Salomon succeeded in becoming the leading business in its market by creating a disruptive innovation. Read on for an explanation given by Benoît Sarazin (Farwind Consulting) of how Salomon multiplied its sales figures by 2.5 in only 5 years!
The first step in disruptive innovation : identifying a new market
- How Salomon identified unfulfilled latent needs :
For a number of years Salomon had been equipping athletes of a little-known sport, “adventure racing”. It is an extreme sport that is very demanding on shoes. For instance adventure racers take part in “Raid Gauloises”. Salomon’s teams were looking to improve these athletes’ performance and so designed shoes that were more stable, solid and protective, as well as lighter and faster. However the “adventure racing” market was too small and, with Benoît Sarazin’s counsel, they looked for a larger market.
- Identifying a starting niche :
The « trail running » market was small compared to the « running » market, but Benoît Sarazin saw potential for growth there. He noted that trail runners aspire to run in the wild, far from asphalt. However, since there was no specialized footwear for this, mountain runners were using running shoes. Therein lied an unfulfilled latent need since running shoes are not well adapted to mountain running: runners slip, they hurt their ankles etc…
- Anticipating fundamental market changes :
By drawing an analogy with Mountain Bikes, whose market has become much bigger than the Road Bike market in the last 20 years, it is perfectly reasonable to think that the trail running market will become much bigger than the city jogging market. Is the human body made to run on asphalt? In the long term Sunday joggers (who make up the biggest part of the market) will stop modeling marathon runners and will “get off the road”, as it was done with bicycles 20 years ago.
7 pieces of advice for creating a competitive advantage through disruptive innovation
- Starting small and thinking big :
You predict that a given market, while small, will become much bigger. That means having a vision of the future. But you must start small, with a starting niche…
- A single competitive advantage is enough at first :
Provide a simple but very competitive offer in your starting niche. When you launch a product in a niche, what you bring to the customer is based on a single benefit : Salomon’s “trail running” shoes were more stable on treacherous terrain. Nothing more. And yet Salomon sold 3 million pairs of its first “trail running” shoes in 5 years…At first, compared to the competition, the iPhone was merely simple to use. It did not even have a 3G connection, a fact that some competitors did not hesitate to make sarcastic comments about. They did not laugh for long…
- Provide an offer that is based on existing technologies :
These trail running shoes use only traditional materials and techniques that are used in other domains, such as cross-country skiing and hiking clothes. Creating was involved, but strictly speaking no revolutionary technologies were used.
- The disruptive innovation allows you to make significant profit margins
The advantages provided by Salomon’s shoes to its customers are such that Salomon can sell at a price higher than that of the competition. And since significant investments in R&D weren’t necessary in creating the shoes, the innovation brings about some great profit margins. Typical of disruptive innovations!
- Make distribution simple :
The target is running equipment stores, who hold the largest share of the market. But Salomon does not have a presence there. The right strategy is therefore to start with distribution networks in which Salomon has a presence – namely stores specialized in hiking. The idea is to reinforce its presence there (especially by progressively broadening their product range) and to then target stores specialized in running equipment.
- Progressively develop and adapt your product range in order to keep your competitive advantage :
3 years later Salomon launches a mixed shoe that is perfectly adapted to both walking AND running. Finally, in 2011, Salomon launches “all-terrain” shoes, good for both trail running and running on asphalt.
- Keep on improving, steer clear from a 2nd disruption, so your competitive advantage becomes long-lasting :
Do not rest on your laurels, do not wait for your competitors to imitate your product! Going from one disruptive innovation to another without exploiting them properly is like creating a new market for the benefit of your competitors. Therefore once the disruptive innovation is on its way you must keep your status as pioneer and innovate progressively. That way once a competitor is ready to launch an product imitating your own you are already one step ahead. In this way your competition makes you look good… By belatedly imitating your product they endorse your innovation, and you become the standard to follow in your market.