Too big to innovate?

When was the last time you walked into a supermarket and saw a truly new product that was not from a small brand? The shelves are full of the same familiar products, and what is touted as new is often nothing more than a tweak: a new flavour or a different packaging. This is not just a feeling; research also shows that innovation in our industry has reached an all-time low. Research firm Mintel showed in a study that FMCG brands never launched so few genuine new products as in 2024. Even worse, over 65% of all innovations turned out not to be real innovations at all! In the meanwhile, SMEs and private label are actually becoming more innovative. What is going on with the big, famous FMCG brands? Have they become too big to be truly innovative? Or is something else at play? You can read it - and more - in this newsletter.

The innovator’s dilemma

In 1997, Harvard Business School professor Clayton M. Christensen released his book The Innovator's Dilemma. In it, he described how large, established companies struggle to embrace radical innovations. At the heart of the dilemma lies the fact that the very practices that have led to the success of these companies are, at the same time, also the obstacles to real innovation.

Big brands usually have more to lose than smaller brands in the market. Because they have a larger market share, they have to invest more to protect it. As a result, large manufacturers increasingly focus on incremental innovations - such as new flavours or packaging - rather than radical innovations. The big brands, due to their size and success, are forced to play it more safe.

While incremental innovations may seem the safest option in the short term, radical innovations actually provide the most growth in the long term. It is not that large manufacturers do not want to innovate and grow, but their own success makes this difficult. They have so much to lose that they have to play on the defensive - and that makes it harder to attack.

The number one frustration

Ask anyone working at a large FMCG company about his or her biggest innovation frustration, and the answer will probably boil down to something like: it takes ages before a new product can be launched.

Especially in the largest organisations, where numerous departments and management layers are involved, the innovation process is often slow and stagnant. The time-to-market of innovations is long, and what's more, many good ideas disappear into a bureaucratic swamp of endless meetings.

It is a challenge to innovate with speed and flexibility within these large organisations - and that is precisely what frustrates many professionals. But who do you blame? You can hardly hold your colleagues responsible for the bureaucracy within your organisation when you yourself are just as much a part of it. This reminds me of that fantastic billboard campaign by the Dutch consultancy firm Omdenken:

How big enterprises can innovate like startups

Big brands do want to innovate more, but their size and success makes this challenging. Does this mean big brands can never become more innovative? Certainly not! They can become more innovative by embracing the principles of a startup. Think: small teams, direct communication, speed and direct contact with consumers.

The only way companies can really apply these principles is by creating a startup within the organisation. Such a startup-in-a-company operates under the radar, allowing it to act with speed and complete autonomy. Here, innovations are conceived, small-scale pilot productions are carried out and new ideas are tested at an early stage. Only when an idea has real potential and the foundations have been laid will it be revealed to the rest of the company. This significantly shortens time-to-market and gets good innovations to where they need to be: on the shelves!

However, such initiatives require a huge amount of courage and confidence from an organisation. Not every organisation can realise such an underground innovation hub tomorrow. But with the right dose of courage, trust and guidance, it is certainly possible!

Speed up the innovation process and shorten time-to-market within your organisation

Do you work at a large organisation and want to speed up the innovation process? We at Bamboo Brands can help you. With over 25 years of experience in guiding innovation projects within large FMCG brands, we help you to significantly shorten the time-to-market.

Want more information about the possibilities? Then feel free to contact me at theo@bamboobrands.com. We'd love to help!