Episode 149: The Art of Innovation Through Tough Times

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew. Such a challenge of how it is that you balance this focus on business and running a great business that generates cash and, and is a sustainable business, but at the same time you're balancing it with these artistic ideals that are focused on creativity, on disruption, on innovation. And that balancing act is extremely, extremely difficult, but the best among us in this business, in this industry, are the ones that have got their finger, I think, on the pulse of both of those heartbeats.

Many of us might be stuck right now in preservation mode, protection mode, which is expected, but we can't stay here if we're going to change our future. An article in the Harvard Business Review studied 3 global recessions and discovered there were 4 primary types of responses by businesses, and only one was successful. The progressive companies, companies who cut costs like others, but they cut costs by improving operational efficiencies and not merely reducing headcount while simultaneously making greater investments than their competitors in R&D and marketing. Hi friends, I'm Bobby LeHew, the Chief Content Officer at Commscue. Today I'm joined by Mark Graham, Commscue's President and Chief Brand Officer, as we explore the choice to innovate even during hard times. And how. Today's episode is brought to you by Commenscue, the work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more or to begin your free trial now, visit commenscue.com. Now here's my conversation with Mark. Mark, there's no question now, no question at all about whether to innovate and evolve or die. We've been talking about this for so long, it feels on the SkewCast and through our community. And we talk to a community of progressive thinkers, people who are constantly on the cutting edge, but this time in history has presented us with challenges. And through this economic downturn and coming out of it is gonna require a different type of thinking than we've ever imagined before.

So Bobby, what I think is so interesting about this discussion is that this concept of innovate or die is something that you and I have spoken about in our podcast experience for many, many years now. And there's many iterations of this theme. But what I think is so different about this conversation now is that it is quite literal, that if you aren't innovating, you are literally dying. And what I mean by that is we're now faced with a crisis where we've got customers that cannot hold events. So as a result, they are canceling huge promotional products campaigns. You have the inability to physically meet with your customers, which then renders a lot of salespeople handicapped in terms of their ability to close a sale. And I think that what we're seeing in this last sort of 8 to 10 weeks is that those firms that are pivoting and thinking differently and radically shifting their business models are the ones that are surviving, and in some cases thriving. And I think that's really what we wanted to talk about in this podcast, which I think differentiates it from, say, an innovate or die conversation we might have had, say, 2 years ago during bull market when innovate or die means, hey, as a salesperson, you should be proactive in order to expand your share. But we all know that if you didn't innovate, say, 2, 3 years ago during a bull market, most distributors would have just kept on moving on just fine. They may not have grown as fast as they wanted to, but they'd be sustained just by virtue of the economy. Things are radically different now.

One of the things we've always enjoyed doing, and our community has commented on this too, is that we bring outside examples into our industry so that we can all all kind of better see the transition, because it's really hard to see that from inside our business, inside our walls of our own business, or inside the walls of our own industry. But when we look outside and we can see objectively at some other industry and what's happening and how they are evolving and adapting, it's easier to take principles from, from that experience and apply them to our own. What are you seeing out there that's caught your attention as people are evolving and adapting.

I think you're absolutely right, Bobby, that we in this industry, I think, spend a lot of time looking at other industries for inspiration to see what to do and also what not to do. There are two industries that have caught my eye because they've been very much in the limelight over the last two months from the standpoint of, of what to do and potentially what not to do. And those examples are retail And number 2, the restaurant business. I'll give 2 quick examples. So in retail, and specifically in the book business, there's a company in Toronto called Type Books. It's an independent bookstore. It's been around for some time now. They have thrived in the Amazon age. They're not an online bookseller, but rather a retail store where you go in and you speak to the bookseller and they've got a curated collection and they have a loyal tribe. But of course, in the last 2 months, they have literally had to close their doors because of social distancing. And what's interesting is that, uh, this business has created this concept of a mystery bag. So you as a consumer can email them or call them and say, uh, here are the books I like, here are the books I dislike, here are the genres I like, and so on and so forth. And they will put together a curated collection of books. I think it's about 4 or 5 books for $100 and, uh, deliver it or offer curbside pickup. And that's just, to me, such an ingenious example of a business that could very well have been closed, that has decided to innovate and really leaning into their strengths and their relationship with their community of book lovers and, and offering considerable value. And to me, it, it's just so reminiscent of what we do as distributors and suppliers in this industry, right? The best among us are the curators. They're the ones who can make those great recommendations, the one that build those connections with their communities. And I just love seeing that in a business that literally has been told to close, and, and, and they're innovating their way out of this problem.

