There is so much I love about this interview with Ryan. He has an amazing perspective on similarities and differences between “traditional” and “corporate” startups (start listening at 11:58)
I believe this is particularly powerful because no matter what industry you come from you’re familiar with the products Ryan and his team are innovating.
While the entire interview is golden, I also really enjoyed a few quotes from Ryan that I wanted to call out ahead of the full transcript (below):
His definition of Innovation inside Smuckers (starting at 3:54)
I define innovation inside of J.M. Smucker’s as really the company leveraging our strengths to create value for consumers, and they in turn return value to us. If you kind of orient yourself around that it kind of sets you up for how I approach every day and how the teams approach every day.
His perspective on managing multiple stakeholders (starting at 14:31):
There’s a lot of bosses inside a large CPG organizations and an innovative leader inside has to have the ability to create a vision, and collaborate, and navigate those waters which can be challenging. There’s a lot of bravery in there because if you listen to every piece of feedback you got on down the road you’d probably end up with something that was pretty dull and quite frankly might not be valued by the consumer at that point. So there’s a lot of bravery that’s required to do that.
Finally, his perspective on failure and how it relates to the culture (starting at 24:19):
culture for a tolerance for this failure but not for incompetence. … And what’s the real definition of a failure? For us, if we are moving forward and we continue to figure out how to create value to consumers then for us it’s not a failure. It was an opportunity to learn.
I also hope you’ll consider subscribing to Agile Giants if you haven’t already on:
Sean Ammirati: 00:08 Welcome to Agile Giants, lessons from corporate innovators. I’m Sean Ammirati, your host, co-founder and director of the Carnegie Mellon Corporate Start Up Lab, and partner at the early stage venture capital fund, Birchmere Ventures.
Sean Ammirati: 00:22 Each week I’m going to talk to guests who are experts at creating start ups inside large corporations. I believe fundamentally a start up within a company is the same as one inside the proverbial garage, a group of entrepreneurs trying to make the world a better place using new ideas and inventions. However, I also believe some of the techniques and processes are just inherently different.
Sean Ammirati: 00:46 This podcast is going to explore those similarities and differences. On this week’s episode I talk to Ryan Thomas. Ryan leads innovation for Smucker’s, an $8 billion CPG company I’m sure almost all of you are familiar with. You know, a lot of these early interviews are people that I’ve worked with and known for a long time. I actually didn’t know Ryan well before the interview but sought him out specifically because I thought the perspective of a large CPG company would be interesting as we think about different companies and how they approach innovation, and Ryan certainly doesn’t disappoint. I think there’s a ton of lessons here both for how to do innovation inside a consumer-facing brand like Smucker’s, as well as just generally how large companies should approach these processes.
Sean Ammirati: 01:35 You’ll also see many similarities if you’re a traditional entrepreneur to the lean start up methodology, designed thinking, and techniques that you’ll be very familiar with. Hope you enjoy this week’s episode.
Sean Ammirati: 01:55 Welcome to another episode of Agile Giants. Today I have Ryan Thomas with me. Ryan is the vice president of innovation at Smucker’s and I’m really excited to have him on Agile Giants today. Ryan, before we jump in to talking about what you’re doing at Smucker’s and your career, could you just give the listeners a sort of arc of your overall career and sort of what led you to ultimately leading innovation for Smucker’s?
Ryan Thomas: 02:18 Sure. First of all, thanks for having me, Sean. I appreciate the opportunity to chat with you. You know, my background has been … It’s been a combination of what I call traditional brand marketing, and very large CPG companies, and innovation roles. I started my career being a brand steward of large brands, so at H.J. Heinz or The Campbell’s Soup Company, or pet food that the J.M. Smucker’s company owns now. Through that work over the last 15 plus years there’s really been this transition from managing brands, or being a good brand steward to one of how to think about growth and how to think about brands connecting with consumers. So, that’s kind of how I’ve navigated it. It was probably about 10 years ago or so that I really felt the urge to step out of traditional brand role into a more innovative role and I’ve managed to have a couple roles, and then bring that back into how to think about managing, stewarding a brand.
