There is a large and growing body of evidence suggesting that brands cannot reinvent themselves. There is the immovable nature of large financial services companies – which is a nice way of saying that on the whole, they are way too bureaucratic and conservative. But there is also the issue that, once gotten, perceptions about brands in the target audience are hard to get rid of, no matter how much that company changes.

Besides, there are good reasons not to try changing your brand perception. To do more of what your target audience perceives positively and to reduce the negatives could be your best course of action to improve market share, at least in the short run. But that opens up your product to the treat of disruption and any changes at that point might be too little, too late. So what to do?

We have long suggested that the best strategy might be to use diversified brands. That is, to build and fund new brands offering disruptive solutions that may or may not succeed. Using separate brands means that the downside risk is mostly limited to its funding and in addition, the new brand will not have the ‘support’ of the mother brand. On the upside, there is a large opportunity to be the first offering in a new category or the first company marketing to a specific niche.

Being first gives the new brand the opportunity to roll the dice. If it works, a large pay day can be expected and more and more company resources can be shifted away from the main brand into the new brand. In the beginning, the new brand can be started on a shoe string and if the new brand is started using a separate team outside the regular company structure, the entrepreneurial spirit this new venture will foster will energize everyone.

So what type of ventures should be started using a separate brand? There is a fine line between a venture that just requires a new product and a venture that requires an entirely new brand. This depends on the chosen strategy; some launch a new brand for every target audience they deem profitable and might as a result have a few separate brand in the same category. Other companies launch new brands for every product category but keep new variations under the company umbrella. Our advice in most cases is to launch products with the potential to Disrupt under a separate brand, but keep innovation of features or small variations in target audience under the main company brand.