Reimagining Potential

Late last year I was working on an M&A deal with a public company that was selling a business they hadn’t been able to grow.  The principal said to me over dinner “I can see you have a process to find the disruption, that would be a huge benefit to this team”.  This was interesting feedback and set me thinking about the playbook he had observed.  In the next two blogs I want to suggest some ways in which you can inject new ideas and impetus into your strategy refresh. I think it is important to distinguish between large players, often with a multi-brand portfolio and fast-growing insurgents.  This week it is the scale players I am going to focus on. 

First, you must take time to look afresh at the world around you. What is changing in your category structure?  The reality of consumer products is categories are very stable and rarely get disrupted.  There are enduring fundamentals, but quite significant shifts can occur at the edges which affect how your brand portfolio fits together in a changing competitive set and product formats, flavors and secondary benefits can evolve substantially.  Margins and pricing can also change a lot, sometimes unintendedly so.  Many public companies reorganize so much they often lack comparable data beyond 2-3 years.  This is disabling.  Work with your market tracking providers to assemble a 10-15 year view of the category.  Look to really understand what is changing and what is not changing.  Both angles are useful for building a bigger future. Every time we have done this we find a clear set of priorities to focus on.  There is also usually a substantial “leaky bucket” often from poor resource management and team turnover that can have outsize P&L consequences.  Your strategy can be grounded in these important multi-year insights.

Second, revisit the consumer fundamentals. The drivers of preference, which are often quite functional in nature.  Look objectively at how you perform.  Blind product tests are often a thing of the past, either not measured or parity weakly accepted to manage margins. Your whole strategy must be built on what matters most to the consumer today and what will matter to them tomorrow. You must address important weaknesses, even if this requires investment.  No advertising will compensate for a brand position or product specification that falls short on the fundamentals that matter.  If you are a big brand, you have little choice but to seek to win on the primary drivers.  Across your portfolio there are likely to be only a handful of spaces for lead brands to occupy.  Sharply defining your brand in a clear consumer space is essential and can have been lost over years of tinkering and incremental, tactical variant activity.  Now is the time to reset.  These fundamentals matter more than anything.  Channeling the necessary energy and resource into core superiority will make more difference to your future than any emerging new idea. Be the best at what matters most.

Third, extend this thinking to imagining where your categories could evolve to. Use outside facilitation to help your team explore this.  You must obsess about unmet consumer needs.  What does the consumer really want solved? What is the outcome they really aspire to that today’s products only partially deliver against?  In nearly 30 years in consumer products, I don’t remember any situation where the innovation potential of a category was tapped out.  I can think of many examples where something new changed the trajectory of entire categories, developing the consumer experience and the category value.   This is often missed by the scale incumbents.  Don’t be that business!  This workstream requires clear choices.  You will likely choose the benefit areas that best fit your science & production capabilities and your brand positions.  You must understand the potential size and technical feasibility of each area, so you don’t waste a lot of effort on small and difficult areas with limited chance of a big outcome.  This is a process to select the big bets that drive the next generation of your brand’s potential.  Use the choices to focus your R&D teams and outside innovation efforts, even as far as M&A projects.  Some innovations may work across your portfolio, others may fit an individual brand.  Launching innovation is expensive, but you can materially influence that cost by the choices you make. Get the sequence and balance of commercial value right to allow you to achieve more.  Start a virtuous circle of new growth, creating new resources.  With better conversion of consumer choice, you develop both market share and brand equity.  If you have real innovation that the consumer wants and deliver it at scale, it will be highly attractive and highly incremental to your P&L.

Now the final step.  Package this plan into a coherent, choiceful, compelling roadmap. The big danger of larger organizations is your strategy lasts one annual planning cycle and then you get distracted.  Activity based management is key.  Turn the ideas into quantified, costed action plans.  Validate them with the consumer to mitigate risk and sharpen the ideas further.  Be deliberate on sequence and risk to make your resources go as far as possible.  Use early wins to power longer term bets in a self-funded way.   Apply real project management disciplines and carefully align functional strategies to the big choices you have made.  This will create the consistent focus that is the prerequisite of making real progress, building your brand, P&L and your capabilities simultaneously.  Great strategy really matters.  The payoff is always in how well you act on the ideas.