Sean Ammirati: 03:28 That’s awesome. Yeah, growth is such an important topic, not just for tech companies but all companies these days. That’s awesome. Let’s drill into a little bit about what innovation and leading innovation means inside of Smucker’s. Maybe as a way to get started, and it can be Smucker’s or the pet experience before, but could you talk about an innovation project that you were part of that you think you’re particularly proud of and sort of illustrates what innovation means in one of these CPG companies?
Ryan Thomas: 03:54 Sure. Well, I define innovation inside of J.M. Smucker’s as really the company leveraging our strengths to create value for consumers, and they in turn return value to us. If you kind of orient yourself around that it kind of sets you up for how I approach every day and how the teams approach every day. That translates to a good example of an innovative product that we launched just this past year actually, which was Jif Power Ups. Jif, as I’m sure you’re familiar, is a very iconic brand. It is the largest peanut butter brand in the United States, very iconic, has a penetration that’s while I can’t recall it is very high.
Ryan Thomas: 04:39 That innovative project was around taking an iconic brand into a new space, into a new part of the store, one where we were not incumbent. So if you think about the strengths of brands and CPGs it really lies in one, the power of that brand. And even today, in a very dynamic general market place this idea of how much of the shelf do you control, and for a brand like Jif to go into a different part of the store, in this case the snacking part of the store, where families, moms, and dads in particular are there seeking solutions to how to provide healthy calories, how to provide healthy snacks, how to provide healthy meals to a family life that’s quite busy. That’s one that I’m most proud of and I think represents what the best of CPG can do because brands are our largest assets.
Sean Ammirati: 05:31 I want to pick up on that brand as an asset in innovation, but maybe could you give us a sense like, how’d you come up with that idea for this new offering with leveraging the Jif brand and then sort of what was the process from idea to that hitting the shelves?
Ryan Thomas: 05:44 Sure. Innovation for us is really driven by strategy, strategy and consumer, and they really go hand in hand. And so understanding your consumer’s challenges, problems, life, lifestyles, those types of things. That’s where we’re really grounded. The strategy piece comes in, as you are aware, strategy is really about choices. And for us choices are what strengths do we have that we feel like we can leverage with a consumer need, a consumer job, a consumer problem to create value for that. So the strategy in this case was as we looked at our business portfolio and we looked at the health of the Jif brand, when you’re the largest in a category, can be hard to get incremental growth, right?
Sean Ammirati: 06:34 Sure.
Ryan Thomas: 06:34 Yep, short of population growth or short of call it super macro trends that would force folks into the category in which you compete. And so we set our strategies to transplant our iconic brand and what that brand means for consumers into places we feel like are relevant. And so that was kind of a high level overarching strategy.
Sean Ammirati: 06:55 Okay.
Ryan Thomas: 06:55 Once we established that we said, okay, what role can we play in that and where might be the best to play. So we think about the age old questions of where to play and how to win. So we made the choice around, we want to play outside of our traditional nut butter category. The where to play today was today has a lot of equity around being nourishing, sustaining, fulfilling. It is a natural protein, high levels of protein, one that is pretty simple if you think in terms of if you think about ingredients, and so that’s a macro trend around less ingredients is preferred over more ingredients. And so we felt like snacking was an area we can get in. But snacking’s quite large. There’s a lot of context and occasions for that throughout the day and so then we focused in on a consumer. We use a framework here at Smucker called “Jobs to be Done.”
Sean Ammirati: 07:48 Yep.
Ryan Thomas: 07:49 And really, jobs is all about what someone is trying to achieve in a given circumstance. It’s never just about function. There’s function, there’s social, there’s emotional dimensions to it. And so we dug into what consumers were hiring and firing for those given snacking circumstances. We tend to orient around what we call anchor points in a consumer’s day, and for a family’s day, morning occasion is quite large, the lunch occasion, the afternoon snacking. And so those were the three that we kind of honed in on and said, what was being hired there, what was being fired, what were the context by which were driving decisions, and what compromises and tension points were in there.
Ryan Thomas: 08:34 And so we work with consumers. We do in-depth research. We spend a lot of time with consumers. A lot of that work is less quantitative, Sean, and more qualitative. It’s really around observing behavior. Consumers are not always the best at articulating what job they are hiring for but if you listen closely and you listen for some cues you can start to pick up on some things.
