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Published: August 26, 2008

 
 

The Unique Advantage

It’s even possible to gain scale of a kind with a highly nimble, prolific innovation organization. Launching a steady stream of good ideas, as P&G has done in home products in recent years, can give a brand a reputation for fresh thinking that transcends the individual ideas and translates into market share gains. (See “P&G’s In­novation Culture,” by A.G. Lafley, s+b, Autumn 2008.) The rules still apply; any new product must be difficult to copy or it will not maintain its value. But the whole can be greater than the sum of the parts. The brand itself can benefit from an aura of originality that translates into consumer preference and sales.

Finally, we fully recognize that ideas that are difficult to copy are difficult to develop, and mature companies also need a strategy for when such ideas are in short supply. Here, we suggest defying conventional wisdom about being first to market. If a product can be copied, it’s often more profitable to be the copier. Consider the Spanish-owned clothing retailer Zara International Inc. (a subsidiary of Inditex), which has become one of the world’s fastest-growing retailers by combining an efficient supply chain with a successful knockoff strategy. This formidable one–two punch caused LVMH Moet Hennessy Louis Vuitton SA’s Daniel Piette to call it “possibly the most innovative and devastating retailer in the world.”

One company that’s managed to employ many of these strategies to its own benefit is the one we started with: Mars. Over the past few years, it has seen its sales growth rebound to 16 percent. The company has successfully chipped away at risk aversion in R&D and streamlined its cumbersome market testing pro­cesses. It’s had a number of successful launches, including Snickers Marathon, the CocoaVia line, and WholeMeals bone-shaped pet food.

Mars also renewed its emphasis on production and formulation technologies that it could apply across multiple products. For example, it holds patents on the special ink used to print personalized M&Ms, themselves a significant new development meeting an emerging consumer desire for customized confections. These personalized candies, called My M&M’s, were developed by an internal team in just 90 days using a streamlined R&D process. As these and other examples have shown, companies can find a lot of life after middle age. The key is to have the right attitude. You can’t be a kid again, but we’ve mapped out some of the roads that could lead to renewal.

The magic formula for keeping innovation healthy in a mature industry is knowing there is no magic formula. If staying young and strong were easy, we’d live in a different world. There will always be a place for line extensions backed with big campaigns and for being first to market. But it’s important to make sure when you’re dipping into your own fountain that your competitor isn’t standing right beside you with a siphon.

Reprint No. 08306

Author Profiles:


Alexander Kandybin is a partner in Booz & Company’s consumer products and media practice based in New York. He works with leading consumer products, health-care, and chemicals companies on growth and innovation strategies, raising returns on innovation investments, and building sustainable growth and innovation capabilities.

Surbhee Grover is a senior associate with Booz & Company’s consumer products and media practice in New York. She focuses on helping firms meet innovation challenges in product introduction processes, portfolio management, and capability development, and on developing strategies for growth imperatives.

Also contributing to this article was Booz & Company Associate Jeannette Chang.
 
 
 
 
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Resources

  1. Nikhil Bahadur and John Jullens, “New Life for Tired Brands,” s+b, Spring 2008: How to discover the dormant vitality in an old product line.
  2. Kevin Dehoff and John Loehr, “Innovation Agility,” s+b, Summer 2007: Explains how to follow Toyota’s example without copying its specifics, and create your own versatile product development process.
  3. Barry Jaruzelski and Kevin Dehoff, “The Customer Connection: The Global Innovation 1000,” s+b, Winter 2007: Booz & Company’s annual study of the world’s largest corporate R&D spenders, finding two primary success factors: aligning the innovation model to corporate strategy and listening to customers every step of the way.
  4. Alexander Kandybin and Martin Kihn, “The Innovator’s Prescription: Raising Your Return on Innovation Investment,” s+b, Summer 2004: Introduces the innovation effectiveness curve, another tool for raising performance throughout the product life cycle.
  5. For more thought leadership on innovation, sign up for s+b’s RSS feed.
 
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