This one popped up when I was thinking about what we do and reflecting on the fact that a client had told me his company was planning to launch 50 new SKUs (probably off of a base of a thousand or so) in the coming year, with one or two completely new brand platforms among that number...
I wonder if there's the opportunity to have an integrated conceptualization, design and small-batch manufacturing business to accelerate the piloting, evaluation and scaling of innovative consumer packaged goods?
The pitch would be: We'll help you design, research and conceptualize new products for this, our local, market (e.g., North America, developing Africa, Western Europe, etc). We'll handle the manufacturing, piloting and testing. They'd say:
"Handling new formats and small runs is our specialty. If things get big, we'll help you transition the business in-house or to another third-party. We're full-service, so no handoffs. We get you to the end and beyond."
The offering would be local to allow for local development and minimize transaction costs / friction involved in integration of capabilities (such as overseas manufacturing). The users would be corporate design, innovation and venturing businesses. Over time, two or three big players would emerge a la contract manufacturers or the big trading companies.
The company would actually be a consortia of smaller players and capabilities, a network of sorts, with a primary integrative client relationship structure. Think big advertising, or better yet, video game publishing. The strength and effectiveness of this network would be critical to the performance of the company.
"Brand in a box offerings" are out there, but there isn't an integrated offering with refinement and production. Fast-moving consumer good companies are looking to maintain relevance and
grow through new users and
offerings. Meanwhile, these
industries are really prone to fast-moving, smaller entrants. Why not in house?
Over
time, large companies follow or combine one of two growth strategies.
One cohort builds a shared innovation capability to support its various
business units. The group comes along with the corresponding overhead
while striving for, and falling short of, world-class performance. The
other cohort relies on M&A, often paying a premium in the market
for the acquisition. Such clients tell us "we don't build businesses
anymore, we buy them." When one strategy doesn't seem to be working,
they start emphasizing the other. Meanwhile, smaller players don't do
either. They're too focused on execution, scale and building out the
channel.
This idea sort of flies in the face of the notion that a company's innovation process is a competitive advantage. Huh. Here's an article about that:
http://blogs.harvardbusiness.org/hbr/restoring-american-competitiveness/2009/10/the-us-is-outsourcing-away-its.html
Yet, this idea also recognizes that there are multiple ways to skin a cat. The point is to skin the cat.