Ryan Thomas: 08:56 Once we do that and we kind of feel like we’re honing in on those certain circumstances, and then we use design theory to really design thinking to help unlock what a job spec would look like. And so the design really helps us articulate a visual positioning. You know, I think historically in CPG world concepts and very verbal cues were kind of the tools of the day. That has since evolved since then and we use a lot of visual positioning. We turn visual positioning into MVPs, minimally viable products, to help us iterate, gain consumer feedback. We do that very rapidly, very quickly.
Ryan Thomas: 09:35 And then, in this case, we use branding as a shortcut. Jif is iconic. It has equity with families in particular, already has a high penetration so its got legs of which it can stand on and transplant in other places, things like comforting, it’s trusted, it is peanut butter, nut butter. Jif is the number one representative is very sustaining, and filling, and can be empowering. Making sure that children, family members are not hungry, that they’re not worried about hungry. They’re worried about their math exam not when lunch is because they’re hungry.
Ryan Thomas: 10:09 And so we introduce branding as those shortcuts. In this case we chose an existing brand and then a sub-brand under Power Ups to reinforce what the particular benefits of these products are. And then, ultimately, you’ve got to introduce tension points and constraints. And those things are costs, technology, speed to market, customer interest, and availability, those types of things. Tensions are really important because while you must remain grounded in the consumer you ultimately have to do it in a way that meets the format at which the shop that provides the value and there’s value on down the whole value stream. And those constraints are really important. In fact, my team talks a lot about true innovation really comes out of the tensions and the constraints.
Sean Ammirati: 10:57 Yep, absolutely. You know, it’s interesting. One of the big theses that I have about this space is that a corporate start up and a start up that might be one of my portfolio companies are in many ways very similar, in many ways different, right? And the process that you just laid out is not that different than the process that a traditional start up would go through. You start going from design thinking on the ideation side to lean start up methodology to then you start going to marketing and commercialization. But then you also illustrate some of the things that are different. So like most start ups don’t have the advantage of taking advantage of the number one peanut butter brand when they’re trying to release a new product. So it sort of, I think, illustrates both sides of that. Few quick follow ups to that if you can. One, can you give me a sense how many people were involved in this and then, two, just timing from when you developed that original strategy for Power Up and this new extension of the Jif brand to when it hit the shelves. How many people and how long was that process?
Ryan Thomas: 11:58 Sure. If I might before I answer those two, just to build on your comment around similarities and differences. I thought a lot about that as well, Sean, and it’s no surprise that we, as a broader CPG and Smuckers in particular, has tried to model off of what successful entrepreneurs have done but there are unique differences inside a CPG. And one of them is size and scale. One of the things that we talk about that CPG has is this ability to press a scale button. And when we press that scale button we can be in virtually every Walmart store, or Kroger store, or Publix. Now it’s not that easy, but we have the relationships, we have the supply chain and commercial mechanism to allow us to do that, which smaller entrepreneurs typically don’t have a scale button. They have other advantages that aren’t a scale button.
Sean Ammirati: 12:54 Right, and that’s not just in CPG, although I think you guys because it’s a brand everybody’s familiar with. That’s why I love talking to you because I think everybody listening to this knows what Jif is. They may not know what complicated aluminum processing is but Alcoa has the same sort of get to scale quickly advantage that you do. It’s just brings a different set of sort of mental overhead that someone in the Smucker’s company, like we get it. But yeah, I think there’s similarities and differences. I couldn’t agree more. I also think that there are just differences about the process. I think some of the processes are very similar. Others are, they need to be tweaked to work inside a corporate framework, different budget. You know, there’s nobody funding corporate start ups like what I do as an early stage venture capitalist. There’s no venture firm you can go talk to. You’ve got internal accounting, and internal finance. Whereas a start up might be able to talk to 50 people like me, you’ve probably got a handful of budgets that you can pull from I would imagine.
Ryan Thomas: 13:58 That’s correct. And the budgets are large and so the answer to your questions around number of folks and ultimately timing. Number of folks is … That project in particular, from beginning to end was probably 150 people across the enterprise, if you think about your insights group, and your research and development groups, and your technical groups, your product development groups. One of the things in food that I’m sure you and your listeners are aware is it’s highly regulated. Food safety is ultimately important.
