Innovation Perspectives - Your Trend Spotting Team

This is the eighth of several 'Innovation Perspectives' articles we will publish this week from multiple authors to get different perspectives on 'Who should be responsible (if anyone) for trend-spotting and putting emerging behaviors and needs into context for a business?'. Here is the next perspective in the series:

by Adam Schorr

It is critical that businesses have a clear sense of the state of their current marketplace. They need to understand the needs of their customers, the relevant business models, the competition... But all of this is only good for keeping the lights on today. It does nothing to insure the future viability of a company because the world changes. New competitors emerge from nowhere. Business models grow stale and new ones are created. Customer needs change. In order to insure a healthy future, companies must remain aware of emerging trends, identify which are relevant and develop plans for responding.

But who should do that? The market research or insights group? Marketing? Sales? R&D? Well of course the answer is yes. Every employee ought to maintain a healthy curiosity about their world and do their best to help the company see around corners. But this is not enough. For one thing, these employees have day jobs. Their job is to keep the lights on today. You can add another task to their list but don't imagine for a moment that their current responsibilities won't suffer just a little bit. Secondly, if every employee does this, the company will have quite a bit of trend information and will need to separate the wheat from the chaff and synthesize meaningful insights. And, finally, this all needs to be integrated with the overall vision and strategy of the company.

I believe companies ought to establish standalone innovation groups that would be responsible (among other things) for identifying, interpreting and planning against emerging trends. These groups should report into the CEO directly who must make innovation a top priority - as important as keeping the lights on today. Attitudes need to change. Given the pace of the business environment (which is only getting faster), a company has got to identify its next move before such a move is needed. This is a matter of survival and only by treating trend management as a core competency can a company have any hope of long-term success.


You can check out all of the 'Innovation Perspectives' articles from the different contributing authors on 'Who should be responsible (if anyone) for trend-spotting and putting emerging behaviors and needs into context for a business?' by clicking the link in this sentence.

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Adam Schorr is an experienced innovator and brand manager with a passion for the human soul and its ability to reshape the universe. Adam blogs about innovation, marketing and all sorts of quirky topics at www.adamschorr.com.

Innovation Perspectives - Packaging Up Innovation

This is the sixth of several 'Innovation Perspectives' articles we will publish this week from multiple authors to get different perspectives on 'What product or sector is in desperate need of innovation?'. Here is the next perspective in the series:

by Adam Schorr

While recent years have been a boon for innovation in various industries such as consumer electronics and automotive, the consumer packaged goods industry seems to be stuck serving up warmed over versions of past innovation. But while product innovation in CPG is badly needed, the true innovation crisis in CPG has to do with the fundamental business model. Although the players have been changing due to industry consolidation, the CPG industry continues to labor under a decades old business model whose foundational truths evaporated years ago.

The essence of the CPG business model is as follows: One group of companies manufactures products that are perceived by consumers as significantly better than the alternatives. Over time, these products serve as the backbone for brands that are loved and trusted by consumers and which are relied on as shortcuts to simplify purchase decisions. These companies sell their products to a second group of companies (retailers) who have expertise in merchandising and who, in turn, sell the products to the end users (consumers).

This model worked out well for the manufacturers when two things were true: 1) Their products were perceived by consumers as significantly better than the alternatives and 2) They had the trust and attention of consumers and were able to motivate consumers to go to the retail stores to buy.

Today, these essential truths are no longer true.

With ample contract manufacturing capacity available in the market, private label goods are proliferating. More importantly, a sizable and growing share of consumers perceive private label versions of products to be as good or better than their branded counterparts. Just as troublesome is the fact that manufacturers no longer have the trust and attention of the consuming public which means they cannot influence consumers to go out in droves and shop in retail stores as once they could. In a world where manufacturers are not producing products that are perceived as significantly better than the private label alternatives and where the 30 second commercial no longer holds a mass audience in rapt attention, manufacturers of branded consumer goods are in a very precarious position. One has to wonder whether the role they play in the CPG value chain is still needed. I can assure you that the retailers are asking this very question and are answering it ever more vociferously in the negative.

Sadly, some of the CPG players draw the wrong lesson from their current woes. Some have declared a war on costs, seeking to drive cost of out of their system so that they can reinvest back in their brands. This is an example of trying to play your game harder. Playing your game harder makes sense when success is a function of skill. But success in CPG today is not a function of skill, it is a function of position. The retailers occupy a privileged position on the competitive landscape. They own the shelves and they own the stores in which consumers shop. Trying to win a battle of costs against private label goods is a waste of time. Branded goods will not only lose this battle, they will undercut whatever raison d'etre they still possess.

All is not lost for the CPG community. As always, innovation is the key to success. Branded goods manufacturers need to focus on two things: 1) Knocking the socks off of their consumers with products that are not easily copied. These fantastic products will earn the attention of the consuming public. 2) Finding a way to recapture the relationship with the consumer.

The 30 second commercial is not coming back as a means of building consumer relationships. Brand stewards must leverage new technologies to turn the attention that their products earn into brand loyalty that can deliver financial returns. Once these two fundamentals have been re-established, CPG manufacturers would be wise to re-evaluate the rationale for funneling all of their sales through a channel that has demonstrated robust support for building its own private label business at the expense of the big brands.

The path of meaningful innovation is the only path to success for the manufacturers of branded consumer goods. They can choose to continue tweaking the current model or to seek a new model. One thing is clear: The market will not wait for them.


You can check out all of the 'Innovation Perspectives' articles from the different contributing authors on 'What product or sector is in desperate need of innovation?' by clicking the link in this sentence.

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Adam Schorr is an experienced innovator and brand manager with a passion for the human soul and its ability to reshape the universe. Adam blogs about innovation, marketing and all sorts of quirky topics at www.adamschorr.com.