In May 2019, chef Stefano Secchi opened Rezdôra in the Flatiron district of Manhattan. Riding in on a wave of anticipation after returning from Modena where he worked at the Michelin three-starred Osteria Francescana under world renowned chef Massimo Bottura, expectations were set high. Mr. Secchi did not disappoint. Within three months of opening, the New York Times gave Rezdôra a glowing three-star review, placing it in an elite group of restaurants in the city. Not surprising, reserving one of the 48 seats was nearly impossible. Mr. Secchi couldn’t have asked for a better opening
COVID-19 put an abrupt halt to the accolade filled trajectory that his revered mentors set him on. Rezdôra’s future is now in jeopardy unless Mr. Secchi rethinks his playbook.
Maneuvering outside of the narrow set of criteria that constrain how businesses should act and look is challenging in established markets. This was the climate Mr. Secchi was facing up until the crisis. To deal with uncertainty, new businesses tend to emulate the structures, cultures, and outputs of competing companies considered to be more successful or legitimate. The direct-to-consumer brand playbook established by companies like Warby Parker and Casper is a case in point. Their positioning, messaging, and aesthetics are now ubiquitous in the direct-to-consumer space, proliferated by new entrants trying to replicate the success of market leaders. Customers and critics, on the other hand, evaluate businesses, holding them in check by establishing criteria for what they should look and act like to help shoppers make purchasing decisions. When businesses don’t meet established criteria for the category they compete in, either deviating too much or crossing categories in unfamiliar ways, they risk illegitimacy costs: such as consumer resistance. Emulating successful peers and being held in check by customers, largely explain why introducing transformative innovation is so rare and difficult in times of relative stability.
Up until recently, Rezdôra would likely never have thought of selling pasta to go, as it is doing today. It’s not a common practice amongst Michelin-starred restaurants, like the one Mr. Secchi trained in, or similar three-star New York Times restaurants, such as Marea, Del Posto, or Union Square Café. Skipping the line, and selling to the masses is a move more befitting of an Eataly than a rising culinary superpower. Yet constraints are breaking away. What a successful business should look and act like and what customers consider legitimate and acceptable is in a state of unprecedented transition and re-evaluation. Keeping the roof over your head by selling fresh pasta is no longer regarded as vulgar commercialism — it’s a necessity to survive and serve your customers.
Systemic crises dramatically reshape evaluative landscapes, creating opportunities for businesses to reimagine how they operate and deliver value to their customers. Here are three approaches that other companies on the brink have used to reinvent themselves and their markets.
Rifts between evolving customer demands and the assumptions upon which businesses develop products and services eventually lead to disconnects. In some cases, rifts take decades to develop, in others, mere months. This occurs when businesses fail to re-examine the fundamentals of the thing they are trying to solve for their customers and finding new ways of doing so. In 2016, after 92 years in business, Elmhurst Dairy was facing this disconnect. Shifting dietary and environmental concerns resulted in a steady decline in dairy consumption along with the profitability of the company. Exploring behaviors around plant-based milks, Elmhurst Dairy rebranded to Elmhurst Milked, and now produces milks made from nuts, oats, and rice. Utilizing a proprietary milking process that preserves the natural proteins of the plants, Elmhurst is fulfilling the evolved needs of its customers in a reimagined way that distinguishes them from their plant-based competitors.
Experience and expertise drive deep understanding of customers, but also entrenchment. The further businesses penetrate one market, the more they lose sight of potential opportunity spaces outside of their comfortably established niche. In 2003, with no way to compete against a sudden onslaught of cheap Chinese manufacturing, Baltimore-based Marlin Steel was on the brink of going out of business. That was until a fateful call from an engineer at Boeing asking about custom wire baskets for airplane parts — not realizing Marline’s sole expertise was in manufacturing wire bagel baskets for store displays. With few options, Marlin retooled and retrained itself to go from levels of precision measured in the widths of bagels to within one thousands of an inch. Today it is the poster child for U.S. manufacturing. Marlin is still bending heavy-gauge wire out of the same shop — although heavily upgraded — but in a new way that allows them to outcompete Chinese prices and European levels of precisions and durability, in far more lucrative markets.
The quip, “necessity is the mother of invention,” often makes people think that the solution must be something radically new. Yet most innovation comes from transposing an existing way of doing something from one domain into another. When it is assimilated into the new context, it generates novel expressions of its original intent and an entirely new way of looking and working within an existing environment. In the early years of Noma, chef René Redzepi and his team were seeking ways to stock their pantry with ingredients that would keep their cooking interesting throughout the colder months of the year. With existing storage methods out of the question, Noma had to find a way to preserve the authentic flavors and ingredients of the region when fresh options were not available. Rather than devising a new technique, they revived the age-old practice of fermentation. Unleashing it on an entirely new set of ingredients and incorporating them into their menu in innovative ways. Today, fermentation is considered by Mr. Redzepi as one of the most essential practices at Noma, which has won the S.Pellegrino, World’s Best Restaurant award four times.
Shaking up what is and what is not deemed a legitimate move or look is freeing businesses to reimage themselves in ways previously thought impossible without taking huge risks. Many of the novel ways companies are trying to survive will likely turn into established practices that will define how markets evolve over the long run. Being early to define these emerging practices, behaviors, and looks will give those courageous enough to think differently — and survive — the competitive advantage of shaping how others will have to respond.