Ryan Thomas: 14:31 And so there are a number of folks that are involved and their expertise is required in order to achieve a project like Jif Power Ups, and along with that comes a lot of stakeholders, Sean. And those stakeholders are certainly all vested in resource and resource allocation. That’s probably another difference as you think about smaller entities, more homegrown entrepreneurial, or even like you said, the VC side is everyone’s got a boss. There’s a lot of bosses inside a large CPG organizations and an innovative leader inside has to have the ability to create a vision, and collaborate, and navigate those waters which can be challenging. There’s a lot of bravery in there because if you listen to every piece of feedback you got on down the road you’d probably end up with something that was pretty dull and quite frankly might not be valued by the consumer at that point. So there’s a lot of bravery that’s required to do that.
Ryan Thomas: 15:33 That being said, the Power Ups, Jif Power Ups project was probably … From when we declared the business strategy, Sean, was probably 18 months. Once we felt like we were validated in the space and could then move it was probably nine months, but from strategy declaration to in market was probably about 18 months and there’s always an opportunity to go faster. There are, like I mentioned before, there are constraints that get introduced when you have customers like ours that have certain reset windows for where they stock their shelves, etc., they plan those out typically six to seven months ahead so prior to you first shipping you basically need to have all your details six to seven months ahead of time, and that’s when you’re doing your hard selling, which is a bit different than potentially some other categories and depending on your channel of distribution.
Sean Ammirati: 16:30 Yes.
Ryan Thomas: 16:31 But about 150 folks would’ve been involved. There was a core team that I’d say is probably about ten to 15 that would work on this all day every day, and then with the number of experts surrounding it that would come in when required, when necessary, etc., and then about 18 months soup to nuts, but nine months from when we had the vision to when we could actually ship.
Sean Ammirati: 16:55 One question that hit me as you were going through that too, on the scale, so how many people are on your innovation team, like across all these different ideas that you’re looking at?
Ryan Thomas: 17:04 Well, we decided two and a half years ago to develop a dedicated innovation team inside of JMS. They are structured to report inside of a growth organization so whilst they sit outside of a business unit, which is how we typically CPG orient ourselves, can be category based like in our instance coffee, pet food, our consumer businesses. And the reason why we chose to do that is to be able to share skill sets and to be while very connected to the business to have this, at least, a level of autonomy that you could interact with the businesses and be driven by strategy but free to be able to share across.
Ryan Thomas: 17:53 And depending on the size of those businesses, in the case of J.M. Smucker, each one of those businesses, we have three, are roughly the same size in our net sales. So the innovation teams are roughly around the same size. So total innovation teams probably in excess of 30 plus folks. And we also have our insights partners which are dedicated to innovation, and then we have our R and D. So I’d say dedicated to new products, new value creation is certainly in excess of 50 to 60 people across the enterprise.
Sean Ammirati: 18:28 That really does give a great sense into what innovation means inside Smucker’s. You know, you’ve touched on power of brand, you’ve touched on some of the constraints like just the production lead time relevant to maybe a software company, large or small. Is there anything else that’s worth touching on in terms of things that you think may be unique about doing innovation inside the CPG category versus some other industries?
Ryan Thomas: 18:53 You know, we do have resources and depth of operational knowledge that is quite advantageous. If you think about someone who wants to start a pet food company because they have a passion for it and they may have a real point of difference in terms of how they’re thinking about it. To be able to navigate the technical complexity of how you create a dog food, which for your listeners is actually more regulated than human food because a dog or a cat will live on that, in theory could live on that same food every single day for its entire life. So therefore, it is highly regulated. It must provide complete and balanced nutrition with every serving. Whereas you and I could have a pop tart for breakfast, and a salad for lunch, and we kind of subsidize our calories throughout the day and that’s how we obtain nutrition. A cat or a dog can’t do that so it’s highly technical. It’s very scientific. It’s highly regulated in terms of how you get it through both the federal and state government levels.
Ryan Thomas: 19:50 So we have resources that allow us to do that, but at times it can be a challenge to muster them, again, when you’re thinking about allocation. So it’s an advantage but we have to find a way as innovators inside the companies to be able to inform and direct those resources in a way that adds value and that is constantly iterating. You’re progressing something every day which sometimes in CPGs you can get stuck in the mud and every other week or so I kind of have to give yourself a little shove. You got to get out of the mud whatever that shove looks like.