Right. By, by the way, Mark, I have been to Type. I'd forgotten this is on Queen Street, and I remember it's a, it's a, a beautiful boutique experience. It's always crowded. There's, of course, Queen Street is, but an interesting aspect with what they did, not to go too far down this, but when you go to a boutique bookstore today, it's a browsing experience as opposed to going to a chain where you know exactly what you want. What I love about what they did was they still realized that people love to be surprised and delighted with their book choices and selections. So I don't even know if that was like a deep understanding of the psychology behind their customer, or if it was just, hey, we're going to do this to survive. But it's an interesting corollary to what the in, um, in-shop browsing experience is like, which is surprise.

Yeah, so I just think— I think we can take a lot of inspiration from that because, yeah, uh, for, for every example of a Type Books in Toronto, you're read about 100 examples in the book business specifically where the independent retailer has closed their doors because they can't survive. They've had to lay off their employees. And listen, I have great sympathy for folks that are in that situation. But what I think is so interesting about this conversation is that everyone has been dealt the same deck of cards and some entrepreneurs are choosing to innovate and survive and others are just choosing to close the doors. And as I say, I don't want to say this with judgment, but we all have a choice. Choice. Um, the second example that I had referred to is in the restaurant business. This is an industry that many of us love and have got deep connections with, just because we all love to go out and, and, and enjoy great food at restaurants in, in various cities around the world. Um, and so there's another example in Toronto. I just want to cite this because it's where I'm from. There's a restaurant downtown Toronto called Alo. It's one of the top restaurants in the world, um, from a from a gastronomy standpoint, high-end modern French cuisine. It's considered the top restaurant in Canada. It's expensive. It's nearly impossible to get a reservation at, and highly, highly revered spot in Toronto for eating. Of course, they were told to close their doors 2 months ago, just like everyone else in retail, and if there was a candidate for any restaurant that would just say, "We're gonna have to close our doors and ride out the storm because we literally cannot function," the way that our restaurant is supposed to function, Alo would have been top of the list and you would have excused them for that. But what they have done is they've offered curbside pickup and it's an expensive option. They sell out online whenever they release their pickup menu and their takeout menu. And the experience is actually quite extraordinary in terms of how it is that they've been able to recreate the magic of the dining experience at Alo.

Yeah.

To recreate that for, for people that are coming to pick up the food and eat it at home. Everything from a customized menu to reheating instructions to a customized Spotify playlist that you can play while you're eating your food. It's— it was just really an extraordinary experience. And again, I look at that and I see so many restaurants that are just making the decision to just close down because they don't want to adapt. Versus other folks that are innovating and surviving. And as I say, I'm trying to make these comments without judgment. I can't imagine how challenging and how difficult it is, but again, when you're faced with this choice, you really have one of two paths that you're going to take, and I take a lot of inspiration from folks that are innovating because we can apply that back to the promotional industry.

Marc, what triggered this whole conversation for you was an article you read in the New York Times by Gabrielle Hamilton about a restaurant, Prune. What sort of stopped you in your tracks was that she was unsure that there was a sort of a pervasive attitude that business had been difficult for some time, but that— and that almost she was unwilling to evolve and adapt to the climate that was required right now. Yeah.

So this article was written in The New York Times Magazine, published, I would say, 2, 3 weeks ago. And for folks that aren't familiar with Gabrielle Hamilton, she is a celebrated chef that opened a restaurant called Prune in the East Village in New York City about 20 years ago. A real trailblazer opened up a very special restaurant that's just loved by people in the village as well as people around the world. Bobby, you in fact have actually eaten there. I'm a bit of a poser because I've only read her book. It's called Blood, Bones, and Butter, and you recommended that to me a couple years go. Anyways, the gist of the article, I will say for anyone that has read the article or will read it because we will link to it in the show notes, is that my first thought is that I felt profoundly sad and sorry for Gabrielle Hamilton. I understand what it's like to start a business. I understand what it's like to be stressed about payroll. I understand what it's like to deal with the paperwork. I understand that you put your blood, sweat, and tears into this business. So that, that's the first thing I wanted to say. The next thing I wanted to say is that I struggled with the conclusion that she was reaching in the article in that it's almost as though she had no choice but to close. She talked a lot about quote unquote modern solutions in delivery apps or curbside pickup or refashioning the restaurant to provide meals in a box, so on and so forth. These were just a couple of examples that she cited, but in every case, she had a lot of good reasons as to why that wasn't going to work for her. So as a result, her only choice was to close down. And that's, I think, where I, as you say, I was stopped a bit in my tracks and I had question marks over my head and I was like, I'm not so sure that that's necessarily true. That to me represented a choice that in this case, this entrepreneur restaurateur was making to close down. And I think if you look at some of the other examples that we've cited, it's a choice. And I think from that standpoint, that's something that we in the industry can learn from is that we've all been handed a really horrible deck of cards right now and we're at We're at a cross— we're at a fork in the road. And one is that we say we can't innovate, we can't survive because our business model is outdated or can't be adjusted to the times. And in other cases, other people are prepared to throw out the playbook and start from scratch. And that's what struck me about the article. How about you, Bobby? I mean, you had the chance to actually meet her when you were there. What did you think? Where am I seeing this wrong?

