I stumbled upon an old Steve Jobs interview where he lays out what happens when tech companies — specifically those with monopoly power — adopt a product-first mentality versus a marketing-first mentality. By adopting this kind of approach, he laments, companies eventually lose sight of staying connected to consumer needs.
The interview really hit home for me, because it eloquently encapsulates so much of what I see happening in the food industry today. In fact, Jobs even cites PepsiCo as a prototypical marketing-first company.
The interview excerpt is embedded below, followed by my thoughts on the parallels to what’s happening in the food industry.
"The product sensibility—the product genius—that brought them to the monopolistic position gets rotted out by people running these companies who have no conception of a good product versus a bad product..."
A Lack of Innovation Investment
If big food companies want to survive in the future, they need to completely rethink how they innovate and how much they invest in innovation. Launching funds and incubators is certainly an important part of an innovation strategy, but companies also need to figure out how they can create great products for 21st century consumers. No longer can they succeed by solely milking their legacy products for diminishing shreds of market share with lavish marketing campaigns.
Are the monopoly powers in big food in marketing mode? Absolutely. At PepsiCo, from 2013 to 2015, the company spent 3.1 to 3.6 times more on advertising and other marketing activities than they did on R&D.
Source: CB Insights
At P&G it’s about 4-5 times more spent on advertising than on product development.
Source: CB Insights
Compared to other industries, the CPG industry as a whole spends 1.58 percent of revenue on R&D compared to 13.38 percent in tech and 11.15 percent in healthcare. Food is just not investing in its own future via product innovation.
Source: CB Insights
People Want Better Food, Not Better Marketing
Since the Green Revolution, food production (especially of the packaged variety) has been pretty opaque. Enamored with fast, convenient food, consumers didn’t seem to care enough to ask where things came from.
For decades, big brands really didn’t have to think too hard about the product, vis a vis how wholesome it was, the quality of the ingredients and the integrity and sustainability of the process. R&D was mainly focused on food science to prolong shelf life to unprecedented lengths or dosing a snack’s salt/fat/sugar content to trigger the maximum bliss point in your mouth.
Marketing led the conversation in big food, not product. As Jobs stated, “for PepsiCo, that might have been ok,” especially because of their duopoly over the market. While marketing is a crucial part of the business that won’t ever go away, the future of food means a return to food products taking center stage.
Product Takes the Lead
We’ve entered the age of product-first, marketing-second food. It’s a paradigm shift driven by consumers who now demand better food, and can see right through the bullshit of any disingenuous campaign. Smaller challenger brands, like Back to the Roots, Justin’s and Sweetgreen, are leading with well-crafted, wholesome, sustainable products first and letting that be their marketing focus. Gone are the days of cheap catch phrases or mascots to sell product, it’s the product quality doing the selling now. Digitally powered word of mouth weeds out the subpar, so you really can’t hide behind anything inferior for too long. This shift back to product-first food production is a good thing.
There are some great people doing amazing things at big food companies today, and I’m optimistic that they will help their companies lead the charge for a better food future. Yet, I’m shocked at the number of people I’ve encountered in leadership positions at food companies who treat food like a mere widget on the shelf. Yes, food is a widget, but it’s one that’s inextricably linked to the well being of our planet and society. Maybe selling food as a mere marketing exercise is a good strategy for moving units, but is that really how we want to look at our food system?
In tech companies, the product people are the designers and programmers who have the consumer’s best interest in mind and who craft the products for marketers to sell. These are the people that Steve Jobs championed and raised the bar for the whole industry in Apple’s heyday.
In food companies, we must ensure that food designers, chefs, farmers and dietitians are empowered in the right decision making circles to create food that’s better for people, planet and profit. Intrinsically great food products might mean less work for the marketing department, but certainly more value for the consumer.