Logan Ensign: 2:00
Well, dive right in. I know you have been in a lot of different sort of vertical consulting different verticals across the board, but we are particularly interested here in the CPG space. One of the comments you'd made is about how a lot of the large-scale CPGs have outsourced innovation. So I'm curious, from your vantage, why is that the case? And perhaps what's broken in in more traditional innovation models?
Bobby Moesta: 2:26
I worked in innovation since 1987. I started in the automotive business and then I moved to the defense business. And then I moved to the food business from 1993 to 2000. I have this company now called The Rewired Group. And I started that in 2008. And I've been working with CPG since then as well. So I've seen kind of this longer term thing, if you will. I feel like between 2000 and 2010, somehow they lost their way. And I think they lost their way from two perspectives. One is what I term as sustaining innovations or cost reduction kind of innovations outpaced the notion of new products. And so it was easier to go do a cost reduction and save$20 million on some line than it was to go build a new line. And so when finance and marketing kind of teamed up, RD got kind of pushed back to the side. I worked with Nielsen at some point in time where they had launched something along the lines of 25,000 new pro SKUs in a year, and less than 40 made it over 10 million. Ultimately, people were putting in millions of dollars and getting thousands of dollars out. And so over time, management started to look at it. And I think when 3G bought Kraft and Heinz was when it really kind of hit, they literally shut down almost all the RD centers. They were like, we're not going to do RD, we're just going to milk this thing as long as we can. And then other companies started to follow. And you start to realize that what they ended up doing is building an incubator system where they'd innovate by putting things into academic or communities like Techstars or, you know, some entrepreneurial kind of network, and they would pour money into that and then acquire. But ultimately, most of them all grew by acquiring something, not by actually innovating on anything. And so they've lost their innovation muscle. And I feel like it's starting to come back, but I haven't seen anybody kind of take the charge. I would say PG is the exception to this rule. Their whole business model is based on innovating. And so they're one of the few that I know of that have been continuously innovating throughout their entire 30-year history that I know of them. Is it a people challenge an issue? Is it a process challenge or issue? I think it's a leadership problem. Most of the people who were promoted to the top positions were not innovators. They were salespeople trying to grow. They were finance people trying to save money. They were HR people trying to basically make it a good place to work. Like you started to realize, like and you look at it, and it's mostly finance people or salespeople are the people, sales and marketing people kind of leading those organizations. And so it just took a backseat.
Joel Beal: 5:11
What's wrong with the model of having excellent operators who can efficiently market and run a supply chain and separating out the innovation, outsourcing it, as you said, to incubators, to small companies that they acquire?
Logan Ensign: 5:25
I think there's a couple things. One is they can't count on what they have because the customers change, not the market, the customers. And so you start to realize we need to actually innovate to just keep up with how they're changing. All of a sudden we have we have to take a lot of the food coloring out of stuff. Like that's a big deal. And if I don't have the capability to do it, all of a sudden I got to outsource that or I got to find capability to do it. And it just bottles bottlenecks everything up. Ultimately, my experience, and this is my opinion, right? My opinion is that I feel like it's led by marketers, and marketers see the market, but they don't see consumers and they don't see buyers. They see segments. And so they don't have enough intimacy on the true innovation pieces. And so we plan about an innovation project when we're the stupidest. And so we are asked how much budget we need, as opposed to being able to say, like, what are the what are the milestones we have to think about and what are the unknowns we have to go solve? And so a lot of innovation isn't about executing unknowns. It's actually uncovering the unknowns and solving those unknowns as fastly as possible. So it's about learning. And so most of them are set up as project management type things, like we know what to do, but when we hit a bump or we actually find an unknown, we don't know what to do next.
Bobby Moesta: 6:41
I don't think this is a problem unique to CPG, the focus on the financial aspects, take the innovation out. A lot of people have complained that MBAs did this a little bit. What do you think is causing it to swing, though, the other way?