Ryan Thomas: 20:32 And then I think we are attempting to introduce new ways to think about failure, and risk, and iterating, and learning. In our world today, and I’m speaking broadly from CPG, there is not really a lot iterating and learning. When you think about it, it’s usually is once and done. If you make it through your stage gate process and all those hurdles inside and you get to market it’s generally once and done. Ergo, if you have a slip out of the gate your first year it is not impossible but very hard to come back from that for a whole lot of reasons internal and external. Where I think if you look at a lot of other industries, and even food products, RX bar comes to mind, where the ability to iterate in market and learn quickly can help really incubate and then sprout a great idea. And that’s tough for us to do.
Ryan Thomas: 21:38 We’re trying to think about how we do that and what failure looks like and what risks like. A lot of our risk comes into risk of opportunity cost, of what else we could be working on or we talk a lot about risk to our brands because they are our biggest assets. It’s something that we continue to try to learn, and develop, and how might we do that. Now, in the industry and categories in which we compete there’s a lot of, obviously, category … I’m sorry, a lot of channel dynamics going on that may allow us to have a bit more of that test and learn, incubate mentality, but it’s certainly a work in progress for us.
Sean Ammirati: 22:19 Yeah, that’s great. And actually that sort of leads to … I’d like to now, for the last chunk of this podcast step up a level and just get your general advice for innovators whether they’re in the CPG space or other because I think there’s a lot of opportunities for you to try and share best practices that may help the guy running innovation out of a bank, or a chemical company, or whatever. Like it’s not just CPG and so maybe because you were just touching on this, this continued learning yourself around how you guys think about failure and risk. If you were going to give one of those professionals in a different category some advice, like not a competitor so you’re not helping someone that you’re competing with, just what might you tell them about how you would encourage them to think about failure and risk and then we’ll head a couple other questions in the same general vein.
Ryan Thomas: 23:07 Sure. Well failure and risk is part of it so I’ll tackle that node as a part of a set of nodes. I think the place to start is talent and then culture because I think you have to have those two before you can go anywhere. And innovative talent, it is a talent and it is a muscle that can be built and curated but it sometimes is not for everyone and there’s probably three to four buckets of how we think about talent. One is ability to create a vision, ability to collaborate, learning, and then this idea of execution. And there’s certainly values that are underneath that and other things like level of being comfortable with ambiguity, which is sometimes there are folks which are not comfortable with ambiguity and if you’re going to be in an innovative role or the innovative leader that’s an area that you have to work on. Even the best at it still get uncomfortable with it, but so if you think about talent and then it’s curating that talent, finding that talent, and furthering to develop that talent.
Ryan Thomas: 24:19 And then inside of your walls it’s really around your culture, culture for a tolerance for this failure but not for incompetence. And you have to be willing to experiment and you have to be willing to provide feedback but also receive feedback. And I think the failure bit comes in there is because it’s imperative to have a culture that is clear what failure is and what it’s not, and what to do with failure. We talk a lot about … I know it’s pretty cliché but fail forward. And what’s the real definition of a failure? For us, if we are moving forward and we continue to figure out how to create value to consumers then for us it’s not a failure. It was an opportunity to learn. That doesn’t mean, Sean there is never failures. There certainly are. I’m pleased to say that while we are not perfect we, as JMS, I think have learned that if you can fall forward on failure it will learn, it will lead to better things, not only what you learned about that project itself but about the consumer, about how the world around you is changing, and that failure is just simply a response to an input or a feedback loop somewhere. And if you can figure out where in that feedback loop exactly you can hone in on then that failure was very valuable.
Ryan Thomas: 25:52 Again, it’s easier said than done. That’s why I started with talent and innovative culture because if you’re someone who is a single individual, or you’re part of a small team, or you’re part of a large team that’s charged with growth inside of a company, whether it’s microchips, or whether it’s peanut butter, or whether it’s telcom that culture is still important because companies by and large are wired to replicate things that they’ve done in the past and not rewire for the future and yet that’s what an innovator leader’s task is.
