PepsiCo builds new R&D model

NEW YORK: PepsiCo, the FMCG giant, is seeking to develop an innovation culture based on embracing failure and avoiding the "risk" of letting inertia shape its activity.

Brad Jakeman, president of PepsiCo's global beverage group, argued the "key to innovation" rested in solving the difficult problem of "How do we fail often, fail fast and fail cheaply?"

He added that disruptive innovation is, at present, not the preserve of Fortune 50 firms, but small, "pure" players that are free from shareholder pressure and complex structures.

"They have built into their culture this notion of ... if I fail, I'll move on to my next idea. And that's just not how big corporations think," said Jakeman. "This is not just an issue for our company; I think it's an issue for all large companies, because categories are not being disrupted by us anymore."

PepsiCo has partnered with The Barbarian Group, the digital marketing and creative agency, to build this kind of model. Jakeman, however, stated this should not be considered "risky".

"I actually think most clients in most companies of scale are taking the riskiest move possible by continuing to do exactly the same thing in a world that is dramatically and profoundly changing more quickly than it ever has," said Jakeman.

"If you're doing the same thing you were doing two years ago and expecting that to have the same result, with the consumer that we have today, the fragmented media environment that we have today, and the relationship consumers have with brands that we have today, that's high risk."

In an effort to ensure it keeps "doing new things", PepsiCo has run several incubation schemes attempting to identify promising start-ups in areas such as social media, gaming and mobile.

Jakeman also argued that the need was not focusing on an innovation department, but a culture which embodied the principles across the organisation, meaning an "experimental budget" was far from vital.

"The more you to try to segment things ... the regular stuff by definition will always have a greater budget than the experimental stuff," he said. "The chances are that the stuff that has the biggest budget is just a plug and play of things that have been done before, i.e. the riskiest things possible."

Similarly, although many agencies boast a diverse range of new media capabilities, Jakeman suggested many big shops are still overly focused on television advertising.

"That's because the economies of agencies, the revenue models, are all built around the conception and the production of television, and the digital stuff happens on the fringes," he said.

Data sourced from DigiDay; additional content by Warc staff, 21 November 2012

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