As an innovator in a large company working hard to drive growth and deliver products that consumers love, your size is an advantage, one that you can leverage for incredible results, but when it comes to innovation, you can’t rely on big company strength alone. Between your company’s capabilities and the entrepreneurial ethos underscoring every successful startup, lies the sweet spot for disruptive innovation and the key to unlocking exponential growth.
In their new book, Fire in the Machine, Jonathan Tofel and Carolina Sasson share insight gained from decades spent working within and consulting for Fortune 500 companies. They share the strategies that have helped their CPG clients harness entrepreneurialism and balance the startup mindset with big business systems to unleash the best of both worlds. The book is an insightful journey to the challenges that all great innovators in large corporations eventually face and this is your chance to leverage new strategies and realize the growth that’s possible when entrepreneurial innovation is in the driver’s seat.
Hey listeners, Drew Appelbaum here and I’m excited to be here with Jonathan Tofel and Carolina Sasson, authors of Fire in the Machine: Driving Entrepreneurial Innovation in Large Organizations. Jonathan, Carolina, thank you for joining, welcome to Author Hour.
Jonathan Tofel: Thank you very much.
Carolina Sasson: Excited to be here.
Drew Appelbaum: Can you respectively give us a brief rundown of your professional backgrounds? Carolina, why don’t you start first?
Carolina Sasson: I am a classically trained CPG marketer. I spent a couple of years at Proctor & Gamble, transitioned over to a company called WhiteWave Foods, which is now part of Danone North America, and really spent almost 11 years there doing all the upstream, downstream type of innovation work. Along the way, I also started my own company; it was a paleo-based snack based out of Boulder, Colorado, which is my home.
In the last three years of WhiteWave Foods, I spent leading the entrepreneurial group, called the Seed Group, kind of drive a creative growth or new categories, create new categories for the company. All excellent incredible innovation experience and then have been part of Mission Field now for a number of years driving innovation for large CPG companies.
Drew Appelbaum: Very cool and Jonathan?
Jonathan Tofel: Thanks. Yeah, I’ve got 22 years of experience in CPG, also classically trained marketer and brand management. After my MBA, I started at Proctor & Gamble as well, got a chance to work on some really powerful amazing brands out there and powerful amazing teams and then partly through my career there I said, “Hey, I’m curious to do something a little different” and I jumped to this tiny little startup, which was the makers of OxiClean.
So if you ever saw Billy Mays on that shit, like my television, tell me how great this cleaning product was, that was kind of myself and my group behind the scenes. From there, I went off and worked as ad health entrepreneur for Clorox, that is another big powerful company and then eventually started up a consultancy and then shortly after that kind of realized, “Hey, I wanted the stuff that I was doing with Proctor” and it’s confluence and comparatively different experience at OxiClean, with something really interesting and powerful and about 10 years ago, that’s kind of what got me to start off Mission Field.
Taking Disruptive Ideas and Doing Them Better
Drew Appelbaum: So you two obviously have a world of experience here. Why was now the time to share your stories and write this book? Was there something inspiring out there for you? Did you have an “aha moment” or did you two just talked together and say, “We need to get this strategies out into the world?”
Jonathan Tofel: I’ll start first. I think the fascinating part for me was as we were talking together about what we do and how we help our clients, one thing we started to realize is that we kept seeing the exact same statements, maybe about a dozen or so, repeated to us and request for proposal documents for us to do work that kept – always start with, “You know, we’re a big great company with big great variants but we wish we were better at…” and there was a lot of blanks.
Over time in seeing dozens and dozens and dozens of these RFPs, we started to see patterns and similarities and repeated communications of what these big companies were struggling with. And although stated differently from company to company, the insights were the same and that’s when we put our heads together. We said, “Here’s a great opportunity to talk about what they’re telling us and let’s see if we can help diagnose and help them understand how to maybe do a better job.”
Carolina Sasson: I would add to that, we’ve sat in the shoes of being large CPG marketers. We know what it feels like, we’ve been there, we’ve done it, and putting together what we have learned as we get to see behind the scenes to so many companies and really provide the innovators sitting in a large CPG company, trying to drive innovation, that they are not alone, that their struggles are real and that there are better and different ways to get disruptive innovation out there, we really wanted to share that story.
Drew Appelbaum: So when you started to write this book, who exactly where you writing this book for?
Jonathan Tofel: Drew, the strange thing is that the trend right now is that the big consumer package goods companies, who have almost all the resources, are driving about 25% of the growth of all the different categories out there, but the small to medium size brands are actually driving 45% of the growth in all of those categories, almost double what the larger companies are doing, and that’s shocking because they’ve got everything at their fingertips.
Drew Appelbaum: Let’s dig into the book itself. For anyone that doesn’t know, we’ll refer to it as CPG moving forward, but talk to us about just the world in general of consumer packaged goods.
