GOING PRO:

GOPRO CASE STUDY

EXTERNAL VIEW:THE CONDITIONS
1. INDUSTRY / MARKET
A NEW MARKET
The Ride the Wave Process can be used to find new opportunities in any market or
industry and with any type of product or service. As an example, let’s go through
each of the three principles and look at a company like GoPro through the eyes of
the surfer. Given GoPro’s significance to the sport of surfing, it’s fitting to use the
principles to examine the company’s external and internal challenges. In using the
process, we can look at what has caused GoPro’s problems and evaluate what the
company did to overcome those challenges and find success. From the time of the
company’s inception in 2002, GoPro has singlehandedly created a new category
within consumer electronics. GoPro was the early market leader in portable cameras
and had cornered the market through incredible hardware and beautiful design. The
cameras were durable, could be used in all kinds of environmental conditions, and
brought the action sports market to life.

METEORIC RISE
GoPro had essentially created a new market within consumer electronics and was
the category leader within a period of a few years. The cameras were used to film
the death-defying feats of action sport athletes, who began to self-produce short
clips that showed them catching waves, base jumping, and “going pro” in their
various sports. The company became one of the most well-known brands in action
sports and had the benefit of free marketing anytime someone posted GoPro
footage on the web. The company had built its own community, had loyal followers,
and created products that gave athletes of any skill level the ability to share their
sporting exploits like never before. GoPro focused on its strength—hardware. The
company created cameras that were a staple among modern athletes and worn by
the most well-known athletes in action sports. GoPro became a household name
 and the first in its category to capture the experience of action sports and share
these experiences with the world.

EPIC FALL
GoPro cameras were originally meant to meet the needs of action sports athletes, but over
time, they started to gain mass appeal. Unfortunately, competitors caught on and GoPro had
to defend its action sports niche. Competitors with lower cost options started to enter the
market, and larger companies with deep pockets were able to offer cameras priced under
$100— roughly a third of the cost of a GoPro camera. At its highest point, GoPro stock traded
at $87. At the time of this writing in January 2017, the stock was at $8. GoPro had suffered a
significant drop in its stock price, and revenue had fallen from $420 million in June of 2015 to
$220 million in June 2016. The conditions had changed, and GoPro was too slow to deliver
new products and services to the market. The company was left to fight for its own
customers and had to rethink how it would fulfill their needs in the future.

2. CUSTOMER
USER OPTIONS
GoPro was the dominant player in portable cameras, but competition entered the
market with alternative camera options, and the market became saturated over
time. There were numerous user options for customers and offerings anywhere from
$99 to $499 per camera. The price point was far below what GoPro was asking for
its cameras, and competition was stealing customers from GoPro by undercutting its
business with a less expensive option. The market became fragmented. There were
too many user options, and GoPro started to lose the foothold it had built over the
years. Customers found lower cost options that could match GoPro’s picture quality
as the camera technology on smartphones improved and became less expensive
over time. GoPro had established a strong customer base within the action sports
market, but began to lose ground with new users who found competitor cameras
cheaper and easier to use. Bigger and more dominant players that started providing
new options to users slowly eroded any momentum that GoPro had generated in
the mass markets.

EVERYDAY CAMERAS
GoPro wanted to move beyond its niche of action sport athletes and into a more
mainstream market to be seen as a camera for everyday use. The vision was to
expand usage among consumers doing “everyday activities,” but who never
thought to capture these activities on camera. With the advent of social media and
self-publishing platforms for photos and video, it became more and more
acceptable to post self-created content of yourself doing just about anything from
running to playing Frisbee with your dog, or even jamming on a guitar in your room.
People’s private lives became more public, and they needed a way to capture it on
camera. Personal cameras became more accepted for everyday use, and cell phones
 were suddenly capturing incidents never caught before on camera. This would be a
new market for GoPro to enter, but providing a simple, easy-to-use option would
prove more challenging than anticipated.