I met Gabrielle. I couldn't wait to meet her. I read her book. I came to her as a writer first. In fact, you know, when I sat down with her and talked with her at the bar, I said, I discovered you as a writer first, not a restaurateur, not a chef. I was really just there for the experience, and it was a privilege to meet her. And she's such a great artist because she's so multi-talented. She's had the PBS show, she's won multiple awards, and yet she still loves this restaurant she created. And I think One of the things that we are talking about right now that's so important for right now is that you and I talk with many entrepreneurs in our business to draw a corollary to this. We talk to many entrepreneurs who make a decision at this juncture, and that decision is, I'm either going to just sunset the business, which might look like waiting this out, riding this out, or selling the business, or reimagining and reinventing ourselves. I think one of the dangers right now is that we're so busy reacting to the new product requests that are taking us outside of our core, maybe, maybe, that we are not proactively thinking about how to reinvent during this time. And so to give you an example, Scorsese was famous. Was sort of social media, uh, was excoriated in social media because he said that Marvel movies aren't cinema. And he then wrote an op-ed piece in the New York Times to explain it. And his point was that cinema allowed you to take risks and that Marvel movies were a franchise, something that you could produce over and over and over again. And it wasn't that he was against them, but one of the interesting things about Scorsese Here's someone who doesn't need the money, who only needs to enact their vision. And he acknowledged in the article that he embraced Netflix, even though he would much rather be producing a film on the screen. One more example is that at the age of 78, Bob Dylan just hit his first Billboard number one hit under his own name. And the wild thing is, it's a 17-minute song. Here's an artist that is constantly reinventing himself. In Scorsese's case, there's someone who pivoted toward— sorry, who flexed in a different direction toward a different type of way of expressing what he wanted to do. So I think this is the heart of what we're discussing is this crossroads of when and how to reinvent.

I think it's such an interesting point, and I think a way to just put a final mention on the story about Gabrielle Hamilton. And I think maybe the surprise that I had is that in my experience, the business people who define themselves as artists first and business people second, not only do they create the most dynamic and interesting trailblazing businesses to start, but they're also the folks that are the most ripe for reinventing themselves. So Bobby, do you, you know, you have interviewed so many people over the last several years on the SkewCast. Are there examples that you can cite of people in the promotional products industry that have embraced that moment of the crossroads where they've zigged while others have zagged in terms of reinventing or reimagining their businesses in the face of crisis?

The first one that comes to mind is just because I'm, I'm close to these guys and have a history with them is Thumbprint. And I mentioned Thumbprint because I have been privileged to know both the father, Greg Gill, and Brian, the son. And I remember when Brian was like first coming into the business and Greg and I used to, um, Greg would come to Robin when I was a distributor and he, he would train us on things they knew and I would go to Florida and talk with his team about things we knew, and we did a really interesting exchange of information. In fact, our tech teams were real tight and they were building things and leaning on each other for advice. So I knew the company well enough to know, and Greg well enough to know, that he has had multiple decisions in his, his entrepreneurial journey where he could have sunset the business. And instead, what you find is a company that has reinvented themselves not just once, you know, Some companies will go through a rebranding, so to speak, once in every 20 years. These guys assess that— I don't know how frequent it's been lately, but it seems like it's been once every 4 or 5 years. And when you think about how fast the market is changing, that's pretty aggressive and progressive. So here's someone who made a definitive decision. He's going to invest in— you've seen him invest in leadership and team and talent so that he can plow that wisdom and energy back into his business. And I think it comes from just the love of the business and saying, okay, this is the direction we want to go. The reason why they came to mind too is that 2 weeks ago, Brian sent me a text and he said, hey man, check this out. Here's a video game we developed for a customer of ours. And I'm like, what? A video game you developed for a customer of yours? And so these guys are at least, they're open to avenues of transition and change. And I think the experience of reinventing themselves over and over has helped give them a muscle they have that allows them to shift.

