With the recent collapse of HBC (written about here) and a looming recession stirring familiar unease, I’ve been thinking about the kinds of brands that hold steady when the ground shifts. The ones that not only weather adversity, but use it as a moment to deepen their advantage. The current economic situation is hitting familiar nerves—uncertainty, budget cuts, businesses scrambling to adapt. But if there’s one thing the past few years have shown us, it’s that some brands don’t just survive these moments. They use them to get stronger.
The Advantage of Making Something New
There’s a story in the business world that plays out over and over again. A company finds success. It figures out how to make money. It builds a machine that captures value, milks its market position, and extracts whatever it can from the foundation it has laid. Then, often without realizing it, the same company starts the slow drift toward irrelevance.
Call it the erosion cycle. Or worse, the vanishing point—the moment when a brand becomes so disconnected from its original purpose and audience that it’s no longer visible in the cultural or competitive landscape.
Because the best companies—the ones that stay ahead, that matter in culture, that keep moving—don’t just capture value. They create it.
THREE PATHS
The Three Paths: The Builders, The Harvesters, and The Depleters
A company (or an individual, for that matter) has three broad choices in how it plays the game of competitive advantage:
The Builders (Value Creation + Value Capture)
These companies are architects of the future. They generate new ideas, products, experiences, or ways of doing things that shift how people engage with their world.
At the same time, they have a model that lets them hold onto and reinvest that value, rather than losing it to competitors. It’s a dynamic cycle: create, capture, create more. This is where brands find longevity and sustained cultural relevance.
- Example: Apple’s early years under Steve Jobs, where breakthrough products like the iPod, iPhone, and App Store reshaped industries.
- Example: Red Bull’s media empire, where they built value beyond energy drinks by owning extreme sports culture.
The Harvesters (Value Capture + Value Extraction)
This is where many successful companies drift once they get comfortable. They’re still bringing in revenue, still holding their position, but they’re mostly optimizing existing ideas rather than making new ones.
The business is more about monetizing the thing they’ve already built than about reinvention. It can work—for a while. But without fresh value creation, the advantage starts to wane. Margins shrink. Competition closes in. The ground beneath them begins to dry up.
- Example: Netflix, which started as a disruptive force but has now shifted into primarily squeezing margins through price hikes and account restrictions rather than reinventing streaming.
- Example: Facebook (Meta) post-2016, where engagement strategies became more about algorithmic exploitation than innovation.
The Depleters (Value Extraction + Value Destruction)
The death spiral. This is when companies have moved entirely to extraction mode. They cut costs at the expense of quality.
They over-monetize at the expense of user experience. They sacrifice long-term viability for short-term gains. This is the end of the road—brands in this phase might not even know they’re in it until it’s too late.
- Example: Sears and Toys ‘R’ Us, which were acquired by private equity firms that extracted value rather than reinvesting, leading to their collapse.
- Example: Hudson’s Bay Company, which I wrote about earlier this week—prioritizing real estate sell-offs and discounting over reinventing its core retail offering.
The sustainability of competitive advantage follows this arc. The more a company leans into value creation, the more resilient its advantage. The more it leans into extraction, the closer it inches to irrelevance.
THE IP PLAY
Why Making Matters More Than Monetizing
If there’s one thing we’ve seen time and time again, it’s that brands and businesses that commit to value creation—not just optimization—are the ones that thrive. That’s why more and more companies are turning their focus toward original formats, IP-driven storytelling, and product experiences that hold attention on their own merit—not just because they’re supported by a media budget. It’s not about making more things. It’s about making the right things—ideas that resonate, endure, and offer real strategic lift. Whether in content or product, the challenge is the same: stop filling space and start building something worth remembering.
This isn’t just a theory. The best examples of value creation in content and product are brands that built things people actually care about:
- Nike and Wieden+Kennedy didn’t just make ads; they made cultural moments.
- Red Bull didn’t just sell an energy drink; they created a global media empire.
- LEGO didn’t just manufacture plastic bricks; they built a universe of storytelling.
- Apple didn’t just build computers; they redefined entire industries.
What all of these have in common is that they went beyond execution and leaned into ownership. They didn’t just make campaigns or products—they made IP.
THE TRAP
The Hudson’s Bay Company is a perfect example of what happens when a brand shifts from building to harvesting, and ultimately to depletion. I wrote about this earlier this month—how one of Canada’s most iconic retailers lost its way by failing to reinvest in what made it matter in the first place. It’s a case study in what happens when value extraction becomes the default strategy.
This isn’t just a problem for legacy brands. It’s the natural endpoint of any company that leans too hard on efficiency at the expense of invention. The Harvesters optimize until there’s nothing left to optimize. The Depleters extract until the brand no longer means anything to anyone.
And then? They vanish.
A BALANCING ACT
The Tension Between Value Capture and Value Creation
Of course, this isn’t easy. Value creation takes time. It requires investment in ideas that may not pay off immediately. It demands a level of patience that companies focused on short-term returns often can’t afford.
But the alternative? An endless cycle of chasing someone else’s innovation. Competing on price. Fighting for relevance instead of defining it.
The best brands—the ones that endure—figure out how to balance the two. They create enough value to stay ahead and capture enough of it to sustain their business. They never let the capture outweigh the creation.
FINAL THOUGHT
What This Means for Brands (And Why It’s a Wake-Up Call)
For any brand or agency reading this, here’s the question: Where do you sit on the spectrum?
- Are you investing in making something new, or just optimizing what already exists?
- Are you capturing value in a way that feeds future creation, or just pulling value out?
- Are you focused on building IP that holds its own weight, or are you stuck in someone else’s sandbox?
If you’re thinking about how to create value in your space—real, lasting value—we’d be glad to explore it with you. These are the kinds of conversations we care deeply about, and we’ve seen firsthand how transformative they can be. Because in the long run, making is the only advantage that matters.
