****Is Innovation a Matter of Luck? Big brands launch numerous new products each year, ranging from three to five to over a dozen, but you may have noticed that many of these products typically sell for only one year before disappearing the next. In a sense, big brands do not lack R&D capabilities, consumer insights, or distribution channels. Yet, once a big brand succeeds and establishes a firm foothold in the market, it seems as if some innovative genes suddenly vanish, making it difficult to continuously launch decent innovative products. Look at the four major beverage brands: Coca-Cola, Nongfu Spring, Uni-President, and Master Kong. Why have they rarely launched successful beverage products in recent years? Why did Genki Forest, after introducing products like Rancha, sparkling water, Alien, and milk tea, seem to have no standout new products in the beverage channel this year? Moreover, have you noticed that Nongfu Spring has never successfully made carbonated products, and Coca-Cola has never succeeded in tea drinks? Is innovation a matter of luck? Big brands are extremely anxious today. Countless small and medium-sized brands quickly launch innovative products through platforms like Tmall. Although the failure rate is high, as long as enough people continuously try and error, even luck can lead to success under small probabilities. Therefore, even if innovation is a matter of luck, big brands must consider how to increase the probability of that luck.
Why does Coca-Cola always fail to do well with new products in recent years? From a marketing system perspective, if we compare Coca-Cola's products to a foot, then its marketing system is a pair of shoes. The problem with these shoes is that they are too big and too tightly matched with Coca-Cola. A new product is like a small foot; the shoes of Coca-Cola's marketing system simply cannot fit the new product.
The underlying logic is: The more successful a brand, the more likely it is to rely on path dependency. Moreover, the more successful a product, the higher its fit with the marketing system, and the lower the tolerance rate, making it harder to accommodate new products. Once a big brand succeeds, it will in principle reuse its existing channel and marketing system, and it is difficult to redesign a marketing system for a new product. So in a sense, if a big brand can still succeed with a product, it must be because that product has adapted to the existing marketing system's shoes.
****Why Are Big Brands Less Innovative Than Small Brands? Small brands may not have the correct innovation methodology, but they have two notable characteristics: speed and excellent intuition. Why? Small brands have relatively small teams, and decisions are often made by the boss on a whim, so decisions are fast, without complex processes or multi-person approvals. Additionally, the boss of a small brand works hands-on, so many things are easier to push forward compared to big brands. This is the advantage of small brands, but once a small brand grows, this advantage disappears.
From an evolutionary perspective, a primitive stem cell is omnipotent, but once it divides and undergoes functional differentiation and division of labor, the differentiated cells can only operate within their capabilities.
Benefits of differentiation: specialization, focus, and efficiency. Drawbacks of differentiation: functionalization, only able to do things within one's role.
A task is no longer coordinated by a single cell but achieved through the cooperation of various functional organizations. This brings benefits such as efficiency, economies of scale from collaboration, and the possibility of new connections during collaboration.
However, it also brings problems: functional singularity, inability to think from a global perspective, and inability to integrate resources and coordinate division of labor from a higher dimension. So you see, the biggest problem with innovation in big brands is that if the innovator is not the boss himself, the person in charge of the innovative product will find it difficult to have the ability to think globally, to insight, develop, coordinate, and push forward. Moreover, it is not that big brands' innovation capabilities are inferior to small brands; big brands' innovation capabilities are undoubtedly very strong. It is just that when faced with a bunch of small brands, they appear less innovative.
****Big Company Disease So you see, often the biggest enemy of innovation is the organization, management, and overly correct processes.
Product innovation requires small teams, deep insights, simple decisions, efficient execution, and rapid trial-and-error iteration. Too large a company, too cumbersome processes, too inefficient meetings, too complex coordination and communication, and as mentioned above, overly successful marketing systems and limited channel carrying capacity all make it difficult to accommodate a new product. I once asked a company's sales staff at a training session: Who are we selling to (why would they buy this product)? Where to sell (what is the scenario)? How to sell? Why would consumers buy (how to give consumers an irresistible reason to buy)? But a room full of middle managers knew nothing about how to sell this product except its pricing! This was a top domestic beverage company! But did the product department not consider this issue during R&D? It is possible they considered it, but also possible they did not. But that is no longer the point. The point is, why does such a problem occur in a big company? Process? System? Performance? Lack of awareness? Or management not closed-loop? Let us think further: if Dayao Jiabin were handed to a company like Coca-Cola to sell, what would happen?
