Never Let a Competitor Put You Out of Business
You launched a CPG product to serve a growing need in the market. Consumers started to happily pay you for that problem you solved. The competition missed the opportunity initially but now are rushing into the market with X+1 offerings. These new innovations are impacting the business landscape at a substantial rate.
What do you do?
How do you not fall into the same trap as the competition you took out?
Have you ever heard this business advice?
“If you don’t put yourself out of business, someone else will…”
When I share this nugget of information with J. Schall Consulting clients, it refers to a valuable strategy that has both internal and external applications:
Internally = creating an innovation that disrupts your current business practices
Externally = creating a competitor to your current business
With market conditions rapidly changing, CPG brands need to constantly be innovating to stay ahead of the competition.
Innovation to Parity
CPG brands need to move swiftly to keep pace as the market evolves, but just remember that not all innovation is created equal. A trap that too many CPG brands fall into is that they mistaken “innovation to parity” as being enough to thrive and survive. There’s nothing wrong with being defensive in your strategic plan, but merely playing catch up to what the competition is offering and consumers have come to expect is table stakes for survival. Not only does “innovation to parity” not ultimately convey competitive advantage, all too often by the time the laggards implement their new innovations the competition is another two or three steps ahead.
Internally
Internal innovation means change within your organization. Your organization must must be prepared to change and motivated to make change. When it comes to ROI, internal innovation tends to represent significant cost savings through increased efficiency or improved processes. As an example, CPG brands could see major improvements by redesigning multiple end-to-end processes and enabling them digitally. The key is to create a culture that makes innovation pervasive across the entire company. Employees should be encouraged to come up with ideas and be given the opportunity to pitch and test their ideas, then replicate the successful ones.
Externally
Although external innovation often requires greater investment of resources, and therefore can represent a decreased ROI short term, the long-term impacts are usually more widely visible, both internally and externally.
Change is never easy, so you must ask yourself…
Are you willing to undergo a core shift in your products?
Are you willing to change the way you distribute your products?
Are you willing to interact with your current customer base differently?
If not, it might be best to let that current CPG brand go into cruise control and focus on putting yourself out of business with launching an external competitor. This can be done by taking everything you’ve learned in your current venture and create a competitor to yourself that can be better positioned for the future.
Final Thoughts
One of the most important things to remember when reinventing your company is to not let short-term gains distract you from a long-term goal. I get it though; many businesses continue to let a short-term results impede long-term vision for the company. This might work for a bit, but eventually it catches up with you
Making change is an important part of leading effectively. You’ll undoubtedly mess up, but it should be because you were trying to succeed, not because you were afraid to fail.