Firstly, when anyone in the United States thinks of Gerber products, the image of that blue and white baby face label immediately comes to mind.So Gerber has some very real challenges branching out with a new product when they are so strongly branded across the cultural landscape. The idea was sound and the market opportunity is there, however the administrative and bureaucracy which tends to define the architecture of a large company will alter a good idea until it is perverted into an impotent liability.
What a large company can do to avoid these issues is to search for a potential solution by seeking a small start up that has a lot of the initial work done on that product segment and offer a partnership where the larger company can bring the venture capital, manufacturing, distribution, and marketing to develop a potentially successful off-shoot.
Luke, do you think that big companies have alternative means to innovate in a meaningful way besides simply acquiring start ups?
ReplyDeleteSure, R&D divisions would be good depending on the industry. GE is a good example of this, they strive to be first or second in their market segment and they deliver good growth for there shareholders; if not, they won't enter it. But GE does not make baby food!
DeleteInteresting idea to propose an acquisition as a means of innovating. For a company whose brand association is so entrenched in a specific market (i.e. Gerber = baby food), this might be a feasible solution. If they were to go with this method, it would likely make sense to maintain the branding and name of the acquired company.
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