Sean Ammirati: 26:32 That was awesome. Were doing this remotely so you can’t see me but I’m like shaking my head yes the whole way through that, Ryan. That’s fantastic. We talk a lot about distinguishing between failures and process and failures and concept and I love this sort of cultural angle that you’re bringing to it. That’s fantastic. Let me ask another piece of advice you might be able to give just, again, more generally. So how might you encourage colleagues to think about both two parts of the finance piece of this, how they should value their projects internally and then how they should think about budgets internally for this type of stuff?
Ryan Thomas: 27:05 So Sean let me just make sure I understand that question. So, how to think about financial specifically related to the value of something and then how to fund it?
Sean Ammirati: 27:18 Exactly, so how do you attribute the value of the stuff as it’s being processed so you’ve got this Jif Power Up. How do you think about talking about the value of that as you move from strategy to hitting the store shelves? And then, obviously, afterwards I assume it’s more straightforward when there’s revenue and numbers associated with it. And then, how do you think about thinking about budgets across the way? I think you mentioned earlier you guys have a stage gate process but just how do you think about budgets across that and then thinking about how valuable those projects are as they go from strategy to hitting the shelves.
Ryan Thomas: 27:55 Sure. Well, on the financial piece, when we talk about jobs to be done, the reality of it is, you may believe you can compete in one category and one category only. Again, I’m speaking from the lens of a CPG, of a food consumable, but the theorem applies across industries. You may believe that you’re only in the mobile phone business or you believe you’re only in the budget app category, right? But it depends on what job you are actually doing, that you believe you’re doing, or what you’re actually being used for by the consumer. And that usually will set your frame for how to think about the value.
Ryan Thomas: 28:41 It can then quickly go to the category. So, for instance, when we talked about Jif entering the snacking space at the highest level it’s then, well what’s the value of snacking? What’s the value of snacking for a household of families, you know, those types of metrics that help us, our inputs that help us triangulate call it size of prize. The truly disruptive innovation are usually the ones that frankly create new categories that source their volume or their usage whether it be a product, or a service, or what have you, that source from a lot of different things, and then ultimately that’s when real disruptive and very large chunks of value can be created. And in CPG it tends to get category, so snacking, okay, family snacking. Let’s just make it up. There are bars, and there are handheld stuff, so you kind of aggregate that, and you do some triangulation, and use like items, whether it’s in your portfolio or others outside.
Ryan Thomas: 29:50 I’d say it’s helpful exercise. It’s probably more wrong than it is right but yeah, we as companies are numbers driven and we use numbers to help us make what we believe are factual data based decisions right? So, that’s how we kind of get to size of prize. And then budgets from that, we think about budgets in two sense. How much should we think about investing to unlock a potential value creation? And then once that’s established and you then validate that you have such said value then what level of budget is required in order to activate against that. So the first budget, a component of that will be how large is the size of prize? Do we feel like this is a $10 million opportunity or this a $100 million opportunity? And your budgets tend to be commiserate but not always in terms of how much research is required, how much risk are you trying to mitigate, those types of things.
Ryan Thomas: 30:57 In that space though, we’re trying to move away from the world where just because we think it’s a big idea, which means we should spend big money to identify that. If you’re constantly keeping the consumer first and foremost, and the muscle of jobs to be done in that framework is pretty well exercised throughout the organization you should be able to do that without having to keep on huge budgets. Now if there’s technology in there that’s involved in unlocking say an insight then that may be different but that’s generally how we think about it.
Ryan Thomas: 31:33 And then we think about the activation of … We believe we’ve got something that creates a lot of value for the consumers, how do we make sure that it’s discoverable? It depends on the target. It depends on the channel by which you believe you’re going to go to market. There are a lot of things. Typically, in CPG it was, well, you bought a couple televisions ads, maybe in the Superbowl, and that was a pretty good chunk of money but you got pretty broad mass awareness, right? You know, today we’re much more sophisticated, getting sophisticated by the day, using tools like I just described, television, video, online video as well, but also how you can reach in and have one to one conversations and what that kind of CPM looks like. So hopefully that answered your question.
Sean Ammirati: 32:25 That’s great. Yeah, and I think, just again, I’m always interested in sort of what the conversation is amongst finance because it is this area that I feel like is just inherently different between the two. Let me ask you for one more piece of general innovation advice and then we’ll step up even a level more and just get a closing piece of advice from you. But given the size and scale of the innovation team, I’m sure you’re doing multiple projects at the same time and have in effect I think of it the same way I look at my venture investing activities. You have almost a portfolio of different projects going on. Any advice you might give a leader like yourself in other categories about how they should think about the portfolio, how they should manage this as a portfolio, or is there another way you’d recommend managing, but how do you have multiple projects going on and sort of manage them concurrently and think about the inner [crosstalk 00:33:18]?
