Food, Inc.

A couple of weeks ago, I went and saw Food, Inc., a documentary that describes how the food we eat is produced and the impact that production has on rural farmers, worker safety, and our personal health. For those of you who have read Fast Food Nation and The Omnivore’s Dilemma, the topics covered in this movie are not new. And in fact, Eric Schlosser and Michael Pollan—the respective authors of those two books—were heavily involved in the development of the movie.

Having seen Food, Inc., I am reminded that food companies—notably CPG firms and chain restaurants—have been slow to leverage the Michael Pollan phenomenon as an opportunity for breakthrough innovation. While the idea of eating more sustainably was once the domain of a few aging hippies and foodie-oriented yuppies, more and more people—especially in younger demographics—view organic and local as table stakes for high quality, good tasting food.

And although a lot of people still love hamburgers and ice cream, most people aren’t looking at trans fats, high fructose corn syrup, artificial preservatives, and excessive antibiotics…and saying to themselves, “Yummy.”

Now granted, many CPG firms have acquired “healthy eating” brands over the years; Odwalla is owned by Coca-Cola, and Kashi was acquired by Kellogg’s. But these acquisitions feel like opportunistic responses to a niche segment, as opposed to longer-term, organic growth strategies (pun intended) that take advantage of an industry-transforming trend. Indeed, the lack of a stronger strategic response by food companies is akin to the Big 3 automakers’ lethargic response to Japanese car makers selling smaller, higher quality, fuel efficient vehicles in the 1980’s…and we know how that story ended.

What we see at work here is a common challenge to innovation breakthroughs: over-focus on current customers and their needs.

In this example, food companies today have to maintain share with their current customer base in order to make their quarterly numbers, typically through investments in incremental innovations. At the same time, these companies must also dramatically increase their strategic focus on creating (and reformulating) foods that are appetizing to the Gen Y demographic and fast growing niches that will be the source of their future growth. The problem: most of any companies' strategic assets, product platforms, and investment criteria are geared toward supporting the needs of current customers, not enabling transformative opportunities with new customers.

Going forward, the ability to manage the balancing act of serving current and future customer needs more effectively—with an increased focus on future customers—will decide the fate of most food companies in the coming decade. For the food companies' health and ours, I hope they will manage the balancing act well.