Bobby Moesta: 6:54
Part of it is to realize that at some point they they have to actually start to target where people struggle, as opposed to copycat everybody else and try to say one more feature, one more benefit is going to get me more sales. It doesn't work. The thing is they're losing market. I mean, think look at Kellogg's, for example. Kellogg's just almost imploded, from my opinion. They've been trying to innovate for so long with so much money that the fact is, but they couldn't make anything stick. They had the people, they had the resources, they had they have the food science knowledge, they have the marketing knowledge. Like what's missing ultimately, to me, and my experience would say is they didn't have enough understanding of that you can't steal market share. You need to create market share by going after struggling moments in people's lives. When you try to innovate inside the corporation, you compare it to everything you already have. So think of craft. We make craft macaroni and cheese. I don't even know what a box costs anymore, but let's say it's two bucks, right? And it makes this much margin. Whatever I have to make has to actually have incremental margin or I won't launch it. We shouldn't be measuring things on margin. We should be measuring things on pounds of cash that it generates. Because even though it has less margin, I might sell 10 times the other thing. The reality is like it's still a better product. And so what happens is we end up using the value system of the current products line that we have, comparing it to the new product line, which is like in infancy, right? The the second thing is you have to realize that most of the people running CP CPG companies have inherited everything. They actually have never created much. And so the notion of knowing how to create versus knowing how to manage is really, really different type of work. And so those are the two big things that I think are kind of hindering that industry.
Joel Beal: 8:44
Bobby, you mentioned something interesting about innovation centers being often driven by marketing. I'm curious as you think about evaluating categories and competition and sort of traditional ways of thinking about categories and competition. When you kind of extend the thinking around, okay, job to be done, solving new pain, how does competitive landscape and understanding your competition relate to all this?
Bobby Moesta: 9:07
This is a really good question to me, because what happens is I think the way we've described categories is not how consumers look at anything. Most people would say Milky Way and Snickers compete with each other. They're both candy bars, they both sold next to each other. But when you ask the consumer, uh Snickers actually competes with a Red Bull and a coffee and a and a and a sandwich and an apple. Well, it's because it's a food bar where a Milky Way competes with ice cream and a glass of wine. You're talking to a couple of runners here, Bobby.
Logan Ensign: 9:38
So speaking of, I'm laughing, it's the best food for climbing because you get so many calories in a small bar.
Bobby Moesta: 9:44
It's compact, it's dense, I can eat it, it satiates in my stomach. And so when we start to, when you start to realize that categories are built by the supply side, they're built by the industry, not by the consumer. We end up kind of going like, ooh, we need to actually innovate in our category. That's just that that's like you know, incrementalism on a pinhead. How many more cookies do we need? How many more shampoos do we need? One of the myths that I think is just crazy that most people see is more choice is good. It's like, no, more choice actually creates confusion and actually less consumption in the category in the innovation space in the CPG industry. It's about launching it. Everybody goes like, oh, I've launched eight products. Like, okay, how many were successful? Oh, I don't know. I just move on to the next project. And so their whole notion of success is literally just getting it out the door. Whether it's profitable, whether it generates, you know, whether it's growing, like, well, and and they would say, that's not on me. I'm like, no, you should be tied to the upside of how it actually works and and and tied to basically the results of it, not just the act of launching it.
Joel Beal: 10:45
Bobby, when you specifically go and engage and consult with you know these CPGs, where do you start?
Bobby Moesta: 10:51
I don't believe there's one innovation process that works for everybody. That's just crazy. Everybody has their own, it should have their own innovation process based on what market they're in, the pace of technological change, both in ingredients and packaging and in process. The place we always start is with some post-mortems. We literally go and say, like, let's talk to about to two or three project teams. We're gonna relive those projects. What went well, what didn't go well, and what would we keep doing, what would we stop doing, what we need to start doing. It's literally sitting down with with project teams and diagnosing kind of where are you at, prioritizing kind of what do we need to work on first. And typically the way we we end up doing is making it very customer-centric and understanding where, when, who, and why do we need a new product?
Logan Ensign: 11:42
One of the things I will sometimes hear from our customers is that retailers will come to them and say, I'm looking for this type of product to put on my shelves. I feel like there's a gap.
Bobby Moesta: 11:52
Yeah.
Logan Ensign: 11:53
Do you think that's something? I mean, giving to your earlier point of you really want to be dialed in with that consumer and what they're doing, do you think brands should be listening to the retailers or should they say, like, no, I need to really validate this?