Jonathan Tofel: Consumer packaged goods are fascinating. Think of the amazing complexity that it takes for you to just end up at a grocery store and go purchase a food product, a snack product, a beverage, a pet food, a cleaning product, those things start years in advance with someone’s idea and then they have to get figured out about whether or not consumers want it. They have to figure out how to make those things.
They have to then have a logistics operation that gets it from a factory to a warehouse and from a warehouse to the retailer. Consumer packaged goods in it of itself is amazing, and there’s this little hidden secret that most people don’t know that if you really think about it, the biggest companies have this core competency and ability to come up with an idea, and then about three to five years later have it show up in a hundred thousand different locations.
Your convenience store, your grocery store, a mass manufacturer or mass retailer like Target or Walmart, maybe a vending machine. Then all of that is seamless, it’s endless and it’s constantly there whenever you need it and the consumer packaged goods industry by itself is just fascinating and of course, there’s different companies of different sizes. Some are small and starting up, trying to get a really interesting idea out there.
Some are established companies that have been doing this for, you know, 50 to 100 years and they all have kind of different lenses and approaches to how to make that come to life.
Drew Appelbaum: For what you just described, how is that actually taking place in the market right now?
Carolina Sasson: Drew, it’s fascinating. The CPG category in the US as reported by IRI, which is like one of the data collection systems, the total category in 2020 was over 900 billion dollars, growing at about 10% per year. The interesting thing you would think large CPG companies, they are the strongest resources, they are the big guys in the marketplace, they represent about just shy of 50%, about 46% of the total size of the categories.
But it’s been five consecutive years that they’ve been losing share, so they are down about 1.3 points in 2020. At the same time, the small CPG companies, the smaller players in marketing, they are capturing about a third of the total growth and they’re up 1.1 point. So we have this interesting factor where you have large CPG not growing share over the years.
So the question that we really want to talk about in the book is, how can the large CPG capture their fair share of growth, stop losing share to the smaller brands, use the power of what they do? We want to talk about how do you take disruptive ideas in large CPG, not modify them to fit the system and the constraints that exists and that are real, but how do you do it better? How do you have new methodologies that let you digest and approve riskier, new, radical ideas?
I think that is the interesting thing that will help big CPG come back to gaining share and continue to drive their fair share of growth in the future.
Jonathan Tofel: Drew, the strange thing is that the trend right now is that the big consumer packaged goods companies who has almost all the resources are driving about 25% of the growth of all the different categories out there but the small to medium sized brands are actually driving 45% of the growth in all of those categories, almost double what the larger companies are doing, and that’s shocking because they’ve got everything at their fingertips.
Carolina Sasson: That’s an amazing point, Jonathan and often shocking and eye opening, and I think what’s so exciting about what we talk about is, how did the large CPG companies keep their disruptive ideas disruptive, not modify them to fit their systems but really use new methodologies that can help the companies digest and approve disruptive ideas and bring to the market new and radical products.
Drew Appelbaum: You mentioned in the book that the research actually shows that about 75% of new innovations fail. Why is that?
Jonathan Tofel: Yeah and it is not only 75%, it actually goes along as high as 95%, but there is tons of reasons. I think there’s three big ones, and there is probably tons of sub-points, but here’s some of the big ones. One, big companies constantly like to defer to what they know how to do really well and if you repeat restraints, you don’t push the envelope. Innovation that’s going to grow your company can’t be small and closed in.
It has to be big and challenging and maybe even a little bit scary. That’s the kind of innovation that creates new categories, innovation that creates new brands, but if you constantly launch small innovations, then the risk of that innovation being interesting are just so-so versus everything else, and every other competitor launching another little innovation ends up being watered down.
So one, if you do what you constantly do really well, that’s a challenge but two, is that you often see the way they look at these innovations and how they judge what they are going to do. They use the same tools over and over, whether it’s big hairy innovation that sounds challenging or whether it is the smallest easiest thing that they could do in a heartbeat, and I’ll give you a good analog.
If I told you that the only way to evaluate cars is by saying, “You should buy the fastest and the cheapest car, that’s the best car for you” then a car like a minivan would always lose against the Honda Civic, but intuitively, that doesn’t make any sense. Both have legitimate reasons to exist and I could flip it to the opposite and say, “The fastest and the beefiest car is the best” and therefore, you know, some muscle car should be the one that always wins against the Honda Civic, but that’s also not true.
Each car exists for different purposes and the key is that innovation has got to be looked at in different ways because the more challenging ones, the harder ones to pursue, need different models to evaluate their risk potential. Then part three is what’s interesting, is that the bigger the company, the more they get stuck in the process of how they bring things to life, and so a great analogy here is just thinking about, strangely enough, about boats and ships.
So I could tell you that a battleship or a cargo ship have very clear and specific purposes and you could think of those as like the biggest manufacturers of consumer products, but there also exists speedboats and you really can’t ask one type of boat to do the job of the other, and it is not terribly different with innovation. The biggest companies are kind of like the battleships out there, who have power and strength and ability to go do what they want.
