Categories, as we define them, are built by the industry for the industry’s convenience.
When we say “we need to innovate within our category,” we’re often just reshuffling the same deck.
How many more variations of cookies does the world really need?
How many more shampoo formulations?
The breakthrough opportunities come from understanding what job the consumer is actually trying to get done, which often crosses category boundaries entirely.
I’ve spent nearly four decades working in innovation- starting in automotive, then defence, then food from 1993 to 2000. Since founding The Re-Wired Group along with my co-founder, Greg, we’ve been deeply embedded in the consumer packaged goods world.
That long arc has given me a particular perspective on where the industry stands today, and honestly, I’m optimistic.
The CPG market is ripe for transformation, and I think the companies willing to rethink how they approach innovation are going to be the ones that define the next decade.
But to move forward, it helps to understand what shifted along the way.
The shift that happened between 2000 and 2010
Somewhere in that decade, the economics of innovation changed. Sustaining innovations, such as cost reductions, line efficiencies, and process improvements, started delivering faster, more predictable returns than new product development.
When you can save $20 million by optimizing an existing line, it becomes harder to justify the risk of building something new. Finance and marketing found common ground there, and what ultimately happened was R&D gradually moved to the back seat.
The numbers told the story here.
Nielsen reported that in one year alone, companies launched around 25,000 new SKUs, and fewer than 40 crossed the $10 million mark. That’s a lot of investment with very little to show for it, and leadership teams , understandably, started asking hard questions about where to allocate resources.
What emerged was a different model.
Think incubators, accelerator partnerships, academic collaborations – where the innovation risk was externalised and successful ventures could be acquired later. It’s a rational response to the economics, but it also meant that many organisations stopped exercising the muscle of building new things internally.
The good news is that muscle memory doesn’t disappear entirely; it just needs to be reactivated.
Categories are built by the supply side, not the consumer
This is where things get interesting, because the way we talk about categories inside the industry isn’t how consumers experience them at all.
Take candy bars: most of us would say Milky Way and Snickers are direct competitors. They’re next to each other on the shelf, and they sit roughly in the same format.
But when you actually talk to consumers about what they’re choosing between, Snickers is competing with Red Bull, a coffee, a sandwich, maybe an apple. It’s solving a “I need energy to get through the afternoon” problem. Milky Way, on the other hand, is more likely competing with ice cream or a glass of wine; it’s an indulgence or a treat at the end of the day.
Categories, as we define them, are built by the industry for the industry’s convenience.
When we say “we need to innovate within our category,” we’re often just reshuffling the same deck.
How many more variations of cookies does the world really need? How many more shampoo formulations?
The breakthrough opportunities come from understanding what job the consumer is actually trying to get done, which often crosses category boundaries entirely.
There’s also a persistent myth that more choice is inherently better, but the research doesn’t bear that out. More choice often creates confusion and can actually reduce consumption in a category. And in too many organisations, success has become synonymous with launching – “I shipped eight products this year” -without enough attention to whether those products actually found traction. The opportunity is in shifting that mindset from launch velocity to outcome velocity.
You can’t steal market share: you have to create it
One of the patterns I keep seeing is companies trying to win by taking share from competitors, when the real growth comes from creating new demand altogether. That means going after what I call struggling moments – those points in people’s lives where they’re trying to make progress but something is getting in the way.
When you solve a struggling moment that nobody else has addressed, you’re not fighting for a slice of an existing pie; you’re baking a new one.
But when you try to innovate inside a corporation, there’s a tendency to compare everything to what you already have. But we shouldn’t be measuring new products on margin, we should be measuring them on pounds of cash generated.
Even if something has lower margin, if it sells at ten times the volume, that’s a better outcome. But what often happens is that new products still in their infancy get evaluated against the value system of mature product lines.
That comparison almost always works against the new thing, and promising innovations get killed before they have a chance to find their footing.
The big hire and the little hire
There’s a distinction I find really useful when thinking about product innovation: the big hire versus the little hire. The big hire is when someone decides to buy the product – when they pick up that can of Windex at the store. The little hire is when they actually use it – when they reach under the sink and spray the counter. Those two moments need to be aligned, and they often aren’t.
You can make it really easy for someone to buy your product, but if they’re not using it more frequently once it’s in their home, you’ve just shifted inventory from the store’s warehouse to their cupboard. The real unlock is figuring out how to increase the little hires… finding new applications, new occasions, new reasons to reach for the product.
That’s what drives consumption velocity, and ultimately, that’s what drives repeat purchase and growth.
This is part of why innovation is genuinely hard. It requires threading a needle between purchase behaviour and usage behaviour, and the financial side of organizations doesn’t always have the patience for that level of rigor.
But the companies that invest in understanding both hires are the ones that build products with staying power.