Although my opinion could be considered biased, the NBJ Summit team—led by Patrick Rea and Tom Aarts—outdid itself again with this year’s annual gathering of nutrition industry leaders. Held July 21-23 at the St. Regis Resort in Dana Point, California, the sold-out 2010 NBJ Summit brought together more than 300 CEOs, presidents and other executives for what proved to be an inspiring, instructive and thought-provoking three days of education and networking.
Below are several of the key messages that emerged from this year’s NBJ Summit:
• Innovate your way out of a downturn: The recession took a big bite out of the nutrition industry’s product development activity in 2009, as many companies focused on survival rather than creating their next breakthrough product. But, as Sterling Rice Group Managing Partner John Grubb demonstrated in his keynote titled “The Imperative to Innovate: Disrupting the Competitive Context,” downturns are the exact wrong time to put the brakes on new product innovation. As Grubb noted, with higher risk comes greater reward, making game-changing innovations the key to thriving during tough times and claiming more than your fair share of a market opportunity. Also, product line extensions tend to make up most of a company’s revenues, but new products drive the greatest profit growth.
• Fail fast: True innovation isn’t possible without the risk of failure—and, as Grubb told NBJ Summit attendees, most of what you do will be wrong at first, so prepare to fail quickly and use the lessons from your missteps to move your innovations forward. Because failure is a natural part of innovation, the innovators in a company must be given the time to learn from their mistakes, Grubb added. Of course, creating a forward-thinking ecosystem of innovation can be more easily accomplished at private companies, which are typically not held hostage to quarterly results the way public companies can be.
• Prepare to be scrutinized: Whether it’s coming from the U.S Food and Drug Administration (FDA), the Federal Trade Commission (FTC) or the “bounty hunter” law firms looking to get rich off of class-action consumer lawsuits, U.S. nutrition companies must be prepared to have their products, science and claims put under the microscope. Serious future scrutiny could come from FDA’s impending new dietary ingredient (NDI) guidance, which could publish later this year. If the guidance becomes stricter, an estimated 40%-60% of the current dietary supplement market could be adversely affected.
• Make the world your oyster: As Christine Holgate, CEO of Australia’s largest dietary supplement company, Blackmores, told a packed Summit audience: Even those companies with successful, fast-growing businesses in their home markets should consider global expansion. Under Holgate’s leadership, Blackmores is now in seven markets and is considering launching into others. According to Nutrition Business Journal estimates, total global nutrition industry sales grew 6.6% to $288 billion in 2009. This growth was somewhat higher than the 4.4% growth the $108 billion U.S. nutrition industry experienced last year.
• Choose your global partners carefully: As NOW Health Group President and CEO Al Powers told Summit participants, moving into a new market without carefully vetting your in-country partners or fully understanding the business culture can be expensive mistakes. Powers candidly told the audience that he learned this lesson the first time NOW entered the Chinese market a decade ago and the company’s Chinese partner stole NOW’s product and then marketed other counterfeit supplements under the NOW brand. The experience didn’t scare NOW away from the promising Chinese market, however: Under Power’s guidance, NOW is once again building its business in China—this time with much more success.
• Don’t be afraid of big pharma: Former GlaxoSmithKline (GSK) executive Stephen Stefano spent his NBJ Summit keynote address attempting to convince the audience that pharmaceutical companies—like GSK—can be good partners for the nutraceutical industry. As Stefano explained, blockbuster drugs are becoming fewer and far between and the margins for pharmaceuticals continue to shrink. This is making it more important than ever for drug companies to diversify their product offerings. “The climate is ripe for pharmaceutical companies to get involved in nutraceuticals in a productive way,” Stefano said. He used GSK’s prescription fish oil product, Lovaza, as an example of a “nice fit between pharma and supplements.” Global sales of Lovaza have now topped $1 billion, leading many Summit participants to wonder: What will be the next blockbuster supplement-based drug?
• Never forget Rule No. 6: One of the most inspirational moments during the 2010 NBJ Summit came from Benjamin Zander during his keynote address. In what was (correctly) billed as a life-transforming talk, the Boston Philharmonic Orchestra conductor coached attendees to live their lives and lead their organizations from the viewpoint of possibility rather than from fear, anger or complacency. My favorite part came when Zander presented what he calls Rule No. 6: “Don’t take yourself so damned seriously.” Duly noted!
• Live like Ohno—no regrets: The 2010 NBJ Summit closed on another inspirational high note with the keynote address from eight-time Olympic medalist Apolo Ohno. Ohno, who has launched his own dietary supplement company called 8 Zone, opened himself up to questions about everything, including why he created 8 Zone, what supplements he takes, the music that keeps him going during training and why he respects the South Koreans (who have been some of his greatest competitors on the ice). In explaining how he was able to dedicate four years of rigorous training to prepare for a few minutes of Olympic speed skating competition, Ohno said he learned to remain focused on the journey and live each day with no regrets.
Registration for the 2011 NBJ Summit will open later this year. Sign up early, as this year’s event sold out.
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