I always have my eyes open for dark horses, the come-from-behind winners that no one expects. I cheer for them, marvel at their grit, and hope for their victory over stronger, better-known competitors. They have always inspired me, and they challenge how I see the world. They give me hope.

But why do dark horses win? 

They aren’t favored to win, often for good reasons. They usually don’t have big money invested in them. They have no history of winning, and not many people have heard of them. Yet they win anyway.

A few years back, I started interviewing smaller, purpose-driven companies that were winning despite their size. Dark horse companies frequently have limited financial coffers, little brand awareness, and none of the cushion that comes with historic success. Against all odds, they still win.

Gone are the days of big companies always outperforming the small. Today, most industries are being shaped by emerging smaller and disruptive organizations, many of which out-innovate competitors that are much larger and powerful (who often end up acquiring them to bring that innovation in-house). In fact, smaller brands account for more than 75 percent of all “Circana’s New Product Pacesetter” companies and 64 percent of the growth in dollars. Disruptive, challenger brands have a profound impact on business and the broader culture.

Sales for many of the leading packaged food organizations are not stellar. With a few exceptions, most of the top consumer packaged goods companies are growing at all-time low levels. They are not innovating. But why?

Why Dark Horse brands win

According to recent research by Goldman, larger brands still control the lion’s share of the business (close to 80 percent). But smaller, emerging challenger companies have the edge, gaining share in 62 percent of the top fifty packaged food categories. Are they more innovative, and do they understand the heart of the new consumer better than their competitors?

They have unique identities and purpose

Consumers love to discover early-stage brands with unique identities and purpose. They feel committed, and “one” with these special brands.  Brands like Cheers Health, Yasso Frozen Greek Yogurt, Dude Wipes, Celsius Energy Drinks, Nature’s Bakery, BLK & BOLD Coffee, Duke Cannon Men’s Soaps and Body Wash, Raw Sugar Personal Care, Goli Nutrition, and Impossible Foods are masters of marrying purpose with experiential branding and community love. They introduce innovation in uncrowded spaces within the category, and they pop off the shelf or create new categories altogether.  They are comfortable going against the grain.

They listen closely to the customer

They also listen intently to their core customers. If they uncover a new need in their ongoing customer discussions, they co-create a product for them immediately. They are one with their tribe. When they see a problem, they fix it immediately. And when they uncover a white space, they fill it.

According to a report in CircleUp, larger companies are sometimes calling new packaging or line extensions “innovation.” The report further states that some of the largest CPG companies “spend up to six times more on marketing and advertising of old products than they do on innovation of new products. Of that innovation, only 39 percent are new products, while the other 61 percent are incremental changes to existing products.” Let’s be honest: another flavor is not innovation.

They think differently

Entrepreneurial founders think differently. I am reminded of the five years of research and interviews I conducted for my first book, Dark Horse: How Challenger Companies Rise to Prominence. Smaller, emerging companies that outthink and out inspire their competition embracing ten traits:

1. Their business is personal, is an extension of their identity, and is about more than profit.
2. They listen deeply, staying in alignment, and are “ONE” with top customers.
3. They use their organization’s hidden intangible assets to create differentiating value.
4. They create a simple, flexible business blueprint and share it with their community.
5. They are thoughtful storytellers who carefully pick their customers and partners.
6. They co-create innovation with customers, becoming more valuable for their community.
7. They experientially create at the convergence of cultural and technological shifts.
8. They authentically partner with influencers, and this body helps create a movement.
9. They practice experimentation and specialization, cultivating brand love with their followers.
10. Their corporate culture is contagious, human, and likeable, creating emotional brand love.

Many of the top challenger brands in our industry think differently and engage their retailer partners and customers with an infectious level of creativity, passion, and entrepreneurism.  Maybe it’s time to learn from many of these experiential growth companies.

Are you building real customer love?

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