If your company is finding success today, chances are things are going to change in the future. With the rapid pace of today’s global marketplace, new products and services are emerging faster than ever before – creating more competition and higher consumer expectations of consumer packaged goods.
To keep up and find success well into the future, the time is now to bring about disruption in your company.
But what actually is disruption? Most think roadblock. Or a need to change course. Not surprisingly, disruption makes many executives uneasy. There’s an initial gut reaction to hold onto current strategies, plans and budgets. But the reality is most CPG companies severely need to disrupt their innovation perspective.
Innovation is not just about taking risks or creating ideas. It is also not just limited to your product development or marketing team. True innovation must be held at the core of your company, pushed through to all teams, and rightly executed. In order to maneuver innovation and secure your company’s success in the future, the following four steps can help navigate your roadmap towards disruption.
1. Balance your (innovation) portfolio. Many multi-brand CPG companies are challenged by the need to innovate across their product portfolio and bring innovations to market quicker than ever before. In many cases, budgets are primarily allocated to bigger brands and products. However, in addition to big ticket research initiatives, CPG companies should also find unique ways to uncover ideas from within.
Open calls for innovation are increasing in popularity and should be incorporated at more CPG companies today. For instance, LinkedIn has a quarterly program where any employee can pitch an idea to an executive team. The ideas can be related to anything — HR initiatives, internal tools or new business lines. If approved, the employee can spend up to three months turning the idea into an actual product or service.
Of course, this type of innovation requires investment, but to create success across all brands, there needs to be a balance of risk vs ROI — and finding it can be tricky. Incremental improvements lessen business risk and provide greater agility but also increase susceptibility to competitors. Big innovation, on the other hand, increases business and investment risk but provides the opportunity to create and fill your own white space. While incremental innovations can improve a company’s agility and speed, big innovations can explore new markets and increase cash flow. All in all, to find true success, a company must create a balanced innovation portfolio – a blend of safety and risk, of quick action at times, and a long-term view at others.
2. It’s not just about your products. Many people solely think of products when it comes to innovation, but innovation extends far beyond that. For example, Samsung’s move from a low-quality manufacturer with no brand name recognition to one of the world’s largest electronics companies was largely enabled through significant investments – not in its products but in training, personnel, innovation systems, and processes.
3. Having ideas is not the same as executing them. Innovation must follow a new norm – abbreviated innovation life cycles – to create a competitive advantage.
A few CPG companies are already in the process of introducing such abbreviated innovation cycles. This allows them to assess risk and return at each step of the innovation process, test consumers’ acceptance, as well as the impact of innovation efforts quickly – ensuring that the best ideas are executed effectively and efficiently.
4. Walk the walk. A deliberate information exchange among everyone involved in the innovation process enables more action and alignment, allowing companies to focus on innovation goals. This focus must be reflected in the organization’s processes and incentives across functional teams. Take Nike, for example, where innovation is built into the company philosophy and reflected in such maxims as “it is our nature to innovate, “be a sponge,” and “evolve immediately.”
In the book Execution: The Discipline of Getting Things Done, now-retired Honeywell International ChairmanLarry Bossidy noted: “If a business needs to develop four new products, I may lower the goal for sales growth and productivity, and raise the goal for new product introductions.” The quote reflects that in today’s disruptive climate, the companies that thrive will be the ones that look beyond immediate dollar signs and sales numbers, and support a culture of innovation.
All in all, the four steps outlined above can help you push a wave of disruption that leads to faster, focused, and more impactful innovation. As global, social and behavioral trends shift the status quo, it is up to each executive to improve their company’s processes and ROI. Are you up to the challenge?