An Entrepreneurial Process For De-risking Disruptive Ideas

Jonathan TofelMay 17, 20235 min

What if you have an idea that is so disruptive, it challenges the organization just to think about it? What if there is an idea with passionate champions and proven consumer work that still feels risky to the organization? Is there a path to externalize even the ideas that seem impossible? The answer is yes, and that path is a process we call Roar.

Big CPG is structured in amazing ways to launch at scale, which requires some truly impressive logistics and well-disciplined processes. Transactional testing in a dozen stores for a few months can help validate the idea, but there are times when another step is needed. This is where the Roar methodology comes into play. Roar can fill the gap and help to de-risk the proposition even more—mimicking the entrepreneurial startup process with some unique differences.

Roar starts with thinking about how to do a small-scale rollout of your product or brand for approximately one to two years in order to build confidence about its future. It gives you the opportunity to say, “We didn’t just test this idea. We got it into three hundred stores, and we grew sales to this level. It has traction and the right to live. Now, the organization can feel confident about national projections and a full-scale launch.” Roar allows a new idea to grow to a scale that makes it viable to internalize in a large company’s systems.

But Roar is also meant to emulate the entrepreneurial journey, providing a big company with risk mitigation that goes far beyond a test. It’s a way of proving out your most disruptive or risky ideas, giving them a chance to grow, change, and improve along the way. It’s not simply a regional rollout of a launch, it is a learning journey, an incubation process at a small scale, meant to optimize and grow a product or brand. It’s about giving a disruptive idea the time to live and breathe and incubate over time.

This requires an entrepreneurial process of growing:

  1. Build a consumer base that drives pull versus push demand. Where big competitors prefer to spend a lot on advertising to “push” consumers into the store, entrepreneurs focus their initial activities on retailers to use their power to “pull” consumers to their brands. This can be as simple as partnering with a retail chain to do in-store demos, or offering a retailer free cases of product in return for feature and display.
  2. Build out the retail expansion more slowly and deliberately while winning at the shelf to earn the right to expand. Entrepreneurs often focus on small launches of fifty, one hundred, or three hundred stores rather than trying to go nationwide at the start. It allows them to learn, iterate, and improve upon everything it takes to make a brand grow, all while giving them time to deliver the wows that the retailer wants to see to keep the product on-shelf.
  3. Continue to listen, learn, and iterate with consumers (target audience, rejectors, etc.). How are consumers using your product, and how can you improve it? Get into the points of distribution where your product is being sold and learn from the shopper, the store staff, and the store manager, and take that information back to the company to make your business shine.
  4. Continue to listen and learn from retailer feedback. What is working in retail, and how can you drive category growth to be both a winning brand and winning manufacturer? What does the buyer want that isn’t being delivered by competitors where you can pivot to and show your level of partnership?

Entrepreneurs learn all of these things as they take that journey to their first three hundred stores. So can you.

A Process For The Riskiest Ideas

What makes an idea seem very risky to a large CPG company? It could be something new to the world, something that isn’t particularly intuitive and needs time to develop with consumers. Or it could be risky because it’s very far from the core business without any way to slide it into the existing machinery. Whatever the case may be, leadership believes that the idea presents high risk, and it needs time to prove or grow before it can be internalized.

The Perfect Scenario

The inspiration for Roar occurred a decade ago when we were discussing an idea with a big client that they felt was incredibly risky. Finally, the client said to us, “What if you guys took this idea and ran with it?” We offered to externalize the risk and become the “out-of-house startup,” with our client taking the role of the “angel investor.” All they had to do was fund the production and our time, and we did the rest as a team of entrepreneurs.

Leading and growing ideas as a startup intuitively means leveraging an entrepreneurial approach to prove and enhance the business viability. Here is an example of how it can work:

1. Start with collaborative development or selection of an idea that is disruptive or risky enough that it requires a slow, methodical build with a high degree of learning and iteration.

2. Think about how you might be able to externalize the most challenging processes for your team and remove the barriers that are currently getting them stuck or slowing them down.

3. Reflect on who should lead the project. Consider this for a moment: is it better to hand off a project to someone who has a light plate/workload, or would you rather assign a dedicated, passionate “founder” to run the day-to-day of this operation? If you do what we do and approach the assignment of a new project as if you’re picking a founder/CEO, then the framework, the leadership, and the growth model that is set up at the start may change the way you bring the innovation to life.

4. Adjust the top-down model so that your stakeholders become the investors for the startup. Set up monthly board meetings to maintain open lines of communication and oversight while the day-to-day is left to the “founder” on your team.

5. The project should consider if it needs to externally source the entire process of getting launch ready, producing at a small scale, and gaining distribution within a geography of interest. Let growth start at zero and build as quickly as sustainably possible before it gets rolled back into the larger organization.

6. Set up the project to run with a net-neutral P&L. All proceeds from the sales of the product are immediately reinvested into the brand to help drive demand and iterate improvements. Support is done with an entrepreneurial, scrappy lens: high efficiency, grassroots, low cost, and fast.

7. At the end of the agreed-upon time frame, identify whether the opportunity is going to take the path of (1) internalization and scale for a national launch, (2) growth that requires more time to gain consumer traction, or (3) assessment that it is off track and lacking the legs to grow to the scale required to internalize (in which case, it is disbanded).

Contributed to Branding Strategy Insider by: Jonathan Tofel, author of Fire In The Machine: Driving Entrepreneurial Innovation In Large CPG Organizations

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