Your Corporate Innovation Baby Will Be Kidnapped
Be ready for the dream to end if you're lucky enough to make it happen at a BigCo
Welcome to the latest entry in The Workaround. You’re in good company with thousands of fellow entrepreneurs and innovators who have subscribed!
I’m your host, Bob, and my mission here is to share personal, behind-the-scenes stories of ups and downs from my career leading tech startups and corporate innovation.
I write to make you think, smile, and discover a shortcut to success or a trap to avoid.
Here we go…
My friend Michael joined a giant entertainment company out of L.A. a few years ago. He was given a small, underperforming business line with low expectations. But he saw the upside, in part because he brought personal experience in its sub-category that previous leaders lacked.
Michael turned this business from a dog in the corner to one of the company's fastest-growing and most profitable business units. Then they came for his baby…
Multiple leaders above him are plotting to take it away. It’s now a big, valuable bauble, and swarming VPs are desperate to add a winner to their teams at a time when the entertainment industry is under enormous pressure. Of course, Hollywood has always been ruthless. Michael is fending them off for now—he’s got to play a different game today.
His story highlights a big reason why corporate innovation eventually fails, even after it succeeds. Whether through acquisition or internal R&D, the leaders who manage to turn nothing into something eventually lose out to the hungry leviathan of corporate politics.
I’ve got a similar tale to tell. It’s the second half of the story of my time launching Mr. Clean AutoDry Car Wash, which I began last week. Alas, this sequel follows in the footsteps of The Empire Strikes Back. Let it be a lesson to you, young Jedi…
Taking a Victory Lap
It’s summer 2004, and as I mentioned in last week’s post, our launch of a category-killing innovation in the auto care aisle continues to accelerate. And we’re starting to make plans for an even bigger year two.
I didn’t previously mention that as we were ramping up to launch that product, I was asked to take over the entire Mr. Clean business. It wasn’t a huge honor at the time, though. Mr. Clean was a languishing third-place competitor in the floor cleaning category. There had been rumors of the brand being divested following the recent departure of Comet cleanser and Joy dishwashing detergent. But the big guy survived the purge, partly because of hopes that we could bring innovation to the brand.
When I came over to the base brand, I inherited an innovation that needed a home. It was a funky foam sponge with cleaning properties. Our R&D team found it on a trip to Japan while scouting for Swiffer ideas. They returned with these foam cubes in the bottom of their suitcase. We struggled to translate the package but found it to be a killer cleaner when rinsed with water. We called it Magic Eraser.
My team and I had to figure out how to launch it with just a $4 million budget. That’s less than peanuts for a new product launch at P&G—much less a new cleaning product category. But that’s all the company was willing to invest in an unknown product under a fading brand.
So we looked for a way to maximize the bang for our buck and came upon this new tool called “E-Mail.” Our cleaning brands had amassed a database of 2 million consumers by offering coupons from time to time. One of us came up with the idea of offering a free sample of Magic Eraser to people who replied to our email offer. The hope was these consumers would love it, buy it, and tell their friends.
We “sold out” of the samples in just six weeks, which depleted most of our launch budget. We sent our samples to requesters’ homes and shipped our initial cases of product to retailers—then hoped for the best…
And as you know by now, dear reader, Mr. Clean Magic Eraser was another category-disrupting grand slam. I don’t have to tell you that because you’ve got one in your house right now.
So it was suddenly a pretty fun time to be the Mr. Clean Brand Manager. We tripled sales in one year after decades of declines. And while I now had multiple products to oversee, the Auto category was still my primary focus. The biggest reason was that our retail customers begged me to meet with them. And when the customer calls, you get on a plane ASAP.
I start with Target, where, just months earlier, I found myself in its parking garage in downtown Minneapolis in the winter. My sales lead, John, and I begged a janitor to help us find a hose hookup to do a live demo of our car wash kit to a skeptical Junior Buyer. Today, I’ve got a meeting with the no-longer-Junior Buyer (who was newly promoted, thanks to our success), the Category Director, and the VP of Automotive.
