How The Big Guys Can Innovate And Win Today

The world of consumer brands is in the early stages of a full-on revolution: sophisticated newcomers are creating a massive amount of value, quickly.

So it’s easy to understand why so much energy has been poured into studying the ascendancy of these upstarts and the rock stars behind them.

But wait a minute! Did you really think that incumbent companies—with mountains of cash, inspired R&D, deep retail relationships, operational wizardry, and hordes of high quality people—would sit helplessly idle?

Having spent hours talking shop with a number of today’s top corporate innovation leaders, here are four notable emerging developments suggesting that the big guys might soon be having their own day in the sun.

1. Quantity of new ideas. Corporate pioneers are placing significantly more bets on the table, improving the odds that a big winner emerges. Mondelez International’s new SnackFutures unit recently conceived and commercialized four new brands “at warp speed,” according to Brigette Wolf, the group’s leader. Betsy Bluestone, Commercial Discovery Leader for Procter & Gamble’s internal startup studio P&G Ventures, spoke of a similarly productive run in her group and elsewhere in the company. Incidentally, both Wolf and Bluestone used the same term to describe the goal: “transactional learning.” These are micro-scale live experiments. Going the way of the dodo bird: plodding old school launches with one big reveal, massive budgets, and an armored tank division of sales people rolling out. Making small bets– lots of them– is how successful private entrepreneurs operate, and is just plain better. Sorry, Mies Van Der Rohe: in this context, more is more.

2. Brand new brands.  “MAVERICK IS REENGAGING,” the Navy staff lieutenant excitedly proclaimed in Top Gun’s penultimate scene. After decades of parking most innovation inside big flagship properties—a safe bet, but limiting— big companies are once again creating new brands en masse. The timing helps: conditions for brand creation are more favorable than ever, thanks to the emergence of social media, eCommerce, and greater consumer openness to new stories and names.  Eric Lent, SVP-Upscale Brands at the global hotel leader IHG, cited VOCO, a new brand that they advanced from a blank piece of paper to launch in a lightning-fast 14 months (more on the “need for speed” below). Mondelez’ Wolf referenced her group’s new brands CaPao and Dirt Kitchen; P&G Ventures’ Bluestone pointed to newbies such as Zevo, a modern kind of insect killer, and OPTÉ skin tech. Kellogg’s Chief Growth Officer Monica McGurk was recently touting their nascent Joy BÖL brand (I tried it; it’s easy to prepare and quite tasty, plus anything with an umlaut rocks).  I do a lot of new brand creation— for behemoths, upstarts, and my company’s own ventures— and can attest that these concepts are top notch.

3. New models for external collaboration. “Stop trying; start buying,” argues the cynic, positing that giant platinum-priced acquisitions are the only way incumbents can grow. Granted, the sizzling M&A market shows no signs of slowing (Unilever, for one, has been a rampaging Pac-Man lately; if you’re a startup founder, cancel your afternoon meetings and get your book to them immediately). Nevertheless, corporates are actively developing a third path to growth: startup collaboration. “My dream is that we forge a partnership with several promising early stage companies that eventually become big growth drivers for the mother ship,” said John Haugen, head of 301, Inc., the “Emerging Brand Elevator” at General Mills that is cited by many as one of the best in the game. 301, Inc. has made at least ten investments; one of them was an early position in Beyond Meat, which didn’t become part of General Mills but did emerge as one of the hottest IPOs in years, presumably providing 301, Inc. with a win in terms of a strong financial ROI. A good contingency plan.

Similarly, Wolf and her team aim to build a portfolio of both internally-created new concepts and external holdings. “This is not a matter of ‘either, or.’ It’s ‘yes, and,” she said. One of their outside positions is in a snack startup called Hu (pronounced “hyew,” as in human). 

I caught up with Hu cofounder Jordan Brown, who gushed about the relationship so far: “Their contributions have been ‘next level.’”

Rizal Hamdallah, Global Chief Innovation Officer at Ocean Spray, also likes external collaboration, and connects into a number of networks to stay on top of the latest. He noted, however, that “an internal approach is the strongest.” To Hamdallah, a company’s ability to develop and perfect its own innovation capability is critical to its long term prosperity.

4. Modernized internal structure and practices. Next time you talk to a corporate innovation leader, play “agile” bingo: it won’t be long before this popular method for speed and nimbleness is mentioned. Aside from new operating methods, a number of companies are paving the way for innovation by creating exploratory vehicles that are wholly-owned but relatively removed from the powerful forces that can hamper innovation in the normal course. Wolf, Bluestone, and Haugen all operate semi-autonomously (my words, not theirs). Geographical separation helps, too. Hamdallah and his team recently opened an Ocean Spray incubator called “The Lighthouse,” which operates in downtown Boston instead of company headquarters in Middleborough, MA… 50 miles and a world away. 

The key, they all say, is senior leadership support that is at once strong and patient. “Most external startups don’t begin to show real traction for five years or more,” said Haugen. “This is a much different timeline than what big company leadership is used to.”

Challenges still abound. It is tougher for corporates to launch new brands with the founder stories that consumers crave. Fast adaptation can be difficult, especially if the necessary pivot crosses lines between business units. The jury is out as to how effectively big companies can partner with smaller outsiders; this model is still new has a few skeptics. And corporate conservatism and red tape will never totally disappear.

Nevertheless, each of the corporate leaders to whom I spoke was optimistic about what’s next. “We can deliver results in the present, while creating the future,” said IHG’s Lent.

In competitive sports, “why not us?” is a powerful motivator for teams irked by watching others bask in glory. This mindset pervades in many corporate innovation centers.

“There are so many fabulous brand new brands out there today,” said Wolf. “Why can’t some of them be ours?”