You know you are on to something when people simultaneously hate and adore what you are doing. A prominent Boston Globe columnist once wrote about a band, “[They] are not merely awful; I would consider it sacrilegious to say anything less than that they are god awful.”[1. Coincidentally the critic was none other than William F. Buckley Jr., the “brains” behind the conservative renaissance of America. This would probably be considered the dumbest thing he had ever wrote, if he hadn’t spent the 1960s advocating against Civil Rights legislation, but that’s another story]
A year later the Beatles sold out Shae Stadium.
Apple has legions of fanboys, but plenty of people believe their computers are nothing but overpriced and stylized pieces of plastic. People get tattoos of their favorite football teams on their arm, but more and more refuse to allow their children to play. CrossFit fits this description. For those that don’t know, CrossFit is a new group fitness regime. Fast Company explained:
The heart of CrossFit is the Workout of the Day (WOD), a common workout begun at hourly intervals throughout the day by cohorts of gym members. All exercises are functional in nature, cherry picking movements from gymnastics, Olympic lifting, army obstacle courses, triathlon training, and calisthenics, designed to prepare athletes for whatever real-world obstacles they may encounter, from police pursuits to lifting newborn twins.
People who love CrossFit really can’t stop talking about the benefits, while the critics can’t stop talking about the risks. I’m guilty of the first. I’ve been doing CrossFit for about 16-months and I often find myself annoying friends with stories about my workouts. In that way, CrossFit is like fantasy football: No one wants to hear about it unless they are involved. But yet, there is an entire online industry both deriding and proselytizing the fitness regime. People go ‘undercover’ to investigate the phenomenon, while others enroll their kids in classes. It has been called dangerous. It has been called a cult. But I think that most apt description is innovative.
Earlier this month I picked up Ten Types of Innovation by Larry Keeley and his team at Doblin. I hadn’t set out to buy the book, but when I flipped through it a passage caught my eye. “De-emphasize reliance on products and technology. These are the easiest capabilities for competitors to copy.” I’ve worked in the innovation industry for about three years. When I tell people what I do, they instantly think of smart phones and apps. The truth is that these innovations are fun and important, but that the most lucrative innovations are within business systems themselves. Seeing this in print made me instantly want to read it.
The central idea of the book is as follows: Innovation is not an empirical science like physics, but there are fundamental types of innovation you can follow to increase your effectiveness. The more types of innovation you combine, the greater your odds for success are. “Our goal here,” they write, “is to codify and clarify what, in our experience, makes innovation work instead of fail.”
The Ten Types of Innovation are (These are from their website, click here to read about them more in depth):
- Profit Model: How you make money
- Network: How you connect with others to create value
- Structure: How you organize and align your talent and assets
- Process: How you use signature or superior methods to do your work
- Product Performance: How you create complementary products and services
- Product System: How you support and amplify the value of your offerings
- Service: How you support and amplify the value of your offerings
- Channel: How you deliver your offerings to customers and users
- Brand: How you represent your offerings and business
- Customer Engagement: How you foster compelling interactions
Today CrossFit is big business. In 2013, the company was on pace to reach revenues of nearly $100 million. Looking at the company through the 10 Types lens reveals six distinct types of innovation at play.
According to J.C. Hertz, the author of Learning to Breathe Fire, the traditional profit model for fitness centers was a basic franchise system. “Every revenue stream, from membership subscriptions to personal training fees and smoothie sales, is split between the local gym operator and the corporate headquarters.” CrossFit is structured differently; it doesn’t see a dollar from memberships or anything the gyms sell. Instead, CrossFit makes money by certifying personal trainers in the methodology, affiliate fees to brand an independent gym as “CrossFit” and a licensing agreement with Reebok.
Greg Glassman is the founder of CrossFit. He is also an ardent libertarian, which means the company is built on the idea of a free market. After the affiliates pay the $3,000 fee they are more or less free to run their business how they want. There are no exclusive geographic zones (I live in Astoria, NY and there are three gyms within one mile of each other.) The gyms can charge whatever they want and sell whatever they wish inside. If a gym wants to cater to the elderly it can. If a gym owner is unsatisfied with the quality of gym equipment he can found a company catering to the concept—and pay no royalties to the company. Today, Rouge, an Ohio based company now ships over 80,000 pounds of weights a year. “This slice of the pie that’s within our control is narrowing, and by design.” Glassman wrote in 2013. “We call this the ‘least-rents model.’
At a traditional gym, the product is the self-service exercise equipment. Most people would independently run five miles on a treadmill and lift weights. In CrossFit the entire exercise is built in groups and measured. A typical hour class is guided by a trainer and features a warm up, strength work and a WOD. Warm ups normally include light running and stretching. Strength work involves traditional sets of Olympic style movements (deadlifts, cleans and squats). A WOD is a 15 minute timed and measured workout that can include running and weights. Each persons’ time is recorded. This is a far cry from the “do-it-yourself” model of the big box gyms.
CrossFit lacks a traditional network, but makes up for it with a robust complimentary goods market. According to Chris Cooper of the CrossFit Journal, “Equipment manufacturers and suppliers, such as Rogue and Again Faster; software developers who help athletes monitor their progress; business mentors who help gym owners overcome initial hurdles” contribute to almost a $1 billion ecosystem. CrossFit controls only a small portion of this revenue but operates as a central spoke. While it isn’t scientific proof, I am fairly involved in the CrossFit Queens community. CrossFit is more or less the platform for the organic/paleo movements within Astoria.
The WOD is undoubtedly CrossFit’s most noticeable product. They also give it away for free. Each day the corporate website posts a recommended workout for free; all they ask is that people record their scores in the comments. In a way, this creates a fremium business model. You can get all of the information online, or pay a premium for in person service. The premium pricing part is what sets the affiliates apart. Most big-box gyms want to maximize the amount of people who sign up, but minimize the amount who actually use the gym. CrossFit applies the opposite idea. They want a small amount of dedicated users, who pay a premium ($100-200 per month). This creates a dedicated local user-base that leads to the aforementioned product system.
CrossFit isn’t so much a product as a lifestyle. The company has successfully created a “work hard, play hard” ethos that attracts affluent risk taking clients. They do this in two ways, by aggressively marketing the concept and actively eschewing excess profit. When reports circulated about people being injured in the program Glassman didn’t apologize. Instead he responded, “”It can kill you, I’ve always been completely honest about that.”
Despite nearly becoming both a noun and a verb, CrossFit actively turns down additional opportunities to create a network. The reason for this is simple. “I’m not trying to make money,” the CEO said, “I’m trying to grow a community.” The result is a brand that seems both extreme and honest at the same time.
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