****Product Success Requires a Marketing System Drucker said: The most important and difficult work is never to find the right answer, but to ask the right question. The most useless, even dangerous situation in the world is when you answer correctly but ask the wrong question from the start. We should not leave innovation to luck. When gaining consumer insights, focus on what problems users want to solve, not the means they use to solve them. In other words, users buy a drill because they want a hole in the wall, not the drill itself. So we should study what kind of hole people want, not what kind of drill people want. Whether it is Zhang Xiaolong or Ma Huateng, they have both mentioned that product managers need to quickly "become a novice." The so-called "becoming a novice" means being able to become an ordinary user who knows nothing about product details and technology, observing the product through the user's "thorough" eyes, and asking childlike questions. The three steps of innovation: observation, questioning, and association. From a product perspective, who, in what scenario, wants to solve what problem? What means are needed? What problems remain unmet or can be met at low cost?
Based on these questions, use the marketing STP+4P to solve them. I think these are not difficult for colleagues in the innovation business unit of big brands. The difficulty lies in the company's sales level not being effective. We often hear that salespeople are unwilling to sell new products, but few people think about why salespeople are unwilling to sell new products. 1. Need to push sales? 2. No sell-through? 3. Returns? 4. High price? ... If you want to hear, salespeople will have countless reasons. Since we know from the start that salespeople are unwilling to sell new products, why not consider this dimension when designing the marketing system? Design an incentive policy that makes them willing to sell? More critically, when designing the product, have we thought about: the model for minimum unit sell-through? From one store, one channel, to one distributor, even one market, how should the supporting organization be designed to enable effective sell-through of this product? How to design a system that drives salespeople to naturally sell this product? Outlets, visits, displays, sell-through standards, truthfulness, checks, incentives... Teacher Haiyou has many related articles in the New Distribution public account, so I will not elaborate here. These processes, systems, standards, methods, and performance methods designed around the minimum sell-through model for new products need to be solidified into processes and sales guidelines during market exploration, and then promoted nationwide.
Many product leaders habitually want to leverage existing manpower and channels, but not all manpower, channels, and resources can be shared. In fact, if you deeply study a product, you will find that most resources cannot be shared.
****Companies Need a New Organizational Form Today's consumer demands are diverse and ever-changing. In fact, it is difficult to meet all scenario needs with one product and one channel model. Therefore, we need to design marketing systems in a planned way for products, consumption scenarios, and pain points. However, for a brand, it cannot build a new channel chain for every new product. On one hand, the cost is too high; on the other hand, building such a marketing system is also very difficult. So for an enterprise, how to build an organizational management model that can have consumer insights and the ability to design the entire marketing system for a specific product is the core for large enterprises to innovate successfully and regain competitive barriers.
How can big brands achieve lasting success and realize their own innovation? Clayton Christensen told a story in "The Innovator's Solution" that we can learn from:
In the 1980s, Quantum was a leading manufacturer of 8-inch hard drives. Later, 5.25-inch hard drives appeared, and Quantum missed the opportunity, starting to decline. In 1984, several Quantum employees keenly noticed that a market for 3.5-inch ultra-thin hard drives was emerging, but these drives were sold to personal computer users, while Quantum's main customers were computer manufacturers, not personal computer users. These Quantum employees planned to leave and start their own company, but Quantum did not let them go. Instead, Quantum supported these employees by establishing a subsidiary, providing funding, and holding 80% of its shares. The subsidiary operated completely differently from the parent company. It could independently recruit employees, set its own positions, and of course, bear its own profits and losses. When Quantum's other businesses shrank, only this subsidiary thrived. Later, Quantum simply closed its other businesses and rebuilt itself on the foundation of this subsidiary, creating a new Quantum.
What is this story about? It is about a company encouraging internal entrepreneurship, investing, and finally surpassing its main business. Many companies actually have similar projects encouraging entrepreneurship internally, but the biggest problem is using the old organizational system, performance methods, and financial assessment systems to constrain innovators, making it impossible for them to fully display their talents. This greatly reduces the occurrence and success of innovation because the power of the organization is too strong and management is too coupled.