SOFTWARE AND APPS

In addition to offering a quality camera at a good price, consumers wanted to be
able to edit their footage and turn it into high-quality videos. Unfortunately, GoPro
had spent over ten years focused on building cameras, but had done little to
nothing to help customers with their biggest need—taking all that high-quality
footage and actually doing something with it. As someone who bought one of the
first HERO cameras, I too am guilty of collecting hours of snowboard, wakeboard,
and surf footage, but doing nothing with it. GoPro needed to bridge the gap
between its hardware and the end video product, but had not developed the
editing software or applications that customers needed. For a period of time, in
order to edit GoPro footage, you needed at least some level of technical expertise.
For action sport athletes or to the everyday person filming their lives on a GoPro,
editing was an inconvenience and a challenge. It also became a deterrent to buying
one as well.

3. COMPETITION
DIRECT
GoPro has always faced competitive threats, but over time, competition increased,
and the market GoPro had masterfully carved out soon became crowded. The
conditions became more challenging as GoPro began to expand into markets
beyond its core customers and struggled to attract customers who were not action
sport athletes. GoPro had direct competition from companies that offered a similar
product in the same category and that had the same goals of providing a high-
quality POV camera for action sport athletes. The market shifted as larger players
such as Polaroid entered the market and offered a camera called the Cube, which
competed with the GoPro HERO4 Session. The HERO4 Session launched at a $399
price point and was undercut by the Cube, which sold for $99. After multiple price
reductions, GoPro settled on $199 for the Session, but the damage was done.
GoPro struggled to differentiate itself, and direct competitors saturated the market
with low-cost options that eroded its share of the business.

INDIRECT
As GoPro attempted to enter the mainstream mass market, the company faced
indirect competition from large, established brands that offered a similar product,
but in a different category than GoPro. The action sports market was virtually
created by GoPro, and most traditional camera companies such as Sony, Nikon, and
Canon had similar products focused on a different customer segment than GoPro.
 But as the action sport market began to grow, competitors began to market their
products as alternatives to what GoPro was offering and had the backing of well-
established brands in the camera market. Drones, for example, had been in the
market for years, but began to become more prevalent as acceptance of them
started to grow. They were never intended to be used to film action sports and had
mainly been used for filming aerial views, but eventually, they became an indirect
competitor of GoPro. As a result, GoPro had to develop its own drone to enter
another congested market, but the company struggled to defend its share of the
market as additional competitors encroached on its turf.

REPLACEMENT
Direct competitors with similar products and indirect competition from traditional
camera companies challenged GoPro. There was also replacement competition
from products that were in a different category than GoPro, but that provided a
camera option that could be used instead. As smartphone technology improved,
mobile devices became a convenient replacement option. Consumers with
smartphones had a high-quality camera in their pocket. They could use devices
similar to how a GoPro would be used, but that took advantage of the capabilities
that smartphones offered. The phones allowed for easy capture of activities, the
footage was saved directly on the phone, and you could share the footage online or
use editing apps to create short movies. GoPro had excelled as a hardware
company, but started to lose the market when direct, indirect, and replacement
competition started to offer similar products that were more convenient to use and
had capabilities that GoPro had not yet conceived of offering.

INTERNAL VIEW:SKILLS
1. MINDSET
ACTION SPORTS
GoPro faced fierce competition and needed to change how it approached the
larger mass market. The organization needed to think more progressively about
what skills and capabilities would be needed to stay competitive in the new market
conditions. GoPro had to change its mindset toward skills and think progressively,
like the surfer, about what it needed to do differently. The company was locked into
an action sports mindset and had focused on that core audience for so long that it
did little to expand beyond its current capabilities. If GoPro was going to progress,
it would need to change how it viewed itself and its skills within the new market.
GoPro wanted to attract a mainstream audience that would attach a camera to a
baby stroller, sailboat mast, or the collar of a dog. GoPro held onto its action sports
market, but changed its mindset about how its camera could appeal to the larger
mass market.
 MIX AND MATCH
GoPro was protective of its cameras and the footage created by its community on
these cameras. The company’s mindset was that customers should not be allowed
to use competitive cameras to capture footage and mix that footage with GoPro
footage or use competitive editing and production applications. The fear was that
competitive platforms would cannibalize GoPro market share and pull established
customers away from the products. GoPro wanted its customers to use GoPro
products only, but the company did nothing to offer new products or services to
fulfill customer needs. GoPro decided to change its mindset and encouraged users
to capture or edit footage on any application that was convenient for them. GoPro
also changed its mindset about competitor footage and just wanted footage to be
produced, even if through a competitive platform. GoPro’s mindset prevented the
company from seeing the opportunities created by software and applications. Over
time, however, the company began to take steps to address its skill gaps and
capability needs.

