Strategy beyond the ad brief

0:09Erich Joachimsthaler: Hello, welcome to The Walk Podcast. I'm Lena Roland, 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 global 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 leaders around the world. Now we've been running the survey and report for over a decade and what listeners may recall that last year's survey was particularly gloomy and with good reason.

0:50Erich Joachimsthaler: Agency consolidation, falling headcount 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 suggest headcount 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.

1:37Erich Joachimsthaler: 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 strategists are working with AI, why strategists 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 strategists are finding opportunities upstream, moving beyond the brief and addressing the issues that matter most to CMOs.

2:23Erich Joachimsthaler: 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.

2:50Lena Roland: This is the sponsor.

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3:23Erich Joachimsthaler: My guest is Dr. Eric Joachim Steiner, founder and CEO of Vivaldi. 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.

3:50Lena Roland: Thank you so much. Much of my career, I liked it.

3:55Erich Joachimsthaler: 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?

4:13Lena Roland: Well, I believe that AI is leveling the playing field. A lot of the things that we do is that we treasure, you know, 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, quote, 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 you need to, that demand, new demand forms outside of a category.

5:00Lena Roland: And when you work inside, just inside the category, you're basically serving an existing market that is very difficult to grow.

5:09Erich Joachimsthaler: 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.

5:24Lena Roland: The category is comforting. You know, 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.

5:48Erich Joachimsthaler: Yeah. And do you want to talk about that 7 % figure that McKinsey Research found?

5:54Lena Roland: 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.

6:36Erich Joachimsthaler: Eric, that's fascinating, isn't it? That 7%. So your call to action is start playing in that 93 % space, which is where you'll unlock that new growth.

6:47Lena Roland: Exactly.

6:47Erich Joachimsthaler: We'll get on to how to do that later on. This idea of demand spaces, how is that different from traditional market segmentation? How does it differ from portfolio extension or devising new usage occasions, that kind of thing?

7:02Lena Roland: See, the typical way to think about growth is you think about categories. 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 the 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.

7:46Lena Roland: You're looking at usage occasions. You're looking at moments, episodes, goals that consumers like to achieve in their daily life. Think of coffee. Fulgers and Maxwell compete in the same category. But the growth opportunities doesn't lie in the category of Fulgers and Maxwell, let's say, on the coffee side. It lies in a latte an hour later in demand spaces. It's the same consumer, the same person that's in me, but 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$7 coffee latte. That's the difference between demand spaces and segments.

8:35So 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?

8:48Lena Roland: Exactly, exactly.

8:49Erich Joachimsthaler: And that changes the starting point for strategy, right? As you said, it's 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?

9:02Lena Roland: That's right. And if you start there, if you start with consumers and you dissect the lives of consumers, 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.

9:23Erich Joachimsthaler: So staying close to consumer sentiment, identifying those unmet needs is obviously essential in this area. Yes.

9:31Lena Roland: 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 kid's food. And therefore, you know, it is Kraft 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 and cheese. I don't want the kid's treat, but I still like once in a while the splurge of macarons.

10:07Erich Joachimsthaler: Yeah, some people love it as comfort food or nostalgia.

10:10Lena Roland: There we go. That's the nostalgia. When you research consumers from the outside, you realize that it's not just kids, it's also adults once in a while. And that 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.

10:35Erich Joachimsthaler: Okay, so the real opportunity is not necessarily to find a better way of competing inside a category, but to question whether the category itself is still the right unit of competition.

10:44Lena Roland: 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 a product first. We start looking almost from the inside out. We say, you know, what is our product relative to competitors? Our product has these and these advantages. What do customers really want from our products? And then what you do is you're looking for ways to extending that product into, wow, we could extend here over there. And that is how you stay within the category rather than define new demand opportunities.

11:29Erich Joachimsthaler: Yeah, fascinating. Okay, that's quite a shift, isn't it? Eric, I want to talk about what demand space looks like in practice. In the article you wrote for Walk, you use Rode skincare 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 Rode identify that traditional skincare segmentation might have missed?