Bobby Moesta: 12:07
This is signal and noise, right? There's a signal there that they have shelf space they're willing to do something with. But short of that, most retailers don't know what's possible. And so all we really need to know is there's an opportunity to get shelf space. How do we actually go figure out what to put on that shelf? Most retailers have no idea what consumers want. I mean, think about it. They let P and G run the laundry aisle because they know more about laundry than the retailer. Consumers don't know what they want. They know that they want to do something different and they know the outcomes they want, but they don't know the solution. If we just listen to them, their exact words, and make what they say, we're always behind the eight ball because we're gonna be like, no, no, no, no, that's not what I meant. I wanted it crunchy. Well, this is crunchy. Yeah, but this is too crunchy. You're like, we have to actually understand why crunchy is important, right? Crunchy is about frustration in some cases. Sometimes crunchy is about distraction, sometimes crunchy is about different things. This is one of those things where I feel like the industry has lost its rigor and it's trying to work on what I call Pablum or very, very superficial. Make it easier, make it fresher, make it make it cleaner label, make it this, but they don't know why, and they don't know what people are doing with it. And so they're just literally taking orders and and and iterating, and it's not making a difference. They're like on a treadmill, they're just doing a bunch of stuff, but it's not making the business grow.
Joel Beal: 13:30
Well, you said something interesting that may seem counterintuitive, which is the major retailers let PNG run the laundry aisle. Wouldn't retailers actually much better understand the consumer because they know all the competitors, they know that the consumer is buying coffee versus Pepsi, which is not information that uh a supplier would have.
Bobby Moesta: 13:51
So the the there's something called lag measure and lead measure, right? And the purchasing data is lag measurement. They know that they sold it, but they don't know why, they don't know where, they don't know when, they don't know who. They're buying it to put somewhere, but when do they use it and how do they use it? Most people are trying to look for what they bought last time, and when you change the label and it's not there, it's like, which one is it? Which one did I have? I don't know. I was doing uh toilet blow cleaner, right? And it's like, and somebody finally came up to me and said, like, how like can I help you? I'm like, yeah, I'm trying to buy toilet blow cleaner, but I don't know which one to choose. And then I'll interview them of how they pick their toilet bowl cleaner. Oh, I've used this one for a year, but but this one has bleach. Don't I want bleach? It's like, no, no, no. And you start to realize, like, you can understand how people look at it and they say, well, when this one's not available, I'll buy this one as the backup. A backup? Why do you need a backup? Well, sometimes, you know, when I have guests over, I use this one to actually be because it has a better smell than that one. And you start to realize, like, they have these elaborate algorithms in their head of how they use and consume these products. And we have no clue besides on Thursday, they bought they bought Lysol toilet bowl cleaner. The jumbo size, the two-pack.
Joel Beal: 15:00
Then that's it. No context.
Bobby Moesta: 15:03
No context, no anything. Retailers are are merchants, and so their whole thing is it's not about the products, it's about the movement of the products. And so their whole thing is like what's moving, what's not moving. We're going three layers deeper because at some point we have to understand the social, emotional, and functional requirements of why they're buying what they're buying. They're not randomly buying anything. They say, oh, I bought a pack of gum at the in the aisle and it was, you know, I didn't plan to buy it, so it's an impulse buy. It's not an impulse buy. The fact is, they're sitting there going through the list and like, oh, I've got these meetings coming up, I'm gonna be out, you know what, I'm gonna need gum because I can't brush my teeth. There's some logic of why they pick it. When I learned market research, I didn't learn it from marketers. I actually learned it from criminal and intelligence interrogators because I realized consumers lie. They just want to tell you what you want to hear.
Logan Ensign: 15:55
So, how do you get that data out of somebody?
Bobby Moesta: 15:58
So, to be honest, it doesn't take many interviews, but it takes, it takes 10 one-hour interviews to help us actually get to what I call the variables that are important in the consumption. So there's two kinds of two kinds of jobs. There's what we call the big higher jobs, which is when do they buy the can of Windex, right? And then there's the little higher jobs, is when do they spray the can of Windex? And so part of it is you have to realize you have to align those two things because at some point in time I can actually make it easier for them to buy the product, but if they don't use it more, it's just gonna be an inventory in their store as opposed to or in their cupboard as opposed to the store. But if I can actually get them to spray more and figure out other applications of it, now I can actually increase consumption, which will then increase velocity. It's not the buying of it, it's the using. This is why innovation is so hard. It's about a it's in some cases, it's like threading the needle, and some people have done it. But the reality is like it takes a lot of rigor to do that. And and I just don't believe that the financial side has the patience to get that rigor.