HARDWARE COMPANY
For years, GoPro had focused on product development and designing premium
camera hardware for customers. The company’s focus was on premium and high-
quality first-person cameras, but little time had been spent thinking about how
customers would access that footage or what kind of platform they would use to
edit it. GoPro began to see the opportunities of offering premium editing and
production applications. Instead of strictly seeing itself as a hardware company,
GoPro realized that it could be a content-production company that offered multiple
ways for customers to fulfill the needs that GoPro had ignored for so long. GoPro
began to hire developers with capabilities that could help them close the gaps on
internal needs and changed how the company perceived its own capabilities. Taking
a cue from the surfers who they had supported for years, GoPro adopted a
progression-based mindset about its own skills and began to build those needed
capabilities.

2. SKILLS
LEADERSHIP
As GoPro began to explore new opportunities within the market and changed its
mindset about the type of company it wanted to become in the future, the
organization started to look internally at its current skills and how to bridge the gap
to the new organization of the future. GoPro and its early leadership team
possessed a set of skills that helped make GoPro one of the most well-known
brands within action sports and also consumer electronics. When faced with new
challenges, however, the company realized that it did not have the right talent to
execute its desired objectives and that if it wanted to progress as an organization,
the company would need to build new skills. GoPro began to add new skills within
leadership teams and evolved as an organization. The organization was forced to
purge some of the early employees that had helped to build the organization—
about 7 percent of its workforce in 2016, but found new leadership that could move
them from a hardware company to a modern software company.

HARDWARE
GoPro’s core competency was creating durable products with a premium design.
This skill developed into a core capability and made GoPro successful over a ten-
year period. But as camera technology improved and as competitors developed
quality offerings that caught up with GoPro, the company had to lower its prices in
order to compete, losing the key differentiator that had brought success. GoPro
changed its mindset about its skills and started to think beyond hardware. In
embracing the new market conditions, the company realized that it was not fulfilling
a major need of the customer and that competitors could solve these needs and
gain significant market share in the process. GoPro realized that the hardware-first
approach was coming to an end. The company would need to adopt a mindset
toward software and develop an entirely new set of skills that it did not possess in-
house. GoPro hired developers and added those skills to the organization by self-
producing the skills it needed.

SOFTWARE
GoPro needed editing software expertise and began to develop its own talent, but
it was taking too long to build those skills. While the in-house approach was the
right move, the company soon realized that other companies were already offering
editing software and had platforms that would work well with GoPro product
offerings. The company thought progressively and realized that strategic
acquisitions and essentially “buying new skills” could help fast-track in-house skills
and bring editing software to customers faster than trying to build these skills in-
house. GoPro purchased two video editing start-ups for $105 million. At the time,
this represented 22 percent or almost one fourth of the company’s $474 million in
cash. Merging the new acquisitions with GoPro’s internal software teams allowed
the organization to move faster toward building new skills. The company’s mindset
and willingness to change how it viewed its skills improved the business and built
new skills into the organizational capabilities that were now needed in the new
market.
3. CAPABILITIES
COLLECTION
GoPro added new software skills by developing talent in-house and acquiring those
skills through strategic acquisitions. This process started turning individual skills into
organizational capabilities. Adding software and editing skills to the company’s core
hardware competencies filled a significant skills gap identified within the
organization and also solved a major problem for customers. Users of GoPro
cameras would now be able to capture, access, edit, and share content more easily,
and GoPro would be able to provide an end-to-end process that it had not been
capable of before. By changing its mindset and opening itself up to adding new
skills, the company narrowed a capability gap between its cameras and
smartphones. Users would be able to do everything their phones were capable of,
use a more durable product, and not chance wrecking their phones or losing
personal data. GoPro also made its new products more user-friendly by adding a
display screen to easily select settings and giving the cameras Bluetooth and Wi-Fi
capabilities to make collecting and storing content easier.