12:01Lena Roland: If you look, the entire category of skincare is focused on products. They are focused on the routine of skincare. And they divided the process of skincare into 20, 30 different products that you have in your shelf. It can be overwhelming, 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 a moisturizer, you also need a liquefier, all of these things. Toner, all the rest of it. Yeah, things like that. And Hayley Bieber, she is obviously a famous celebrity being married to Justin Bieber.

12:45Lena Roland: But to me, the success of Road is really not explained by just a celebrity because a lot of celebrity brands actually start with the same, hey, we can also do skincare or we can also do a product. We can also do a fashion. And they all usually tend to be not that successful. She found actually, and 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. with it's a healthy fresh look that with that finishes with lips that gives you this glow and glaze if you will that she is she's 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.

13:51Lena Roland: 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 allure, that look, that glazed look, if you will, that finishes with lipstick. And then she focused on just three products, in fact, 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 skincare products. Effortless, no makeup look, healthy look, but still with the lips to be looking in a particular glaze way.

14:41Erich Joachimsthaler: Yeah, it's really interesting that the strategy was to launch with three products. Eric, in your piece, you talk about something called portfolio as demand architecture. That's where the demand space determined the portfolio rather than the portfolio determining the demand space. Why is that distinction so important?

15:04Lena Roland: It is so important. When David Arca, the professor at California Berkeley, and I developed a portfolio and architecture, the model that was around 2000 or something, branded house, house of brand, if you remember that. We always, what was the goal? The goal was, oh my God, 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 A. Kahn and A.I.N. 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?

15:51Lena Roland: 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 a 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 focused on a simple routine, one routine, and it only needed three products in order to solve for the outcome that consumers are really looking for.

16:48Lena Roland: That's very different from saying, this is my portfolio. Where else can I go? Where is my stretch opportunity and where do I overstretch?

16:58Erich Joachimsthaler: Yeah, this seems to reverse the usual innovation process. So companies often start with an asset, a product, technology, a 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.

17:14Lena Roland: With consumer attention. 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 Eberhard was this person's name. He walked around Palo 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 consumers, of people who lived there in these fancy houses. And in every fancy house, you saw, we call them sometimes the McDonald's mansions or McMansions, because they are like all very impressive buildings.

17:57Lena Roland: There was a top-of-the-line Mercedes or BMW. And then there was a Prius. And Eberhard made those pictures, one of the founders of Tesla, made those pictures. And at the end of the day, he goes 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 or Audi if you will and they are willing to pay any price they have the money for that matter but they can't 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.

19:10Erich Joachimsthaler: 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 where to play and how to win but 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 someone needed to say we probably don't need to go there we've got to keep things simple exactly that you

19:38Lena Roland: know the the major finding also from the 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, what are the brand attributes? What are ways to a better campaign? And so forth and so forth. And I think that 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 where you don't find growth or where it's very hard to find growth.

20:20Erich Joachimsthaler: That segues quite nicely onto the other example that I wanted us 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.

20:42Lena Roland: Yeah, same pattern. If you look within the category, and this is a B2B example, when I started with Aldi years ago, we had 10, 12 designers. And I always wondered, what makes you design, being a designer? They said, well, I come from Parsons School of Design or School of Visual Arts. And by the way, I'm using Adobe here. Look at my world. and they would sit there by themselves and produce their work. And sometimes I go like, that's not a nice job 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.

21:28Lena Roland: 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 client in Netherlands, is 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.

22:04Erich Joachimsthaler: That's a really fascinating example. Eric, this is 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?

22:21Lena Roland: So we at Vivaldi, we 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. At Vivaldi, we have something called a structural change index. We have a study done with 60 categories that accounts for most of 85 % of the U.S.

23:10Lena Roland: GDP. And we analyzed it and looked at several dimensions of how structural change takes place. And what you see relatively maybe to 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 methodology is now 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.