Within the organization, I think we should consider establishing a Blue Army unit specifically for innovation, letting them play the role of disruptive innovators.
This Blue Army unit is an organization that emerges specifically to address the internal and product problems of big brands. Because the special forces are small, they can freely play, flexibly combining the advantages of regular forces and guerrilla forces. The Blue Army unit must have three types of talents:
1. Those with expertise in the "human factors" field, who usually have strong observation and questioning abilities, responsible for determining whether an idea is attractive. 2. Those with expertise in the "technical factors" field, who usually have strong association and experimentation abilities, responsible for determining whether an idea is technically feasible. 3. Those with expertise in the "business factors" field, who usually have strong communication skills, responsible for measuring the commercial potential of an idea.
Note that the Blue Army I describe is not about developing new products based on the brand's existing organizational structure, nor is it about developing new channels. If the existing organizational model could succeed, it would have succeeded long ago; there would be no need to establish a new team.
In fact, it is about giving this organization enough freedom, allowing them to have independent financial and personnel rights, and an organizational management form that suits their own products and business. The core goal is to do everything that the big brand itself cannot do well, and to research and develop brands that the big brand cannot develop.
Second, the organization should be "Pass-ified." The so-called Pass-ification borrows a development term from the IT industry, where various software is designed into various software module packages based on function division. Enterprises freely combine functions according to their own needs, finally realizing their own business processes and functional needs. This Pass-ification is actually based on the gradual improvement of today's enterprise digital application capabilities. Through the connection of information systems, some business modules can be efficiently connected, but also freely combined.
From an industry perspective, some companies are already doing this, such as Tsingtao Brewery's innovation business unit and Budweiser's X business unit. These business units are independent of the existing organization, targeting internal management and processes, as well as businesses that cannot be realized due to the company's own resource endowments, but are necessary for the company's future development trends, such as digitalization, certain categories, product innovation, and the development of certain channels and markets.
Summary: Use models and systems thinking to view the success of a product, a brand, or even a company, and you will find that nothing is a point success.
Therefore, if large enterprises want to innovate, the core is to create an organizational system that can emerge innovation, rather than an innovative product or a team or channel that can continuously develop innovative products.
In summary, for big brands, the problem of unsuccessful innovation lies in three points:
1. New products are too weak and do not match the company's existing marketing system. 2. The enterprise's channel distribution carrying capacity is limited, with no energy to sell more new products. 3. The company's organizational processes are too rigid, not suitable for the emergence of innovative products.
For enterprises to truly innovate successfully, they must build three capabilities:
1) Have a Blue Army unit: to solve the problems of the existing organization and enterprise. "The Fifth Discipline" mentioned the problems of large organizations: goal orientation, emphasis on obedience, focus on right and wrong, excessive competition, and lack of wholeness. I think the problems of large organizations are: too coupled, too low fault tolerance, excessive focus on financial indicators, excessive focus on efficiency, losing flexibility, and finally becoming a Goliath defeated by David.
2) Build systematic and comprehensive capabilities. Within the Blue Army unit, no longer divide by function, but break the organizational structure. For projects and products, have the ability, professionalism, and resources to design products that meet consumer needs, and have the ability to build corresponding marketing systems. It needs to be an organization with marketing capabilities, global thinking, interdisciplinary thinking, and interdisciplinary teams to provide corresponding support.
3) Modularize, platformize, and third-party-ize the organizational structure. Break up the organization's own form, form modules, and use digital means to connect these modules, finally forming a large platform service system. Provide corresponding services for innovative products and organizations.
In the past two years, Genki Forest's innovation is worth learning from. Their organizational structure was designed specifically for product innovation from the beginning. That is why we can see the emergence of countless innovative products from Genki Forest. For big brands, it is not only necessary to learn from Genki Forest's innovative organization, but also to learn from Genki Forest's innovative cultural atmosphere.
Finally, I want to say that the boss must be the most important product manager. If a boss does not value products, then the company's innovation, I think, will often be difficult to achieve.
| Founder of New Distribution FMCG industry channel expert, author of over 400,000 words of FMCG industry research articles For communication, you can add WeChat by long-pressing. When adding, please indicate your company, position, and name.
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