A Break-Up Is a Terrible Thing to Waste

21 Nov 2011 – Jennifer Biringer

“Ideate. Renovate. Validate. Kill.” These were the four rapid-fire imperatives imparted by Privahini Bradoo, CEO and Co-Founder of BioMine, at last month’s GreenBiz Innovation Forum in San Francisco. The first three received nods from the audience as straight-forward principles of innovation, but the fourth caused the audience to stir. Kill – not just weeding out bad ideas but rather killing good ones – is a principle Bradoo attributed to Steve Jobs, who said that good ideas were the greatest roadblocks to coming up with great ones.

This has stuck with me as I’ve continued to follow the disruption now playing out in the food sector. Some of the most iconic food companies – PepsiCo, Kraft and Sara Lee – are either considering or already moving forward with splitting off key lines of business in order to improve the profitability and growth potential of their stronger siblings. What I wonder is whether break-ups like these might have hidden benefits for sustainability as well.

Of the companies above, PepsiCo has certainly received the most attention of late. Specifically, the company’s chief, Indra Nooyi, has been resisting the splitting off of its struggling beverages unit from the much-stronger snacks division; this despite the fact that the former has been lagging in performance even while Coca-Cola’s profits have soared. Partly at issue is that while Nooyi has championed a shift to healthier product lines – including a pledge to dramatically cut sugar, fat and salt in existing products – investors have complained she has lost focus on the company’s core soda business.

Could it be that Nooyi is reluctant to let go of a good idea – to lead a transformation in the food industry as it is currently configured – and therefore missing out on a great idea – the potential to grow what could ultimately become a more profitable, healthier line of products which more closely resembles real food? Fizzy drinks may always be with us, but arguably Nooyi’s ambitions to transform our diets might be better pursued with a clean slate. I can only hope that this is where Nooyi may next be headed, even as she attempts to fend off angry investors, when she says:

Innovation is not just about refreshing what you have. It’s about rethinking and reframing your whole product offering, your complete service…The days of incremental thinking are over. The days when the future was built on the solid foundations of the past are gone… Disruption is now our friend, not our enemy.

To suggest that PepsiCo’s investors should adopt the same long-term view may seem a touch naïve, yet I know I am not alone in placing my bets on companies who seek long-term value by improving the impact their products have on overall consumer health and happiness. PepsiCo’s Board originally hired Nooyi with marching orders to transform the company (and industry), and time will tell if they are bold and brave enough to weather the current economic outlook in favor of a long-term win.

Furthermore, while it’s not the case that break-ups of major food companies will, by themselves, bring about large-scale, sustainable change to our food economy, I can’t help hoping these shifts could eventually make space for bolder ideas and new ways of doing business. And it wouldn’t be a moment too soon.

The food sector, with its relatively slim profit margins and small R&D budgets, has been notoriously slow to innovate – except perhaps in the dubious, rainbow-colored, convenience-oriented ‘easy’ or ‘fun for you’ sense. The market is ripe for real shifts in how food is grown and eaten. Scientists are sounding off about the need to shift from meat and dairy (focusing instead on eating food directly from plants rather than from animals can boost available calories produced per person by nearly 50 per cent), to adopt more resilient ways of growing food (that protect water, capture carbon, and conserve habitats), and to cut waste in our food chain (the total amount of waste produced across the food chain could boost food availability by another 50 percent).

Meanwhile, a younger cohort of consumers and workers, disillusioned with the status quo, is showing up in surprising numbers to support such change. BBMG’s new Conscious Consumer report highlights a larger-than-ever 30% of the population that is taking health and wellness and other sustainability factors into account in a new attitude of ‘no compromises’. And newcomers continue to break onto the food scene to show us a different way. Back to the Roots who are closing loops with Peet’s coffee ground waste to grow mushrooms bound for Whole Foods; or Stockbox Grocers who repurpose shipping containers to provide healthy produce to under-served lower-income markets. With innovation in forms large and small serving as inspiration, the time is ripe to kill old ideas – whether they were good ones or not decades ago – and redouble efforts to focus on the truly great ones.