply that idea? Would the rise of oat milk, solar energy or medical cannabis be understood as demand spaces becoming categories? - Yeah, I think that we need to be careful that in the methodology, it's not always just a consumer insight that enables it. If you look at it only, yes, it was a consumer insight. You know, we needed something that works for coffee that said better with you and your anatomy and it was better for the environment. That is sort of something that comes really, that's a category that forms, oddly has done that through basically a consumer insight. But cannabis is different. Cannabis, you know, we all know the benefits of cannabis, pain, anxiety, sleep, things, problems that you might have sort of like you have to regulate yourself. Cannabis was emerging and emerging demand because of regulation that at least in the United States, I don't know exactly the UK of how that demand then was released. And if you look at solar, solar is very similar. You know, in some way, solar is a technology that actually where the price of the solar became too, we got so low that it created demand. So I think the most important thing is that you need to look at whether it's technology, it could be a regulation, it could be developing consumer demand like this liquid dust or with a road skin, which actually is a consumer insight. And you need to look at various ways of how this demand is formed. If you're listening to this podcast, you'll know that walk is the home of leading effectiveness thinking. And now we're teaching you everything you need to know about the fundamentals of strategy. Walk strategy fundamentals as walks new digital course for junior or entry-level strategists. You'll learn from award-winning case studies and hear directly from top strategists and walks own experts. Giving you the latest industry insights alongside proven practical frameworks. Sharpen up your skills to excel in 2026. with Walk Strategy Fundamentals, available now at walk.com/learning Now we need to talk Eric about how to identify where future growth will come from. McKinsey talks about arenas, these fast-evolving technology-driven ecosystems that cut across traditional industry boundaries and concentrate economic value. Is that where strategies should be looking? I mean, we've already kind of talked about that. Is it at the edges of industry where regulation might come into play, where behaviour is changing fastest? What would you advise? Yeah, to me, McKinsey is a strategy-consulting company and let's call it "standard" and they, of course, look at everything from a supply perspective. And arenas is a concept that was developed by a professor here at Columbia University. Her name is Rita McGrath, who looked at competitive advantage in a new way. And McKinsey picked this up, but largely arenas is a supply-side question. It's about technology. It's about capital concentrating. It's about what is changing in this larger sphere of companies and competition. And I think that's a valuable perspective. I obviously think it's absolutely significant. It is important, but it is like two sides of the same of the coin. I like to look at this from a demand perspective, and that's the other side. Eric, how do you then distinguish between an interesting emerging pattern and a demand space that is actually big enough and strategically relevant enough to build a business around? Yeah, you might know of our methodology. We actually have analyzed, as I mentioned earlier, the structural change taking place in categories. Yeah, of course, those 60 categories, yeah. And we have done this methodology now several years now that enables to get to see what's going on. That's sort of one dimension. Doesn't have to be always in this formal way. The second piece is you look at what signals emerge in those changes. And what are the dimensions in that category that is changing? What I, years ago, developed is a methodology called episode reconstruction. And it's a methodology developed by Daniel Kahneman, the Nobel Prize winner, who showed how to reconstruct episodes and moments in the life of consumers in order to map these emerging signals and how people use workarounds. I think that's a qualitative methodology that is very important to use. You can read this up on that. And I think from there, I think it is relook at changes. You know, changes a year ago, changes in two years ago in a time interval. And that change, sometimes in some categories, changes take place very slowly and sometimes changes take place fast. And to us, this is a window of opportunity where you can actually act. But most important, when we develop these demand spaces, what I found so powerful is that you can quantify a demand space and you can develop what we call an economic profit thesis. You probably know from the publication, I have it work where I talked about the economic profit loop. And that is sort of the powerful thing. It's not about, it's no longer about, oh, consumers are more like this or more like that. That's a segmentation question. Or we see a trend of this and a trend of that. A demand space is an opportunity to quantify it and also to realize that some demand spaces are much more valuable than other demand spaces. Like the Starbucks demand space is a huge demand space. There are versus a full chest demand space that I mentioned earlier. And I think once you have that quantification as a strategist, you have the right ammunition and power to also have a conversation with the rest of the C suite to support this new direction, of course. And Eric does this demand space thinking then require a different kind of strash is someone who's less focused on solving the brief and more focused on questioning the brief in the first place. I think that is really that big about, let's call it a Monday morning question. The strategists that I really, I believe are worth the million dollar question and I'm not saying that worth the money is they write the first line of every brief. They stop writing around the category. They replace the category. They cancel out on the brief your target audience description. And they start with demand spaces. I think this is where really a strategist earns its money, let's say. You look outside the category. You understand the episodes and the behaviors of the consumers. You quantify that. You make it a investment thesis. I call it a capital allocation thesis for the CFO. That's where the demand space is, you know, pays in a significant way. I think that's a really good exercise to do in your, in the brief that you get. Eric, thank you so much for this fascinating discussion. It's been really enlightening. And thank you so much for sharing your time and expertise with me today. Thank you. So thanks, can access Eric's article. And the four future Strushy Report on Walk.com. There are also some opinion pieces. So do look out for them. And of course, this is one of four podcasts. We are dedicating to this topic. So that just needs me to thank you all for listening. If you liked this episode, please do leave a comment. Otherwise, forward to speaking to you soon. [MUSIC]