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1/ This piece from @Annie_Gasparro & @vipalmonga nails what’s happening with the large consumer companies that have been focused on cutting costs (at expense of investing into R&D)
wsj.com/articles/it-sh…
wsj.com/articles/it-sh…
2/ I’ve talked about what I call the “3G effect” for years (publicly and privately).
Public consumer companies cutting costs to deliver short-term profitability at the expense (IMO) of long-term shareholder value.
Public consumer companies cutting costs to deliver short-term profitability at the expense (IMO) of long-term shareholder value.
3/ Annie & Vipal from the @WSJ rightfully identified that ZBB has been around for decades. I call what’s happening the 3G Effect because I believe that 3G’s initial financial success w/ ZBB struck great fear in the hearts & minds of other public consumer companies.
4/ Other public consumer co’s felt the quarterly earnings pressure. They hadn’t been investing into R&D for decades, they are getting eaten from below by emerging CPG and then 3G is getting a ton of attention for driving “shareholder value” by cutting costs.
[airquotes]
[airquotes]
5/ At the same time half of the consumer CEOs are getting fired, activist investors are calling for your head, and suddenly there is this new thing called d2c?? Can we get our “IT” department to look into d2c please?
6/ I think it’s an exceptionally hard problem. What would you do?
7/ Here is what I don’t understand. The people that are running these co’s are exceptionally smart. What did everyone around the table think this path would lead to over the long-term.
8/ Quotes that stuck out:
“At some point you have to make your products relevant.”
“At some point you have to make your products relevant.”
9/ “I’m a terrified dinosaur,” said 3G co-founder. “I’ve been living in this cozy world of old brands [and] big volumes. You could just focus on being very efficient and you’d be OK. All of a sudden we are being disrupted in all ways.”
10/ That can’t be true. I have too much respect for the people at the top to think they didn’t see this coming years ago.
11/ It doesn't take a genius to realize that if you cut costs and don't invest into new products, you're mortgaging your future for benefit of the present.
[Surely there is a more elegant way to say that.]
[Surely there is a more elegant way to say that.]
12/ I see a lot of investment in terms of selling the same products more efficiently. But very little investment in terms of identifying the products that meet the unique and changing needs of consumers. That must change.
13/ Also – co's must have a recognition that the brands that win tomorrow will no longer be the $1b brands. The cultures of these companies have focused just on brands that “move the needle”.
14/ They need to build portfolio of brands that are likely smaller and meet needs of ever fragmenting consumer base.
15/ But for heaven's sake. Lets not be surprised anymore that if we turn off our growth spigot (i.e. R&D) that eventually we will look like dinosaurs.
