" How start-ups and big brands pursue innovation differently | Haines McGregor

On the 17th of March, Haines McGregor held the second part of our event series assessing the nature of innovation in the Food & Drink sector. Hosted by our Strategy Partner, Jamie Holtum, the sessions explored why the rate of failure for FMCG innovation was so high – and identified strategies which increase the rate of success. 

The first session focused on how large FMCG organisations could best harness innovation (read highlights here).

The second session zoomed on how innovation is thought about and pursued differently in start-ups and challenger brands.

Jamie spoke to founders and marketers on the frontline of independent FMCG brands and asked: is innovation more likely to succeed coming from smaller brands? And if so, why? 

Speakers included: 

  • Nick Britton, Founder, High Water Hard Seltzer,
  • Hugh Thomas, Founder & CEO, UGLY Drinks
  • Will Bryant, Creative Partner, Haines McGregor
  • Nicola Matthews, Head of Marketing UK & Ireland, Tony’s Chocolonely 

Here is what was said. 

How start-ups and big brands pursue innovation differently
How start-ups and big brands pursue innovation differently

David and Goliath

Jamie kicked things off by asking the panellists to explore the differences between big and small FMCG brands. “It is more than just process versus passion – so how do they approach innovation differently?” 

Nicola Matthews reflected on her experiences at Diageo before moving to Tony’s Chocoloney. “In a large organisation, you can easily drown in data. There are a million people and processes. Even if you want to be agile, it is not always possible – ultimately the question for any product is always: how big can we make this?” 

“Smaller brands have the freedom to fail fast – but also to discover slowly”, Nicola continued.  “At Tony’s, for example, our CEO isn’t hugely interested in data. Our Caramel Bar now accounts for around 20% of our total sales – and if we listened to the initial data it would have been scrapped.” 

Nick Britton, founder of High Water Hard Seltzer, picked up on this point. “Both have their advantages. Big corporations are amazing at line extensions – just look at the success of Gordon’s Pink Gin. But they struggle to develop new brands themselves.”

“Ideas at these businesses can suffer death from a thousand cuts,” Nick added. “Picasso didn’t paint by committee – an idea needs freedom and space to evolve into something meaningful. Corporations are designed to efficiently accelerate linear journeys. But innovation isn’t always linear.”

“Equally, smaller brands may create something incredible, but they often lack the resources to effectively execute it. And a well executed, but mediocre, product tends to beat excellent products that are averagely executed.” 

So how did things work out for Ugly Drinks? 

Founder and former CEO Hugh Thomas reflected on challenges startups face. “Over 95% of startups fail – but it is important to recognise that a failed product or business does not always mean it was a bad idea.” 

Hugh pointed to Walkers and the success of its Sensations products. “Newer brands had the same idea – but it’s not easy to create new categories. Walkers was able to authentically extend itself because it had earned legitimacy in consumers’ minds. For smaller, less famous brands, it is harder to make that leap. To break down these doors, challenger brands often need people who make things happen through personality.” 

“It is impossible for larger organisations to match the passion of a founder”, Hugh continued. “These people have less resources, but infinitely greater personal investment. They have more to gain – and much more to lose. An innovation manager may be more concerned with protecting their own career and mitigating failure, rather than throwing themselves at driving success”. 

How start-ups and big brands pursue innovation differently
How start-ups and big brands pursue innovation differently

The Power of Passion

The discussion zoomed in on the influence of passion. 

“You can’t artificially recreate personal investment,” noted Jamie Holtum. “Passion is intangible and yet decisive. So how do challenger brands harness it?” 

Nicola pointed to the purposeful culture at Tony’s. “We have a clear mission to remove all child labour from chocolate supply chains. This mission creates a culture of impassioned people focused on what needs to be done to reach these objectives. We are an impact company that makes chocolate, not the other way around.” 

“And this creates a strong foundation which empowers clear decision making across the business. It helps us build our brand steadily – investing in the right processes and people which drive innovation.” 

But Jamie challenged, pushing the panellists to define how passion, belief and commitment actually impacts and improves creative and commercial outputs?

Will Bryant argued smaller brands benefit from singular vision. “Design by committee gets you to a very indistinctive place. It leads to compromise rather than cut-through. Large organisations may have the best talent and tools – but the culture erodes the brilliance of individual vision.” 

Nick Britton agreed – but added that the risk is more tangible for smaller brands and their founders. “Big businesses won’t put cash into a pot that has a 90% failure rate – even if the 1% of successes can spark astronomical growth. Founders have a different attitude to risk.”. 

”A founder needs to be clear about what you are willing to put on the line. I said I’d risk all my savings but never my car or my house. Twelve months later I’d sold my flat. Founders can’t afford to work on things that don’t naturally induce passion. You need a personal connection to what you are creating, a narrative which sparks excitement in the face of risk.”

Enhancing innovation

For the final chapter of the discussion, the discussion turned to sharing tangible ideas and approaches for improving innovation rates. 

Hugh kicked off  by explaining how Ugly Drinks took inspiration from streetwear brands ‘drop’ culture. “We looked vertically across sectors at what was working – and then asked our customers directly what they wanted to see. We ran a survey asking what flavours appealed most – and the answers were surprising.” 

“We then launched these flavours in exclusive batches through our D2C channels – testing and learning as we went. With the data to back us up, we were then able to take the best performing flavours to individual retailers. From this we secured an order from CBS to stock a specific flavour in over 7,000 stores. We’ve developed a reputation as the ‘Willy Wonka’ of flavoured water – and we are leaning into it.” 

“Everyone wants to be a unicorn – but the best startups are more like cockroaches. The pandemic ripped up our plans. But because we were small and agile we were able to survive – whereas a bigger brand may have cut its losses and binned the product. Necessity is the mother of invention – and startups are the best vessel for action.” 

“It’s true that real category defining innovation takes a long time,” Nick added. “The brands we may view as an ‘overnight success’ have really been around for decades – such as Tony’s itself!”. 

“But good research can tell you if a product is speaking to consumer needs before sales traction kicks in,” he continued. “You need to balance seeing the future with being too far ahead of your time.” 

How start-ups and big brands pursue innovation differently
How start-ups and big brands pursue innovation differently

Jamie rounded up the session by asking the speakers to give some advice for innovation managers in big companies.

“Make sure the product is amazing,” Nicola concluded. “You cannot outmarket a bad product – remember the first sale is not as important as the second. No matter your size – you need to create an environment where people aren’t afraid to speak up and express their concerns during the internal sell-in.” 

Hugh and Nick agreed, while also adding to think hard about who the consumer really is.

As Jamie drew the session to a close – the panel identified three key tips for getting innovation out the door:

  • Challenger brands can fail fast and discover slowly. There is no rush. New categories and consumer habits take time to mature. Don’t overestimate data and underestimate your vision. 
  • Risk is a competitive advantage. Passion for a product is a strong defence against risk. When people care they make stuff happen. 
  • Be ready to be wrong. The best laid plans of marketers often go astray – be agile and open to adaptation. 

To learn more about how Haines McGregor helps brands harness the full power of innovation, get in touch with the team at  hello@hainesmcgregor.co.uk