What is it that you think differentiates the person who is prepared to constantly reinvent themselves, to constantly, um, risk the business, versus the person who may have had that outlook when they first started, but over time they become protective of their franchise. They've become protective of the thing that made them successful. And it's ironic, it's almost as though that success is the thing that restricts their ability to reinvent themselves. Yeah, I think you see that a lot in other industries. I think some of the examples that we just cited outside the industry are probably good examples of that. And you certainly see a lot in the promotional industry. What is it that you think distinguishes these two types of business mindsets?

I'm going to, I think you nailed it in your question, and that is that success does somewhat create a more riskless environment. Scorsese hinted at that in that article with when he talked about cinema was about risk. Big movies like superheroes is about franchising, right? It's a, it's a known path. And I know you're a big fan of Kandinsky, and so am I, and his works on art are amazing. And he talked about the difference between the creative artist versus the virtuoso. And the virtuoso is someone who has a talent, a talent for singing, a talent for playing music, and they just craft that talent. The creative artist is someone who comes into the world with their own dream and imagination. You know, their whole existence is for the materialization of that dream. So their whole talent exists for that alone. When we finally see the success that we fought so hard to achieve, is it at that point that the blinders become so strong because we realize we figured it out, and yet the world moves so quickly that it changes? It's almost as if, um, we lose that muscle. Because we, maybe we think we figured it out and now we don't have to evolve.

Well, I think at the end of the day, I mean, it was not a fair question to ask because it was a tough one. And as I asked it, I was like, I don't know how Lee is going to answer this, but the whole time I was thinking, I'm going to ask Mark this. I'm not going to answer this.

Yeah, that's great.

You can tell that you're a pro at this. You know, I think that that I can only draw from my experience having started two businesses or co-founded two businesses in the last 20 years in this industry is that there's a fundamental irony, right? The time when you are going to be the most innovative is when you've got the least to lose. So I feel like at the birth of both businesses, Common Skew and also Roy with Right Sleeve, that I would say that my ignorance ignorance of the opportunity of maybe the industry and all that stuff at the beginning, well, was probably a liability to some extent, turned out to be an incredible asset because you're starting something without baggage, you're starting something without really a lot to lose, and you're approaching it almost from the vantage point of how an artist would approach something. Like, hey, here I am. Hopefully you like what I have, but I've got nothing to lose, so you're going to you're going to listen to me. And if it fails, it fails. I think that the challenge in business is that, you know, once that idea is embraced by that core set of customers, then you start to grow beyond that core set of customers. Then you start to bring on more overhead. You hire more people. You move into a fancy office. And now you've got a customer base that you are, you're having to service. And that right there is going to limit, um, some of your ability to reinvent yourself and to kind of blow up your product because you've got a constituency. Yeah. That is paying you money for this particular service that they bought, you know, when you first articulated your vision for the business.

Yeah.

And so you're really hamstrung, um, which I must say is an amazing opportunity for that new entrepreneur that doesn't have any of that baggage. Um, and I think what's would— I don't really know the answer to this, but I think it's so important to be able to always have some reserves and some resources in your business that is always focused on skunkworks, is always focused on that way of reinventing and challenging that core franchise that you've created. Because if you don't have that, then you're not— you're never going to be exercising that muscle for disruption. You're just going to simply lapse into this, I'm servicing my customer base, I'm doing a good job of that. And then it blinds you from these other opportunities or maybe these other competitors that are starting to come in and might be seeing the world a bit differently. So I think it's like such a challenge of how it is that you balance this focus on business and running a great business that generates cash and is a sustainable business. But at the same time, you're balancing it with these artistic ideals that are focused on creativity, on disruption, on innovation. And that balancing act is is extremely, extremely difficult. But the best among us in this business, in this industry, are the ones that have got their finger, I think, on the pulse of both of those heartbeats.