23:49Erich Joachimsthaler: Okay, that sounds like it could be a whole other podcast itself. Eric, I want to ask you about Liquid Def, which I think is a useful counter example. We know that it created a hugely distinctive brand and changed 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?

24:18Lena Roland: Yeah, well, I have to qualify that. It is not a counter example to demand spaces. It's a counter example that competitive advantage is not enduring, if you forget. 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, let's say, a beer or energy drink can and put water in it. How rock stars have changed. Yes. They wanted to have the image of being cool. You know, I do energy drinks. I drink beer. This is party. Because they drank like so much. He wondered. He said, like, how is it possible that they don't have a heart attack right there because they consume these energy drinks like crazy?

25:12Lena Roland: 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, the 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, murdering your thirst. And that's why also the imagery came around that. If Mike Cesario would have looked inside the category, he would have analyzed Fiji, he would have analyzed Agrafina, he would have analyzed Evian, and he would have looked at some price categories and price tiers.

25:55Lena Roland: He would have never arrived at this idea of liquid death. And this is, again, where did demand arrive? From the consumer's daily life, in this case, the rock band members. Then he created some imagery. He created the product, the can that looks like 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.

26:24Erich Joachimsthaler: Yeah, a lot of humorous marketing, that kind of thing as well.

26:27Lena Roland: A lot of humorous 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 Liquidez 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. And I used to be calling a brand of substance much more differentiation than merely adding some codes or distinctive brand assets, some would say, to a brand in order to compete within the category.

27:22Lena Roland: And I think that Liquid Debt missed a bit the beat in the last years or maybe they lived in a free market that competitors came and copied them.

27:32Erich Joachimsthaler: That's really fascinating about Liquid Debt. Eric, you also point to companies like Amazon, Alphabet and Microsoft as businesses that didn't simply take share in an established category, but identified new sources of demand and built categories around them. And we all know what happened. How broadly should we apply the idea? Would the rise of oat milk, solar energy or medical cannabis be understood as demand spaces becoming categories?

28:00Lena Roland: 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 Oatly, yes, it was a consumer insight. We needed something that works for coffee, that's 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. Oatly 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 to regulate yourself.

28:41Lena Roland: Cannabis was emerging, an 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 ways. Solar is a technology that actually where the price of the solar became due. It 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 regulation, it could be developing consumer demand like with liquid desks or with road skin, which actually is a consumer insight. You need to look at various ways of how this demand is formed.

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30:11Erich Joachimsthaler: 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 behavior is changing fastest? What would you advise?

30:41Lena Roland: Yeah, to me, McKinsey is a strategy consulting company, a more, 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 important, absolutely think it is important, but it is like two sides of the coin.

31:28Lena Roland: I like to look at this from a demand perspective, and that's the other side.

31:33Erich Joachimsthaler: 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.

31:44Lena Roland: Yeah, you might know of our methodology. We actually analyze, as I mentioned earlier, the structural change taking place in categories.

31:55Erich Joachimsthaler: Yeah, across those 60 categories, yeah.

31:57Lena Roland: And we have done this methodology now several years now that enables to get to see what's going on. That 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.

32:40Lena Roland: 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, we look 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.

33:25Lena Roland: You probably know from the publication I have at Wark where I talked about the economic profit loop. And that is sort of the powerful thing. 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 versus a Folgers 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 growth.

34:21Erich Joachimsthaler: and Eric does this demand space thinking then require a different kind of strategy someone who's you know less focused on solving the brief and more focused on questioning the brief in the

34:33Lena Roland: first place I think that is really that big but it's called it a Monday morning question the strategists that I really um I believe are worth the million dollar question or something 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 an investment thesis.

35:19Lena Roland: I call it a capital allocation thesis for the CFO. That's where demand spaces, you know, pays in a significant way. I think that's a really good exercise to do in the brief that you get.

35:32Erich Joachimsthaler: 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. Walk clients can access Eric's article and the full Futurist Strategy 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 leads me to thank you all for listening. If you like this episode, please do leave a comment. Otherwise, I look forward to speaking to you soon.