CREATION
As users collected content, they were now able to use the new GoPro software to
edit and produce videos. The software platform gave users a desktop editing
experience and provided a content-creation solution that could be used regardless
of the type of camera. This gave GoPro a way to monetize a new service that helped
to build from its current capabilities as a hardware company to that of a software
company. But moving from a hardware company to a software company would not
be the end goal for GoPro. Leadership realized that the long-term goal would be to
become a content-creation company. This was a departure from its start as a
hardware company, but a good move if the organization wanted to stay relevant in
the market. GoPro created a platform for its users to edit their footage, but also
created a way to have non-GoPro users try its software and even buy one of their
cameras. Adding software as a capability closed a significant skill gap, but it also
created a gateway product for new customers to find out about GoPro.

SHARING
After solving the content collection and creation challenges, GoPro next looked at
easy ways for customers to post and share their videos. GoPro realized that the
market had progressed to the point where virtually every cell phone on the market
had both Bluetooth and Wi-Fi capabilities. GoPro began adding those capabilities
to cameras so users could upload and share videos without having to use a desktop
computer. GoPro also created a platform designed to be an all-in-one platform for
videos to be uploaded, edited, and shared. The new offering is called GoPro Plus
and is a subscription-based model that allows users to do editing and production
 within a single platform. No longer are users mixing and matching platforms and
applications; they are using a single site and leveraging cloud storage so they have
all their video content in a single place. Even with this success, GoPro would still
need to explore risk and take on new challenges without letting the market waves
wipe out the company.

STRATEGIC VISION:RISK
1. OBJECTIVES
PORTFOLIO
After examining the market conditions and identifying areas where the company
could add new skills and capabilities, GoPro began to take action and implement its
main strategic objectives. In addition to adding new skills and capabilities, GoPro
needed to create a broader product portfolio. For years, GoPro did not expand its
product offerings. However, the company had reached a point where it would need
to recalibrate the business and move from a hardware company to a software
company. GoPro focused on product development in-house and acquired new
products to build a more diverse portfolio. The focus was on new products, new
platforms, and new partnerships that would grow the company. For GoPro and its
leadership, these new priorities and objectives involved a tremendous amount of
risk. But like the surfer, GoPro used risk as a compass and explored adding new
products to its portfolio. Stepping into untested waters was a new risk for the
company, but one that it needed to take.

MASS MARKET
GoPro firmed up the back end of the content-creation process by offering software
and additional applications to provide a full end-to-end solution that competition
did not have. The company was creating a new set of products, which was risky, but
so was wading into the deep waters of the everyday camera market. Mass retailers
favored the larger companies that had deep pockets and established brands. GoPro
was attempting to expand beyond action sports and wanted to become a solution
for consumers in the mass market. This was a major risk. The everyday camera
market was highly fragmented, cost sensitive, and had aspects of seasonality that
could create all-or-nothing scenarios. GoPro would need to capture a significant
portion of its sales during the second half of the year and during the holiday selling
season. GoPro already had its HERO4 Session launch undercut by Polaroid, and
mass-retail competitors could do the same to prevent the company from gaining
additional ground in the market.
 INTERNATIONAL MARKET
As the domestic market became tighter and more fragmented, GoPro began to
consider markets outside the United States. The international markets were at least
one to two years behind the markets in the United States, which gave GoPro the
time to develop a retail plan for capturing international business. The two markets
outside the United States that offered the most opportunity for growth were Europe
and China. GoPro began to build out a retail footprint for Europe and China as well
as developing the marketing channels that would be needed to drive the business.
These new markets were developed and mature, but GoPro represented a fresh
entrance into the established electronics market. This was another major risk for
GoPro, but entering the new market conditions, with a new set of skills and
capabilities, would help make GoPro more effective with its tactics.

2. TACTICS
PRODUCTS
In taking on new risk, GoPro aligned itself with what was changing in the market
and started to add new products to its portfolio. Product expansion was a strategic
objective for GoPro, but tactically, this approach worked to create a new way to
offer new platforms and services. GoPro made its new products mobile-friendly and
had a solution from capture all the way to the end production process. New
cameras also have touchscreen capabilities, voice control, and a wireless remote
that provides mobile, but also offers hands-free use. GoPro also developed the Quik
Key that allows footage to be transferred from a HERO camera to a phone via an
external flash drive. There is also a live broadcast feature on all new cameras and a
Quik App for mobile editing. GoPro is offering mobile products and on-the-go
content creation that eliminates other platforms from the equation. The company
has introduced new products that serve the market better and encourage end-to-
end storytelling on a single GoPro platform.

