Confined to the Cocoon: More Ways To Skin A Caterpillar (Cake)

“Allowing an existing structure to remain in place for too long creates inertia and results in an organization that is maladapted to the opportunities it finds.”?―? Rita McGrath

You are forgiven if you missed the battle of the caterpillars that unfurled during the Covid-19 pandemic. In April 2021, UK-based premium retailer Marks & Spencer (M&S) filed a lawsuit against German-owned discount retailer Aldi. M&S claimed that Aldi's cake, known as Cuthbert the Caterpillar, infringed on M&S's trademark for Colin the Caterpillar. M&S has held a trademark for Colin the Caterpillar since 2008 and argued that Aldi copied the distinctive features of the cake, including its face, colour, and packaging.

M&S sought a?court order to halt Aldi from selling Cuthbert and demanded its removal from Aldi's shelves.?Aldi, however, defended Cuthbert's uniqueness and pointed out the existence of many similar caterpillar cakes in the market. One could argue that there are only so many ways to "skin a?caterpillar" cake. Yet, at the heart of this conflict exists a?much larger issue. Was legal action the only recourse? Could M&S have risen above the squabble and evolved the design? What if they developed a cake, symbolically, in the shape of a butterfly: the metamorphosis of Colin into "Benny the Butterfly"? What if instead of just trying to lock down the ever-shifting sands of competitive advantage, M&S invested in a future one? Rather than line the pockets of the lawyers, they might have financed future product lines.

While many organisations believe their brand and products are innovative, they find themselves confined to?a cycle of incremental innovation. Imagine that happened to the caterpillar.

The Caterpillar Conundrum?

“What the caterpillar calls the end of the world the master calls a butterfly.” - Richard Bach

After hatching, caterpillars eat their eggshells to fuel their future transformation. Caterpillars outgrow their exoskeleton several times as they mature before something deep within them signals that it is time for a bigger change. This signal starts with a deep impulse, an inkling at a cellular level, programmed deep in its DNA. The cells that initiate the change are aptly called?imaginal discs, from the word imagination.

Imaginal cells induce the caterpillar to find a twig and harden its skin, which acts as a cocoon. Then, the caterpillar dissolves into a nutritious liquid that will soon fuel the future metamorphosis into a butterfly.

Many organisations are like a caterpillar that never transforms into a?butterfly. They are cosseted in their cocoon, unwilling to make the brave leap to metamorphose into something truly transformative and new. They get stuck in exploitation mode, exploiting their current competitive advantage at the expense of exploring a future one.

This is understandable. It is a bold move to embrace transformation in the face of ambiguity. As Maya Angelou aptly observed, "We delight in the beauty of the butterfly but rarely admit the changes it has gone through to achieve that beauty.” Change is difficult. The transformation phase from one stage to the next means embracing that messy middle, letting go of certain parts of your past and embracing an uncertain future. This is difficult for leaders as they may need to part ways with colleagues who lack the skills required for the future, even if they were stellar performers in the past. Former CEO of Cisco, John Chambers, alluded to this when he said, “Without changing the structure of your organisation, I would argue that [innovation] will not work.”

In a world of rapid change, what was once a competitive advantage will become transient (for more on this, check out our episode with Rita McGrath). Even the most carefully managed organisations will likely lose their edge as customer preferences, technology and competition change. We already know the half-life of businesses and their business models is shrinking.

Incremental innovation remains a critical component for organisations. However, when an organisation only rewards incremental endeavours (through recognition, remuneration and promotion), why would anybody want to risk their career with a transformational effort? By all means, give the customer a 12-blade razor, a chai-latte-flavoured soda or a 6G Origami phone. You can still be a fast-moving caterpillar-cake copycat, but remember to invest some of the profits from the incremental present into the transformational future. Don't use the future to fuel your present.

THANKS FOR READING

Our guest Helen Edwards tells us the same thing happens in marketing. She writes, "If you’re looking for high growth, don’t start with something already grown. Don’t start, in other words, from the mass – because growth from here will tend to be slow and incremental. Start, instead, from something small, marginal, promising – and see if you can achieve the spectacular."

Helen joins us for a 2-part series to discuss her book, "From Marginal to Mainstream: Why Tomorrow’s brand growth will come from the Fringes – and How to get there first.” (It was in her book that I learned about the battle of the caterpillars).

Part 1 is available here (Part 2 is coming soon).