1/ What would I do different if I were the CEO of @KelloggsUS …? (or really any other CPG giant that keeps selling biggER, sweatER, bubbliER, softER, shiniER, versions of the same product year after year)
2/ Caveat #1: I’m the CEO of a 65-person, privately held, technology co. @CircleUp. I have a tremendous amount of respect for CEOs of public companies and have no illusions about being an expert in delivering value to short-sighted shareholders.
3/ Caveat #2: It’s easy to bash slow-moving co's, esp when their sales have basically flatlined for 10+ years and they’ve had the same tiger with a bandana as their mascot since 1952. I’ll do a bit of that....but mostly want to offer up solutions. (I do like the bandana though) 
4/ So what would I do differently? To start, let’s focus on sustaining vs. disruptive innovation. 95th @Oreo flavor is NOT disruptive. @claychristensen: incumbents make incremental improvements; disruptors enter the market with a product that wins on a NEW performance dimension.
5/ Historically big CPG focuses their "innovation" on existing product lines and building more of the same. Kellogg’s could use a bit more Google’s self driving car or Amazon AWS and a bit less new flavors of Pop Tarts.
kelloggs.com/en_US/our-bran…
kelloggs.com/en_US/our-bran…
6/ Incumbents struggle to innovate in a disruptive way because it results in products that target a small foothold mkt ($$ too small) and potentially cannibalizes core. [Other reasons to come in future TS]. It’s just not worth it for them. But the implication will be fatal.
7/ This is more true in CPG where their legacy (decades old) products are cash cows that still spit out $. In CPG things dont die quickly. In tech products die in <5 yrs (sometimes months). Imagine @Apple still selling Newton?
8/ But in CPG incumbents just spend on marketing the same old products… In 2017, @abinbev spent $8.4 billion on sales and marketing activities. $8.4 BILLION. That's the GDP of Haiti.
9/ So really, what would I do differently? … On day one as CEO of Kellogg’s, I would take a hard look in the mirror and ask myself which Kellogg’s brands are still relevant and can grow for the next 10 years.
10/ Last week I had a convo with a 20 year vet from a Fortune 200 CPG co who said “I bet in 10 yrs our co will not exist. It will be broken up into smaller co's and sold off.” Cutting dying cash cows is hardest but probably the most imp step in righting the ship. Let’s sell ‘em.
11/ Next: shift away from cost cutting & towards culture of innovation. Stock price will drop. Short-sighted investors will be replaced by LT investors. Likely go private - has drawbacks but may be required. Hey @OneCarlyle …...so we haven’t talked lately... How are you?).
12/ IDEA 1: I’d double down on R&D. It’s no wonder that one of these companies has been making Frosted Flakes the same way for over 60 years while the other started as a search engine and now builds phones, maps, and self-driving cars.
R&D spend as a % of revenue:
R&D spend as a % of revenue:
13/ Is it crazy to jumpstart innovation at a co this size? Maybe. @Microsoft - previously a laughing stock in SV- seems to be on a better track (MSFT up 2.5x since @satyanadella took over in Feb 2014 - see below - compared to @KelloggsUS which is the same price as 4 years ago)
14/ IDEA 2: Next, incubate new brands with external (or internal) entrepreneurs. Don’t constrain brands to existing product lines. Think 100+ co's/yr . The YC for CPG. I know maybe that’s stupid and crazy. Wait….why is it stupid again?
15/ IDEA 3: I’d revitalize the Venture Capital arm. Too many public CPG companies only invest in brands 5+ years old that have passed impressive revenue thresholds. Or they only invest into what happens to be in line with their current product strategy this quarter. Change that.
16/ Many large CPGs have launched venture arms, but most invest $5-$10 million across 3 to 4 companies. Then the CEO freaks out about costs and bails on the strategy. We will dare to take the long view. I’m talking about $500M across 200-300 companies over the next 2-4 years.
18/ Start externship program with the incubation and VC efforts. We put @KelloggsUS people in those smaller co's to help smaller co’s and cross pollinate an innovation culture back at Kellogg’s. That will cost $. I will get that $ by killing things like:
19/ To do this we’ll need to invest into non-commoditized data/tech solutions to more effectively discover innovation. Do you really think that you have a “better gut” than the 80k other “industry attendees” at Expo West? Amateur hour.
20/ IDEA #4: Three words regarding M&A strategy: "More. Smaller. Bets." News flash - if a brand already has strong market adoption, then you aren’t the only one that wants in on deal. @vitaminwater was a brutal deal for @CocaCola - paid way too much. We need to buy sooner.
22/ We wont solve this with just one press release or one magic bullet. We are fostering innovation through R&D, Incubation, VC, M&A and Partnerships. We’re changing the culture throughout the org. It will be hard - everything great is. This is important for us and all consumers.
23/ In summary, I’d push for a culture of innovation by encouraging teams to fail fast. It’s ok if an investment goes south because we got in early and have 100s of others. And it’s ok if a new product only serves a small market if it’s a NEW customer base that could be bigger.
24/ Maybe I’m wrong. Maybe we should keep putting $ into making our chocolate cereal even more chocolatier. Hey @ProcterGamble you should just focus on making blades that are even sharper. That’s right -because that’s the dimension that is going to attract new customers.
25/ If you want more you can read it here. circleup.com/blog/2018/04/2…
More to come on why this isn't happening
More to come on why this isn't happening