They greet us warmly—which is somewhat usual in brand-retailer relationships. Aside from powering their 50% growth, our partnership has helped them get their business on the radar with their company leadership. We were able to show the first innovation in the aisle, and it’s got their minds opened up to bigger things. They want to clean out the crap on the shelves, encourage more “discovery trips” by their guests, and make automotive a closer fit with the entire store’s “lifestyle solutions and simplification” equity.
The best part is that they want us to lead the way with them. We leave the meeting room and go for a walk through the store together. They point out specific categories where we might apply our innovations. At one point, the Buyer points to the wall of cleaning accessories—stuff like tire brushes, sponges, and scrubbers—and tells me:
“See all this stuff? It’s branded under Target, but it’s not unique enough. We want to give this entire category to Mr. Clean. That’s a top brand that people trust now, and you guys are the ones who can take it to the next level.”
Now, if you’re a CPG marketer reading this, please wipe the drool from your open mouth. For everyone else, this kind of brand-retailer partnership is simply unheard of. I started to swoon with dollar signs swirling in my eyes. I quickly nodded and mentally drafted my internal memo to share the good news—until the buyer stopped me with one last comment: “But we need to lock this down quickly, and we need your commitment by next month.”
I go from this meeting down to Memphis, where my meeting with the Autozone team is very similar. And then I fly out to the granddaddy of them all, Walmart, in Arkansas—which our sales lead, Kenny Shields, calls “Fayette-Nam.” (Rest in Peace, Kenny, we miss you!). Walmart, too, needs help. They want to kick out a bunch of vendors and give us their business if we can enter the market with products that bring innovation and match their margin needs, which aren’t unreasonable.
Presenting the Great News
Getting our leadership’s support should be a no-brainer: It’s a guaranteed sale, nothing we haven’t done before, and, hell, just a few months ago, my GM, Christine, gave me the approval on a $40 million launch budget on a much riskier proposition.
My manager, Brad, and I try to get individual time with Christine to run through the plan, but she says she wants us to present to her entire cross-functional leadership team. I’m not sure why. I figure maybe she wants to show off our success a bit and maybe use the meeting to rally everyone to move quickly on this huge opportunity.
The day of the big meeting arrives, and I’m eventually called in from the hallway to grab a seat at a giant square conference table with around 25 senior leaders from functions ranging from Product Supply to Finance to Market Research.
I begin my pitch with a recap of our whirlwind series of meetings and outline the massive bonanza in our hands. While we’ll need lots of support in the months ahead to take advantage, my most pressing need is for approval on taking over Target’s accessory business, as now I’m down to three weeks before the Buyer’s deadline.
I brought some samples of the current Target brand tire brushes, along with some samples from an external partner we’ve worked with in the past. We’ve already got some ideas on how to upgrade them. I pass them down the line of people as I speak.
Eventually, the samples reach Christine, and she asks me to stop speaking. She holds a brush in each hand, inspecting and comparing them. Then she says:
“I think this brush is a good representation of the Mr. Clean equity, but I’m not sure this one is a fit.”
Then other members of her team start to weigh in. The product supply guy says he thinks we need to find a new supplier. The market research person suggests we do a 6-week consumer equity test. Finance wants to know if these brushes' margins will match what we make in liquid soap.
It devolves into a shit show. No one is paying attention to me anymore. They are talking and opinionating, but I can only hear the pressure of blood surging through my ears.
I realize in that moment our opportunity is lost. The manager who admitted she knew nothing about the category months ago and fully trusted my decision-making—was now deciding which tire brush was on brand.
WTF Happened Here?
I went from top-of-the-world to down-in-the-dumps.
Nothing came out of that meeting except for a bunch of blah-blah-blah. There are other meetings in the following weeks, mostly with Christine, her boss, and other functional VPs debating the future of the business we built from nothing. We miss the Target window of opportunity, and that with AutoZone…and (sniff) Walmart.
I do some serious soul-searching and eventually figure out how the pendulum could turn like this. I reason that when AutoDry was a small idea with unknown potential, it was easy for Christine to give me the green light. She had other, bigger businesses to worry about. And the launch budget came from a different P&L. When AutoDry became a big business she felt the pressure to ensure it went well. It’s human nature to think you’ve got to touch something when it’s your responsibility.