Logan Ensign: 16:58
And now, Joel, is there more you wanted to dive into on the sales and retail? Because there's a big meaty topic, and we got 16 minutes on uh we we can go to that.
Joel Beal: 17:06
I have lots of things I would ask. It's it's just very interesting, uh, Bobby.
Bobby Moesta: 17:11
I'm very different. I'm 60 years old. I've only got so much time. I wish people would have been this blunt with me back in when I was 30. I'm sure I'm gonna catch a bunch of flack for it. This is gonna be the probably the most polarizing you know podcast you have. But the reality is like at some point in time, I feel like you have to basically put this forward because nobody's talking about this stuff.
Logan Ensign: 17:31
Well, what's interesting, Bobby, is Joel and I are in technology, right? And and and we're on the innovation side of technology, and it is interesting to think about technology across verticals.
Bobby Moesta: 17:41
Uh so software, like I do a lot of software work. You have to be pretty committed to actually engage us. I don't have a big staff. I have five people in this firm. We've been doing this for almost 17 years. And the number one reason why I don't have a big staff or big group of people is because we make you do the work. People, most of the time they hire consultants as outsourced, hey, write this PowerPoint, do this little thing. Like, no, no, no, no. We're gonna help you rethink how you do it, and we're gonna we're gonna sit side by side with you and help you do it.
Logan Ensign: 18:14
Well, shifting gears into I think a topic that's on a lot of people's mind is around AI. If you've got a perspective or or advice around generative AI and its role, as you've kind of seen that.
Bobby Moesta: 18:25
The people who are really killing it in AI are the people who aren't talking about AI, they're solving struggling moments for consumers with AI. And so the best example I have right now is a company I've worked with for since about 2012. It's called Intercom. And Intercom is a customer success package. They do everything from inbound to basically onboarding to ongoing support to ticketing, right? Instead of trying to make it replace people, what it first did is it tried to use AI just to help the current people service better and service faster. And so the best way to do this is to actually have it add value as early as possible and as quickly as possible and have it take the things where you can't find people to help. So, like when people started to have trouble recruiting customer success people, that's one of the reasons why it was there, is like, yeah, we need three more, but we can't do it. All right, well, here, let us try to do that. And so all of a sudden, when they couldn't find people, then they could actually substitute people for the AI. But the intent was never to basically replace people, it was more or less help people because there's not enough people there to begin with. It's kind of like Amazon with robots, right? It's so hard to hire and recruit people to do all that work, which is hard work in the warehouses. Everybody's trying to make it so customer facing to say, oh, we now have AI, we can build your list for you for today. It's like, no, I don't want you to build my list. They're trying to actually add features and benefits where nobody wants them. Most people are we gotta add AI, we gotta get AI, we gotta put it in the product. And it's like, okay, let's let's just talk about if we're customer. Customer-centric, what problems do they have and how will AI help them? We're not building AI for AI's sake.
Joel Beal: 20:06
It's tempting to start with a technology or solution. Yeah. And then and and kind of coming into AI. Is this a technology that is as susceptible or more susceptible or less susceptible to brands, technology companies starting with the technology, not understanding the job to be done?
Bobby Moesta: 20:25
Aaron Powell So this is where like if you study technologically pushed innovations to the market, most of them fail because they over-engineer it, they try to make it perfect, they try to make it fit everybody's situation, and then it's too expensive, and then it's not at the right place at the right time and what's there. And so one of the things I would say I pride myself on is I'm better building a kick-ass half than a half-ass hole. And so most people, most people want to say, oh, it's got to have this, it's got to have that. I'm like, no, if we do these three things really well, they won't give a shit about anything else.
Bobby Moesta: 21:01
And this is where it's like, well, no, we you know, we were gonna have people rejecting it. And it's like, no, no, go test it, go show, go do this. And you start to realize, like, that's true. Like, think of the iPhone. What did the iPhone when it first came out suck at? It literally was horrible at it. Reception, the calls, the calls sucked. But it it brought the PDA in, it gave me the iPod, it gave me songs in it, and basically the and then they made it better. And then what happened? The battery sucked.
