There is a famous quote from the legendary series Game of Thrones, in which the machiavellian Littlefinger is warned that the world is “descending into a pit of chaos”. But Littlefinger corrects the assertion. “Chaos isn’t a pit. Chaos is a ladder.”.
The pandemic has caused unprecedented chaos around the globe, shutting down industries, twisting our daily habits and altering how we communicate and interact with each other. The landscape of our lives has fragmented, and we are still working out how to piece it back together.
This has left both brands and consumers in a place of uncertainty. The future is unclear.
And that means there has never been a better time to shape it.
In 1995, Harvard Business School professor Clayton Christensen coined a term for the process in which a smaller company, with fewer resources, is able to challenge and unseat larger, established competitors by targeting segments of the market that had been neglected or ignored.
He called this process disruptive innovation.
As larger, established companies focused on incremental improvements products for established consumers, smaller companies could gain a foothold at the bottom end of the existing market or tap into new markets that the established companies would fail to notice.
Smaller start-up companies would enter the market with new or innovative technologies, or the capacity to deliver products in an innovative way, at a lower price than the incumbent brands.
These businesses end up setting the bar for consumer expectations in their category – and sometimes define a whole new category in the process. Look at how Netflix rose in parallel with Blockbusters’ collapse – or how Amazon was able to pioneer ecommerce (predicted to be worth over $5.4tn by 2022) from its humble beginnings as an online book store.
They were able to take advantage of changing market conditions and emerging consumer habits to drive innovation.
Our current landscape is ripe for this kind of thinking. New habits and trends are emerging across demographics, so it is critical that organisations bet big on innovation – finding ways to create categories, identify new routes to market or rethink their business model. And doing all of this with sustainability at the heart – especially in the world of CPG.
The end of incremental
CPG brands generally sit within the established/incumbent space of Christensen’s analysis. But there is a misconception that disruption can only be achieved by the startups.
COVID has given many CPG businesses a revenue uplift and the oxygen to invest in the disruptive innovation that pushes and elevates their business beyond packaged goods. But transforming the strategy into actions is difficult. The processes and paradigms that brands work towards are set up for incremental innovation – rather than making a great leap.
Brands in the CPG space will look at innovation in a few ways; design thinking, lean start-up, & jobs to be done to name but a few. But these all share a common approach of identifying a problem or consumer need, and generating and testing solutions to this need.
This approach works in the short term to help brands foster a culture of exploration while staying closely aligned with existing mission & current objectives. But equally, this thinking prevents an opportunity to offer truly disruptive innovation, as brands are bound to the rules and expectations of the category. Too focused on singular problems. Too focused on the here and now.
To be truly disruptive, brands need to think like Littlefinger. This means embracing a mindset of opportunism – and viewing chaos as a ladder.
Climbing the ladder
There is an appetite from consumers to see genuine innovation from CPG brands. But this requires brands to push the search for solutions upstream. Heinz is doing this already – focusing less on retaining its status as a market leader, and instead adopting a challenger brand mentality.
It also means thinking big about how technology is changing us – and how that change has accelerated in the pandemic era. These shifts we are witnessing in consumer behaviour, habits and beliefs during the pandemic mean that new ideas are viable – if they are put to practice quickly.
Amazon opened its first Whole Foods ‘dark store’ last year, an online-only store that fulfills online grocery orders for customers, increasing its online capacity without exposing staff and customers to potential infection during the pandemic. A valuable innovation for staff and consumers – and one that lays the foundation for the tech giant to roll out similar stores globally.
MealPal, a subscription-based meal company, pivoted its business during COVID from providing members easy pick-up meals at local restaurants during the working week, to offering groceries supplied by local restaurants to pick up.
Brewdog moved from beer to producing hand sanitiser when there was a national shortage in the UK – ensuring that the brand stayed relevant to consumer’s needs (and in their minds) at a time where bars were closed.
These all illustrate the potential to think about ‘global opportunities’ via ‘localised innovations’. By marrying the innate agility and nimbleness of local learning, with the budgets and scalability of global R&D, innovation teams can quickly find more powerful routes to disruption.
At Butterfly, we are hosting a webinar session on 23rd of June illustrating what Disruptive Innovation can look like for your business.
What can you learn from joining us?
- What does leadership in Disruptive Innovation look like?
- How to move from disruptive principles on a page to delivering actual revenue, value and growth for your business and brands?
- How can you invest in disruptive solutions while minimizing the risks?