Why do large companies suck at new products?
I get this question all the time and the answers are really quite simple. At the top of the list, it’s easier to buy than build. Why invest the time and effort and divert attention from the existing portfolio just to dig a dry hole?
More important is the simple arithmetic throughout the food chain. “How am I going to make my bonus/meet management’s expectations/reach my sales quota – you fill in the rest – if I divert my attention to a start up brand?”
So, if you’re a major player, you have a number of options when it comes to new products and brands.
First, you can bite the bullet and say, as I did at the outset of this posting, why bother? Let someone else build it, I’ll make an offer they can’t refuse. Mainly Diageo, but also others, fit this mode.
If you’re aggressive and smart, chances are, you’re also attuned to the marketplace (consumers and trade) and know how to create demand or capitalize on an opportunity. Just look at White Rock, Proximo, Beam, Campari and others.
Next, we come to the companies that go through the motions. Companies that massage their own egos by thinking they can do it as well as the upstarts. Or, those who try to impress their stakeholders by demonstrating innovation. They end up with me-too brands that are poor imitations of the innovators.
Once again Diageo springs to mind.
I just don’t get it. If you’re rich enough to buy rather than build, why waste money on imitations? I suppose it’s because some great new ideas can’t be bought. But they can be copied.
Here are some examples: