Is CPG R&D Experiencing an Identity Crisis?

Monday, 18 April 2016 07:30
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In the beginning, consumer packaged goods companies did all of their own Research and Development work. That has now changed. So has the role of R&D and seemingly their outputs.

Care to learn more? Read on, dear friends...

Is CPG R&D Experiencing An Identity Crisis?

In the beginning, consumer packaged goods companies did all of their own Research and Development work. Some companies leveraged their internal technical strengths to create outstanding products that established and maintained their competitive advantages for years.

For instance, in the 1980's, P&G developed and qualified a core laundry detergent technology through worldwide internal coordination of its vast R&D resources. This platform was so robust that they customized it for use in different geographies with vastly different laundering practices and water conditions. This "world technology" was superior to its laundry detergent competition across the globe and was rolled out across an array of different P&G brands. It was unarguably a huge success.

Then, about 20 years ago, a few companies decided that they could augment their internal technical capabilities by leveraging external resources on select programs. In recent years the pendulum has continued to swing. Now, most companies at least consider external options before deciding whether or not to do in-house product development work. Much upstream technology research has been discontinued.

Overall, this shift in approach has been a good thing. External innovation options expand CPG companies' ability to tackle close-in projects where internal expertise and bandwidth otherwise constrain them. It also can reduce the risks and costs associated with doing in-house upstream technology development. However, it likely has also dampened corporate appetites to develop blockbuster technology platforms as before. Instead, it seems as if new products are being developed on an ad hoc basis and they lack the impact of those launched in prior years.

Whether or not a coincidence, there don't seem to be any true game changing new product introductions in consumer packaged goods anymore. Can you name even a single one within the past 10 years? Perhaps P&G's pod launches (Tide, Cascade). It's possible that business units now operate more independently and may be more likely to pursue "one off" development programs and are less likely to consider more technically elaborate and coordinated initiatives.

There may be other explanations for a seeming lull in truly big new product news in the consumer packaged goods world.

What do you think?

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