But strangely enough, not the maneuverability, so they often lose out on opportunities because they’re just not as nimble and agile as smaller entrepreneurs. With that being said, there’s no reason why they can’t have an entire fleet of options but instead, they build systems that do one thing really well and so if you look at those three big things, that’s often what makes new innovations fail.
The EMBR Model: Achieving Product-Innovation
Drew Appelbaum: Your book also outlines your EMBR model, which is designed to show large organizations how to achieve the product-innovation agility of entrepreneurial startups. Can you talk a bit about that model?
Carolina Sasson: Absolutely. So let’s start off by saying, what is EMBR? EMBR is a model, it stands for energize, make, burst and roar. I will talk about those in a second but philosophically, EMBR as a model is really seeking to triangulate, to figure out the insights to drive new innovation opportunities comprehensively, that’s really important, comprehensively in multiple ways, with the goal to lower risk and build confidence and the ideas, and doing that within that entrepreneurial mindset we’ve been talking about.
So at the simplest, there’s kind of four big pieces of this. The first is make really great ideas that are powerful. That’s our energized process and it is the upfront innovation, sometimes referred to fuzzy frontend work and we do that again, with our mindset, really is about how do you drive an entrepreneurial fast-paced model that gets really great ideas.
Once you have a really great idea, the EMBR model then moves into the second piece, which is make it real, and make is the keyword here. So turn that idea into something that you can put in consumer’s hands as quickly as possible to get real feedback off of a real product, something that people can tangibly hold onto.
The model then continues into what we call burst, and burst actually covers a wide range of things, which are often referred to as transactional testing. At its simplest, this is about letting consumers vote with their wallets. This is about putting real product in front of real people in context and letting them vote.
That might be at a convenience store where you take the product in a small scale and you put it out there and see how it does. It could be in a traditional grocery store. It could be in a home hardware store. Anywhere really where consumers can buy product, that could be online. As long as you are getting out there within context of where you want to sell, moving that into that world of letting the consumers vote.
Then that takes you through kind of the A to Z building of an innovation idea and the fourth piece of it kind of is, iterate, iterate, iterate, repeatedly, endlessly like an entrepreneur. Big CPG has traditionally had a tendency to do all this background work, launch something and it is kind of done. It’s just the way that the system has worked. You get it out, it’s in a huge amount of distribution and you hope you got it right.
We see a lot of product division that does what we call a boom squad and so EMBR really is bringing it back. So instead of doing this big launch and then splat, it didn’t work, it’s tested early before you go do that big skill launch, so that you can again, de-risk and build confidence that you have an idea that it really is ready to scale, and you do that following our EMBR. Then I’d also say that we have a process that’s also in there, which is ignite, and ignite is, how do you bring that all together and do it as a cohesive innovation plan?
Jonathan Tofel: It’s funny, I want to delve in that too. The fitting and adjusting in a launch, it sounds so simple because if you really hear and listen to the news about how, let’s say like, .com business or different kind of Internet plays, they launch beta sites and then adapt and adjust and it’s funny, but in food manufacturing or cleaning product manufacturing, the opposite really takes place, partly because you’re manufacturing a physical thing.
It is hard to make that physical thing and to have it be consistent every time, but some of the newer entrepreneurs that are out there, they’re talking openly about, “You know, you’re buying version 1.2A of our product” and this is a food product and, “By the next time you purchase our product, maybe three months from now, you might be buying a version 2, version 2ZX” or something like that.
It’s funny because that’s a radical thought to consumer product manufacturing where it is all about I create a system, I make that system, I perfect that system, and I keep making that thing for a very long time until I make that small change, and instead, trying to rethink it and say you can make changes right out of the gate and keep making changes and improve the consumer experience, that’s a radical thought.
Carolina Sasson: That’s that taking the entrepreneurial mindset and bringing it back in, letting everybody kind of have that process of iterating, pivoting, bringing it back not just stopping that has so much power.
Drew Appelbaum: You two also have a companion website for the book. Can you tell me what the website is and what readers and listeners can find there?
Carolina Sasson: Absolutely. The website is mission-field.com/fireinthemachine. That’s where you’ll find the information on Fire in the Machine, the book and then missionfield.com, would have all the information on our process and EMBR and what we do.
Drew Appelbaum: Well Jonathan and Carolina, it is so exciting that you’re here and that your book is published and there’s so much more inside. You two really took a really deep dive into the world of CPG and there’s some really great takeaways in the book and I just want to say, you know, kudos and congrats on putting that book out into the world.
Carolina Sasson: Thank you.
Jonathan Tofel: Thank you very much.
Drew Appelbaum: This has been a pleasure. I’m excited for people to check out the book. The book is called, Fire in the Machine, and you could find it on Amazon. Jonathan, Carolina, besides checking out the book, besides checking out the website you just listed, is there anywhere else where people can connect with you?
Drew Appelbaum: Wonderful. Well, thank you so much for spending some time with us today and best of luck with your new book.
Jonathan Tofel: Thank you.
Carolina Sasson: Thank you.