KANSAS CITY — Fast fashion, the concept clothing manufacturers instituted to reorganize supply chains to rapidly respond to consumer trends, is migrating into the food and beverage sectors. The pace of change is accelerating, and as e-commerce becomes a more significant driver of sales, manufacturers will need to achieve even greater rates of innovation and agility.
Chief executive officers have been discussing the adjustments they are making to research and development organizations to keep pace with the changes taking place. In November, James Robert B. Quincey, president and chief executive officer of The Coca-Cola Co., likened the company’s original approach to innovation as a quest for perfection. The company would place big bets on a few product launches that were meticulously researched, developed and rolled out over a long period of time.
“The future is not going to be like that,” he said. “We must be more agile, get things to market quicker … test (and) learn. If they don’t work, they don’t work. Move on. If they do (work), take them to the next stage.”
In addition to being more agile, Mr. Quincey said the company is becoming more open source.
“(We are) trying to leverage the scale of all the supply base rather than just do everything ourselves, trying to do it more in a test-and-learn approach …,” he said.
"Success will require embracing data analytics and a willingness to identify failure quickly."
Nestle S.A. is in a similar transition. Rui Barbas, chief strategy officer, wrote in January that consumers are more informed and sophisticated than ever. And for businesses eager to serve this changing marketplace, start-ups often are launched with little more than an idea and a laptop. This “consumer revolution” is driving a disrupt-or-be-disrupted mindset at Nestle, he said.
“Winning in today’s environment requires a hybrid growth model, which means companies must drive value from their base business portfolio while also embarking on new ventures that seed future growth,” Mr. Barbas said.
Mr. Barbas notes much of what is driving change in approaches to innovation is the proliferation and success of small companies that have been able to successfully introduce new business models and products, and subsequently take shelf space and market share from larger competitors. The growth of e-commerce will add to the pressure.
A report from the consultancy McKinsey & Co. highlights, for example, how subscription-based e-commerce platforms, an emerging market for food and beverage, will impact innovation efforts. The report identifies three broad types of subscription services — replenishment, curation and access.
Replenishment includes staple items like milk or flour. Curation services focus on surprising and delighting consumers, and access platforms are members-only services that provide exclusive products for subscribers.
As e-commerce’s share of the retail spend increases, it is the latter two categories that are going to drive greater change in food and beverage research and development. These products and services, such as Blue Apron or Hello Fresh, are value-added, premium efforts that require constant reinvention to attract new customers and engage current subscribers.
As more companies embrace direct-to-consumer programs and other companies seek to service such enterprises, the pace of innovation will accelerate. Success will require embracing data analytics and a willingness to identify failure quickly. It also will require reviewing and probably redefining the innovation process.