Ryan Thomas: 33:18 Sure, I think there’s two ways to think about that. One, I’ll start from the enterprise and then, two, as an individual innovation leader. One from the enterprise is any enterprise has to find that resources, whether that’s time, whether that’s money. It also has a set of objectives. Those objectives could be long term, could be short term, what’s your stock price today versus how willing are you to invest stock price tomorrow. So all those things come into play. I’d say my advice, and this is certainly not too earth shattering, but this idea of understanding the role of things like big bets, and brand relevancy innovation, and then renovation, and how you think about the percentages, the amount of work that fall into each bucket, and how you kind of phase those out across either one business or a total business.
Ryan Thomas: 34:16 If you think about a big bet like Jif Power Ups where 150 folks I said would’ve had a role in bringing that to market. There’s certainly a investment once it actually arrives to market. And it wouldn’t be feasible for us to launch three of those at the same time. So, understanding where you are in both the value creation of an idea, where the consumer is, and where the readiness of the market is, and then what your financial flexibility is in order to be able to do that. We tend to do it through that bucket of where are our big bets, where and what are they, and when are they, and then our brand relevancy innovation and then our renovation, and buckets of resources and time against that. So from an enterprise perspective, again, it may sound like classical call it portfolio or stage gate management but we found it to be really useful in terms of how do we think about our big bets.
Ryan Thomas: 35:16 Then, as an individual leader, you are correct. So, someone like myself, as teams across a number of businesses within each one of those businesses they have a mix of what I just described, big bets, brand relevancy, innovation, and then renovation. It can be challenging for an innovation leader because any one of those projects has a lot of stakeholders and it gets stuck in the mud. And I think an innovation leader has to have a clear mind around what is the vision for the team and what are the practical expectations. When do we need monies to do things, when do we need the sales associated with those, and I think it’s incumbent upon an innovation leader to work with their team and their colleagues. So their colleagues, in my case happen to be business leaders, so those folks who are running P&Ls for large businesses with customers, obviously, with Wall Street, etc., and so I work with them to understand what their needs are, how to think about flow, how to think about squeezing something in, hey, we have a big bet coming in 24 months on this business but we need something in the next 18 or the next 12 and so how do you practically do that.
Ryan Thomas: 36:32 That’s an ongoing job as you can imagine, for and $8 billion company plus. That’s very fluid, right? There’s a lot of things that are going on and I’ve said from day one that I believe true innovative leaders, particularly in large companies, but it applies to any company, they must be the most connected individuals inside of a company. And what I mean by that is they really need to have their pulse on a lot of different things. They need to be able to flex but not bend. And then when they work with their teams, both direct teams and indirect teams, resources like R and D, or insights developments, their job is to help teams get out of stuck in the mud, because inevitably you learn something and that might contradict what you learned before, and you kind of get stuck there.
Ryan Thomas: 37:20 You have to have this, I call it the QB clock. A quarterback drops into the pocket and you better, one, two, three, and that ball’s got to come out. Same thing with innovation leaders. I think you have to have that mental clock to say one week, two weeks has gone by. I need to help teams get out of that mud. And sometimes that’s a combination of visionary leadership but it could be a visionary and indirect leadership styles. You may not know the answer but you’ve got to pick up a stake, put it forward somewhere, and rally around it. And you can pick it up later and move it again, but I think that’s a real skillset of an innovative leader is how you flex but not break within the organization. Make sure you’re delivering and keeping the teams momentum forward. Momentum is everything.
Sean Ammirati: 38:07 Yeah, I love that phrasing, flex but not bend on that as well. Just, I guess, one quick follow up to the first part of that answer. Do you have targets in mind for percent of effort across those categories or is it so situational, just depends on the unit, so what percent goes to big bets for example?