Howard Schultz, in his book about Starbucks, he said— I thought this was a staggering statement, but he said he worried more at the height of Starbucks' success than he did at any other time in the history of their company. When you think about the risks they took along the way and probably the multiple times they had to gamble with investments and plowing money back into the business. That's an astounding statement. Yeah. And I, practically speaking, Mark, I wonder if this isn't a way we can handle this. So how do we now move forward and think about our businesses in a different way? There's this famous book that's been around for a long time about, by Edward de Bono, about the Six Thinking Hats. And what it is is 6 different ways to think about a problem. And he actually says this is like you literally put on these different hats when you're thinking about the challenge. Right now, everybody has been sort of brought to level 1. Like we're all at a point where we are inventing or reinventing regardless of whether we like it or not. So De Bono said we have 6 different hats. We have, uh, when we think about our business, the hat that Schultz was talking about about and the hat that maybe Gabrielle was wearing at the time in those that they expressed that was the hat of how do I maintain this? How do I keep this business going the way it is? And we all have that hat on right now because we're struggling. But the Bono says we should take that hat off deliberately and think about our business in a different way. Think about it. We have a white hat for facts, those the data, the facts, the figures, that's the numbers we're processing. That's something we should do. There's the red hat of emotion when we evaluate our business, you know, our intuitive view, how we feel. There's the yellow hat that's very optimistic and positive. There's the green hat that's associated with energy and creativity and new ideas. So putting that hat on and saying even to your team, it's a great exercise to do with your team, by the way. We're going to put on the green hat now and think about our business. There's the judgment hat, which is careful and cautious. Right now, there might be a lot of folks who are only wearing the judgment hat.

Hat about their business.

They're only wearing that hat. And then finally, there's the royal hat. That's the purple hat. It's like committing and investing, subjectively seeking objective options for your business. So I wonder if in this malaise, in this turmoil that we've been in, that we have been wearing only one hat, the hat of either protecting things, the hat of either just objective facts versus sort of the choosing to deliberately think of the ways in which we can reinvent.

Yeah, no, I love that. And I love the fact that you probably cited that from memory. You just pulled that out from your head, the Six Hats from this obscure business author. But in all seriousness, I think it's an amazing point as we sort of wrap this up. And I think that, you know, the lesson that I think has been driven home for me as I consider these examples in the promotional products industry, as well as examples that that we've cited outside the industry is that entrepreneurs that are successful are the ones that think in a divergent way. They're able to juggle multiple different perspectives, and that is more important than ever right now. And it's not to make light of the fact that some businesses have dried up by 85%. Like, what do you do in that particular case? Absolutely, you have to be in protective mode, and that's probably the priority for you as that entrepreneur. But I think you that we're talking about right now is that if that's 100% your focus, protection and preservation, then it's going to blind you to those new ways of thinking about things. And I think if I was to put myself in the shoes of that business owner at TightBooks, I don't know the proprietor of that business, but my assumption is that if that person was only in preservation and protection mode, they would be laying off employees, they would be negotiating with landlords to reduce rent, they would be applying for government programs, all of which are things that they should be doing. But if that's all they were doing, they wouldn't be thinking about these innovative ways of engaging their community that wants to still be buying from them, that wants to still have that connection and relationship with them. And I think that that's all we're saying here is how can we think divergently? How How can we prioritize protection, but how can we also be thinking of these other areas that will allow us to survive and to thrive? And then when things get back to normal, if we've exercised that muscle now, then I can't imagine the success that we'll see when things get back to this new normal state.

Right. Mark, thanks. I enjoyed discussing this with you, and we're going to keep this conversation alive. We do both feel like it's our job. To keep bringing this question back to our industry because we have seen in a very positive way through the last recession, the industry got refined. Customers refined it. They changed the way they bought. They changed— distributors changed the way they positioned themselves. We saw a very positive outcome through the last recession. And we just want to ensure that we as an industry do that through this because we have a grand opportunity. Certainly doesn't feel like an opportunity.— will be a grand opportunity to reinvent and discover. We're going to have a new series coming out called The Future of Work, and we're going to talk about the new types of tools that we're going to need to approach the new world of work that's emerging. So thanks for bringing this topic up again.

Thank you, Bobby. This was a lot of fun. Thanks so much for tuning in to this episode of SkuCast. Be sure to keep up with our latest content by subscribing to Skewcast on iTunes or to our blog at community.comonskew.com. Until next time, friends, thanks so much for listening.