A natural industry call-to-arms: More innovation, less iterationA natural industry call-to-arms: More innovation, less iteration
A month after this year's Natural Products Expo West, here are some thoughts on the industry's current willingness (or, rather, lack thereof) to take risks, avoid creative complacence and give consumers what they truly want.
April 10, 2019
To: Industry, a month after Natural Products Expo West
Fr: Max Kabat, Co-Founder/Growth Strategist, goodDog
Subject: A call to arms: More innovation, less iteration
Memo: Keto. CBD. Collagen. Coconut. Put these into one product and you might have won a NEXTY for Most On-Trend Thing Everyone Talked About at Expo (yet we’re not sure the world really needs). It’s newness. We’re all obsessed with new things because change is constant. But as the Natural Products Expo West high starts to fade and we get back to business I’m left considering this newness. Are we innovating or are we iterating in the name of innovation? This industry has matured and the risk/reward game has shifted as a result, but making something that already exists–putting it in a pretty package and saying you can make a better margin to investors–is not innovation.
Maybe we’re in need of a level set about the difference?
Innovation adds value. It’s creating a new vertically integrated supply chain. A sustainably made Band-Aid with benefits. A new canning method to seal in just-roasted coffee’s freshness for longer. A cleaner that protects your microbiome by counterintuitively being less efficient at disinfecting. A nutritious food made from upcycled waste.
Another puff made of a different grain. More oat milk because a retailer requested it. A CBD-infused beverage. Calling something inherently vegan "plant-based" because it’s a trigger to get consumer attention. This is all iteration, and we’re all a part of the problem. Have we stopped building brands and businesses for the greater good and instead are focusing on growing ones that might fit under the umbrella of a multinational? Sure is starting to look that way.
How did we get here and who’s culpable? Founders. Investors. Brokers. We all are. We’re culpable because we all became complacent. And that's the true anthesis of innovation.
So this is my ask to my fellow stakeholders: What if we acknowledge our actions and consider our complacency? Will it help us jumpstart creativity?
Founders: The barrier of entry to start a brand has never been so low. But why are you getting in? Is it to fill a white space, or is it to make something we’ve never seen before? The former might raise money faster and scale quicker putting you on a path towards acquisition (because that’s what you’ve surmised from other success stories), but does it have true value? Unlocking value is what makes it all so hard. It builds an unimpeachable business and brand worth its weight in gold, not just a product. What if you think about what the world really needs and go make it rather than making a product because that category is growing?
VC: You’ve developed your own playbook and know what works. You build a brand, sell it, then look for the next up-and-comer to do it all over again. Rinse. Wash. Repeat. You’ve made us obsessed with monikers like scale and velocity, but at what cost? Your success has attracted so much attention that you are now flush with cash so you’re left with no choice but to overcapitalize brands even if they aren’t disrupting anything. It makes business sense to leverage what you’ve learned along the way. Iteration may be smart money management but its not transformative. You have the power to reward disruption and pass on derivation. Legacy is built when the risk is high but the upside of change is higher.
Broker: While you helped make organic and better-for-you products ubiquitous, your business model is now based on depth and breath rather than touch and intention. It only makes sense for you to add another bar if you have five of them because you have the relationships and know the levers. But this breeds intentional iteration. You’re about incremental industry growth. More high-touch models that bring value to unique products is what’s driving the next phase of your function. Take a risk on a product that will bring a new customer into an old aisle. Be the hero of that category manager.
Big Food: You're attracted to things that are familiar—product, ingredients, form. Acquisition or building it yourself are not easy tasks. You lack internal innovation and your top line growth is slowing, so you buy upstarts in hopes of more widely distributing their specialness while learning from it. But then you spend so much time and effort integrating their brand into your business model that you stifle that growth and innovation you were attracted to. Let the innovative brands you are buying, funding or incubating keep on innovating. Cutting costs breeds iteration. Give them access to your sales engine and your price efficiencies but encourage them to run free—the way they got your attention.
Press: Your job is to help inform us. Your detailed coverage of the industry is giving us a much appreciated behind the scenes look at how success stories bake their cake. But covering anything new and calling it innovation because that brand hasn’t done it before is compounding the problem. You have the power to grow a business by giving it attention. What if you were to shine your formidable light on the brands that are truly breaking the mold in the name of innovation?
We say we do this all for the customer. We've given them more convenient convenience. Better betterness. Steve Jobs said, “A lot of times, people don’t know what they want until you show it to them.” By this measure we’re failing. We’re underestimating their tolerance for discovery. They’ve proven to us again and again that they’re curious and excited about the unknown. True innovation is riskier but it's a chance at greatness. We should aspire not just to be order takers but change agents. We all have a role to play. Here we go!
Max Kabat is from goodDog, a brand consultancy that helps mostly mid-stage, founder-built, mission-driven companies grow by articulating a singular storyline then bringing it to market.
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