Bill Pearce, CMO of Del Monte Foods company recently gave some advice to his peers in a talk. He suggested that they “spend on marketing, capital investment and innovation or risk losing your business in the next 5 years.” He did this in the face of an environment where the management (mostly through avoidance) risk is the name of the game.
Part of the advice was to review what was working and what was not in this new environment. Using a historical viewpoint is a mistake because the “revenue stream now is not where the stream was 12 months ago.” Mr. Pearce intoned that “now is NOT the time to shy away from new ideas” further suggesting that you fund them by cutting current practises that worked in the past, but look dubious now or are break-even. “The companies that invest in innovations and roll out…new services now will reap disproportionate benefits when the economy makes a turn.“
Some sound advice with some innovation risk takers trying to significantly change their position. One such company Henkel-Dial recently launched an all in one laundry sheet…Purex Complete 3-in-1. Their effort is clearly designed to establish a new position in the laundry category. Eric Schwartz Henkel’s U.S. Laundry V.P. Marketing told Brandweek recently that ” in the past we had been fast followers in innovation, but this is the first time we are leading with a game changing innovation. ”
Interestingly it appears that another bastion of innovation P&G, might be a bit behind the curve-ball on this one with their detergent business reported down 2-3 share points in recent quarters in the U.S. Innovation has been the hallmark of A. G. Lafley who will turn over the day to day reigns of his company to Robert McDonald on July 1. It is guesstimated that McDonald, who was mentored by Lafley, will continue or re-energize innovation initiatives as the company faces to an era of thrift albeit perhaps with a bit more of an eye toward making sure that compliance and execution are brought a bit more to forefront.
That may be one of the lessons we learn from innovation effortsin products, processes, advertising, merchandising and distribution. They have to be executed well and the dollars spent on merchandising, advertising and products need to generate the same type of measurable return that you expect out of any effort. Many of the new products we have measured with ShelfSnap, many of the Merchandising efforts, many of the shopper marketing and in-store media efforts show the same (or lower) levels of execution and compliance as those efforts have shown over the last 30 years (see our reports on new item introductions and displays in prior blog-entries.)
Still innovation in products and in go-to-market strategies and services, has always been the lifeblood of the CPG business. Those carry it out will end up with game changing performances that will stand them in good stead for years. The comments from Bill Pearce remind me of the actions of another guy of similar name. Billy Pierce was a world class pitcher for the Tigers, White Sox and Giants…who would have been an everyday, run of the mill pitcher had he not re-invented his style after 6 years in the majors adding a unique slider and change-up to his pitch portfolio. It took two years of hard work to master…but these innovations saw him end his long career as the 5th ranking left handed strike out king of all time.