Ryan Thomas: 38:26 No, that’s a great question. First it starts with what your company’s objective, right? So what’s your net sales growth, and what percent of your businesses should have organic growth, and how do you think about innovation. For CPG, our industry’s anywhere between two and four percent growth, probably at least 50% of that is going to come from items that didn’t exist last year or the year before. So that’s kind of how to think about it, or the buckets that I mentioned, big bets, innovation, and renovation, is … We didn’t create it. I certainly didn’t create it. I like to borrow and steal shamelessly. That’s actually a Procter and Gamble model. You know, the percentages off the top of my head … I’m not going to get them right, Sean, but it’s probably 50% of your resource effort should be against big bets, 25% maybe or 30% maybe against your brand, in my case, brand relevancy, innovation, and then the last 20% is probably around renovation. And it probably plays out that way from resource to then value creation in terms of net sales delivery. It’s like you want your big bets to be driving the largest portion of your net sales growth. So, again, those exact percentages are wrong but we’ve borrowed it from but directionally-
Sean Ammirati: 39:45 But directionally correct?
Ryan Thomas: 39:46 That would be how to think about it.
Sean Ammirati: 39:48 Yeah, okay, that’s cool. That’s helpful actually in the CPG space because there’s some [inaudible 00:39:56] articles on this. Different people have started different percentages they put on and it’s kind of interesting to hear different categories and how they think about it. So last question is actually even up a level higher. I’m pretty sure you got your MBA right down the street at-
Ryan Thomas: 40:09 I did, that’s correct, Katz School of Business.
Sean Ammirati: 40:11 Katz, correct? You went to … Yes, so imagine there’s a student today graduating from Katz, sort of young MBA ready to go take on the world and they’re hoping to have a career like yours. Any piece of advice or two you might give them as they’re embarking on that journey?
Ryan Thomas: 40:30 Sure. I don’t think an innovative leader can say it enough, but the consumer is first, and the consumer, however you want to describe consumer people, just human behavior is paramount. And so taking deliberate time to watch consumer’s behavior, human behavior, is really, really important because it’s … You know, particularly in the world that I live in and have chosen to work in the last 15 years is you’re really not talking about dramatic shifts in human behavior particularly when it comes to food. People generally do not just wholesale revolutionize how they think about caloric intake. Yes, there are trends. It may float from one category to another but they don’t wholesale change. The magic is in the nuances and in the storytelling around that. So I would suggest that focus on consumer behavior, understand storytelling. Storytelling is a way that consumers and humans make sense of the world and so whether that’s CPG or mobile technology or autonomous driving, or whatever it may be that’s how we … So this art of storytelling and the role of design in that is really important.
Ryan Thomas: 41:50 And then something that I wish I would have done more of earlier in my career has been be more externally focused. One piece of that is consumer but externally is, what’s going on in Europe? What’s going on in Asia? What’s going on with your competitor? What’s going on in your backyard? What’s going on in your local entrepreneurial group? Just having an external mindset because I think innovation in today’s world … I’m going to go out on a limb. I’m going to say that 95% of it is connecting dots of things that have existed previously and their iterations and combinations thereof. And so the more that you’re externally in tune to those things and can be able to bring those in and process them and connect dots I think the better you’ll be at identifying where value can be created. And then certainly adding on the innovation leadership skillsets like I mentioned before around, do I really understand what it takes to craft, and curate, and communicate a vision inside of a company of three or a company of 300? And then really honing collaboration.
Ryan Thomas: 43:04 You know, there’s lots of examples in very entrepreneur driven companies, the very large, where certain personalities can win over and maybe they’re a bit abrasive but they have a vision. I think collaboration is how you can set a vision and then invite in the expertise, so folks around you. Now, you still have to have your true north. If you don’t have a true north, and your compass is off you’ll be all over the board but being able to collaborate is a skill that has always been important but what will continue to be even more important because we’re so intrinsically connected now, again, across industries.
Sean Ammirati: 43:50 That’s awesome, and a great note to end on, Ryan. Thanks so much for taking the time. I know you’re really busy so I appreciate you making the time for the podcast. I know the listeners will enjoy it as well so thanks so much.
Ryan Thomas: 44:01 Thanks for having me, Sean. Really enjoyed it.
Sean Ammirati: 44:10 I hope you enjoyed this episode of Agile Giants. If so, consider sharing it with a friend. And if you think it’s worth five stars, which I hope you do, please go to iTunes and rate it so that others can find this content as well.