I start going through the motions at the office. One day a good friend asks me to get beers. He had left P&G a few years ago to take over a struggling ad agency. He tells me how it’s starting to turn around with its shift to digital marketing—and he asks me if I’d like to join him as a member of the exec team and co-owner of the agency.
I wasn’t looking to quit, and while I had entrepreneurial aspirations, I never pictured myself on the agency side. I ponder his interesting offer over the next few weeks, and, eventually, the realization hits me: The only way I could stay in this corporate job is not to care. I would have to give myself a lobotomy to change my personality. Of course, that’s out of the question. So I take his offer.
About a year after my departure, AutoDry was divested to a company that makes anti-freeze. They tried to keep it going but didn’t have the same kind of resources to maintain the business, much less help the auto retailers make the transformation they dreamed of. Today, you can find old starter kits on eBay and YouTube videos about products that people miss.
The Passion Problem with Corporate Innovation
My experience is far from rare. This happens often in M&A, where most acquisitions fail. It doesn’t seem to make sense, as these are almost always high-quality businesses that pass months of due diligence and Board approvals. But it’s what I experienced in selling my first two companies. Here’s what happens:
First, it takes passionate entrepreneurs to will something innovative off the ground. Whether a startup founder or a corporate innovation lead, it’s the people who take their job personally and crawl through glass to turn nothing into something. In the process, they acquire vast knowledge of the space, build personal relationships with their customers, and inspire a team around them to succeed.
Then, when the company is acquired, or the corporate innovation takes off, the business becomes an attractive target to a corporate manager to add to their domain. But they rarely understand or care as much about the business. This manager didn’t invest the blood, sweat, and tears it took to succeed, and they don’t have the founder mentality.
The corporate managers who inherit (or grab) these businesses are playing a different game—the promotion game. The higher the ladder's rungs, the more it’s an up-or-out model. There’s more and more internal competitive pressure in and around the boardroom. Game of Thrones or Succession is only slightly more dramatic than the real world.
In this game, you must show you are making a personal impact—that you are indispensable. After all, the more budget and headcount you control, the more critical you appear. And if you don’t hit your number, you’re at serious risk of being cast off in yet another round of restructurings. So there’s a desire to take over a winner and a fear of relying on the people below to lead appropriately.
This is the common path, but there are exceptions to the rule. I got to work with many leaders in my P&G days who have gone on to play this game at very big companies. The ones who made it to the top took the enlightened path of supporting their teams and giving them the responsibility and accountability that motivate people to greatness. And those I saw give in to power games and fear concerns eventually stalled out career-wise.
Whatever your role, it’s important to recognize that you’re playing a game. It’s up to you to pick a strategy and see it through. I hope you choose the enlightened path.
Today, I remain thrilled that I got the chance to lead something big in a corporate role, even if our success was clawed into defeat and ended up in the dustbin of CPG history. Aside from the confidence it gave me to become an entrepreneur, I saw the right and wrong ways to manage the passionate people I work with
This lesson is particularly relevant now that I’m starting to invest in other entrepreneurs. But that’s a story I haven’t told yet. Stay tuned…
How we might work together…
My team and I lead Hearty, a boutique recruiting service that helps tech-forward companies hire proven talent. Our senior team of operators sources and screens, saving you time and money. When you need help, let’s chat.
Need help with a software project? Perhaps a product MVP, a project that requires outside help, or a fractional CTO for key strategic decisions? Our team at Shipwright Studio has worked together to build multiple successful startups, and we love helping leaders turn their dreams into reality. We're the team our clients trust for software built to last.
Looking for Influencer Marketing and Content Creation? The team from our previous company is back by popular demand with A2 Influence. We’re ramping up now and would love to share more.
Feel free to schedule time together during my Open Hours for questions, feedback, networking, or any other topic!
BONUS: Cool Content of the Week
A little something I found meaningful. You might agree…
The Rebooting with Brian Morrissey
I’ve touched the media business as a marketer going back over 20 years now, and I continue to be curious about the state of news and entertainment businesses. Brian is a vet from all sides of this industry. He shares a weekly post and podcast with sharp analysis.
This week he writes about News Aggregation Apps and why they always seem to fail. Check it out!