PROMOTION
GoPro had developed the products to support users, but also the marketing
capabilities to drive product promotion. GoPro has a unique relationship with its
users in that the videos created by surfers and base-jumpers all create free
marketing content for the organization. Digital marketing is driven by users who
post videos to their YouTube or Vimeo pages and show potential GoPro customers
how they can also “GoPro” by capturing their exploits on the devices. By providing
new product options that make it easier to create and produce content, GoPro was
essentially supercharging its already powerful marketing and sales engine with
customer produced content. The company was also able to leverage the new
market conditions created by social sharing platforms to promote these videos to a
wider audience. By adding new products to the portfolio, which allowed for easy
 sharing, and using one of its core capabilities of marketing promotion, GoPro was
minimizing its risks through new product tactics and promotion.

PEOPLE
In order to execute these various strategic objectives and tactical initiatives, GoPro
needed to hire, train, and develop the talent to execute on the vision. From a
tactical perspective, GoPro has had the ability to pull core users into the
organization from the action sports arena and retained its authenticity to a
community of people who are dedicated to capturing their lives on cameras. From a
people standpoint, the company has a tactical marketing advantage because the
core users of the products are also the best talent for the organization. GoPro has a
relationship with the end user of its products that is stronger than any other
company in business today. GoPro has built out its product offerings and focused
heavily on new technological capabilities, but the next area of focus will need to be
on its people. GoPro needs to go back to what made the company so successful,
providing tactical, on-the-ground marketing and sales to consumers directly from its
own people.

3. PROJECTS
NEW PRODUCTS
GoPro identified areas where it needed to match the needs of the market and
created a set of tactics to help execute on these new objectives. This process
involved acquiring new skills, but also building new core competencies that would
align them with the needs in the market. GoPro continued to explore risk, change
its mindset, and look out at the horizon to find the next wave. One of those next
waves was a virtual reality project and a device that had multiple cameras bundled
together to capture a 360-degree view. The Omni and Odyssey started out as
projects but became reality as GoPro continued to evolve as an organization. After
hardware and software, making the move into VR was an easy decision for GoPro.
Exploring risk with a new product was also necessary for GoPro to stay competitive.
GoPro learned from its past mistakes about not reacting to the changing conditions
sooner. The company is firmly in the middle of what’s next in VR and positioning
itself to tackle each new market challenge as it arises.

NEW PROMOTION
GoPro continued to evolve its marketing and sales as well as the way the company
engaged with its user community. Promotion focused on attracting new customers
that had not used a GoPro camera before, but also on having existing customers
upgrade to newer hardware and take advantage of improved product offerings.
GoPro started offering free two-day shipping and free returns on all orders, which
made it easy to order cameras and less of a hassle if you needed to make an
exchange. GoPro also created new promotional opportunities to motivate
consumers to pull the trigger on new cameras and continued to target the mass-
market audience, using opportunities to showcase the products in new ways. The
movie The Martian has extensive GoPro filming throughout and highlights the daily
uses of the camera by an astronaut. Matt Damon is ways away from the action
sports market, but the movie was a creative way to promote the cameras and also
an easy way to demonstrate these capabilities.

NEW PEOPLE
GoPro created a new set of products for customers, but had entered into a new
arena where technology and software could create more challenges for users.
GoPro developed options for users who needed to have problems resolved and
questions answered. GoPro created support tools in the form of FAQs, customer
service lines, and online chats to help customers resolve issues with their hardware
or software. GoPro also conducted brand ambassador sessions for its professional
action sport athletes to try new products and even brought CEO Nick Woodman to
these sessions to help work through the capture and creation process. GoPro
embraced the new and changing conditions by finding out what the customer needs
were and determining that the company needed a new set of skills to execute on its
objectives. GoPro changed its mindset about the organization and began to take on
more and more risk in order to close in on its vision. Using risk as a compass, the
company was able to bridge market and skill gaps that had previously challenged
the organization and set a new course for the future.