Right?
Bobby Moesta: 21:32
And then all of a sudden they got the better, and then the camera sucked. And then the and so you start to realize that they've been incrementalizing the iPhone. They're pretty close to the end. Like, like if you notice, they were coming out with one every year for a long time because the technology was changing, but the technology is not changing as much anymore. It's all in software, not hardware.
Joel Beal: 21:49
So I'm hearing Bobby's solve problems that actually exist if we're your consumer.
Bobby Moesta: 21:54
That's right.
Joel Beal: 21:54
And don't and don't try and solve these manufactured problems.
Bobby Moesta: 21:59
Yeah, don't try to solve all the problems, solve the things that are important. But the other thing is, once you solve one problem, a new problem is always created. Every technological innovation solves one problem, creates a new one every time.
Logan Ensign: 22:13
This has been really great, Bobby. Joel, Bobby, were there other things that wanted to be said, questions to ask?
Bobby Moesta: 22:21
Yeah, I want to say one thing here, which is I want you to know that I'm very bullish on the CPG market. It's ripe for somebody to walk in and basically start to change how they think about it and how they work on it. PG has proven that their strategy of being able to solve customers' real problems and then use scale to basically get it down to prices that matter. It's like it's repeatable, but nobody's studied them enough and nobody wants to actually copy them. But the reality is like there is a there is a pathway through this forest, but the reality is it requires work and dedication and rigor. There's no silver bullet. My belief is the a lot of this industry has been built on silver bullets. The next thing is is always gonna be the best thing. I would tell you if you're in the industry, like you have the opportunity to change the world. I feel like there's opportunity everywhere.
Logan Ensign: 23:10
And Bobby, do you think those changes are they gonna come from the incumbents, or do you think this is gonna be new brands that that really create this change?
Bobby Moesta: 23:21
I I think there's gonna be a combination of people who will buy nostalgic brands and hold a series of brands that have been around and they'll realize how to actually make them more and more relevant in people's lives. And then I think there will be new brands that will basically talk about new experiences. We're trying to connect Pringles and Tony the Tiger to today's kind of lifestyles, and that's very hard to do. There has to be some new brands that are built, but building a brand is very hard and very expensive, and most people don't want to do it. But my belief is there are wide open opportunities in certain categories to do that, just to dominate, just to walk in and dominate. Because everybody's gonna be like, oh no, we can't do that. Like, I remember when everybody said, like, we can't go on Amazon because Walmart will delist us, and then all of a sudden the COVID COVID happened, and everybody's like, oh my gosh, they don't care, they don't even notice.
Joel Beal: 24:17
Well, Bobby, it really has been great having you on Shelf Life. Appreciate the animated conversation and the insight that you brought to us.
Bobby Moesta: 24:25
Thank you for having me on. I hope I didn't piss off too many of your of your audience, but hopefully I inspired a few of them.
Logan Ensign: 24:31
Look, I think yeah, being animated, hopefully actually getting a couple people riled up is generally good.
Bobby Moesta: 24:37
So yeah, yeah. I I think the the the debate is the way to go. That's how we get past these conflicts and get past our our biases.
Logan Ensign: 24:45
If people do want to get to know more about what you do, your work, you know, your current thinking, how can they learn more and what are you up to these days?
Bobby Moesta: 24:53
Yeah, yeah, yeah. First thing is I would tell you LinkedIn is the best place. I have a website called The Rewired Group, which is the name of my firm. I have a couple of books. One is called Learning to Build, which is uh an homage to my four mentors. Um I'm a dyslexic, uh, illiterate kid at 18, told to be a carpenter or uh uh either a carpenter or a construction worker or baggage handler at the airport. These people poured all their knowledge into me and helped me basically become the innovator that I am. There's another book called Demand Side Sales, which is about this notion of stop selling and help your customers make progress. I have two podcasts. One is called Jobs to be done radio, which is kind of old, um, but it's still out there and I still get people listening to it. And then there's a one where my my business partner of 20 years, Greg Engel and I just riff on certain topics. People give us topics, and it's called the circuit breaker. And it's about 20 minutes, and it's just like a bunch of random topics uh of what people either wrestle with or want to hear our opinion on it. It's a lot of fun.