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There was an article this week in the Wall Street Journal about Innovation killing the laundry detergent business. The basic premise of the article was the introduction of Tide Pods, individual load packets of detergent, were eating away at the total market share of the industry, effectively destroying it.

In the article, Mr. James Craigie, CEO of Church & Dwight Co (producers of discount detergent Arm & Hammer and Xtra brands) s quoted saying "Pod is killing the laundry detergent category. New products ought to expand the revenue pie for manufacturers and retailers, not shrink it." I know it has been 30 years, but Mr Craigie needs to review the basics of innovation that he should have learned while at Harvard.

Innovation creates a better value proposition for the consumer of product, and therefore can increase the consumer base, and / or the profit margin of the new products in the market. This increase can then lead to higher profits for the innovative company, even when the total market may contract.

Successful start-ups are based on this principle of innovation which regularly eats into a larger company's market share or even an entire market. Research In Motion (RIMM) launch of the smart phone spelled the demise of the PDA market. Digital cameras and high resolution ink jet printers killed Eastman Kodak's photography paper business. The digital camera industry is now being killed by the smart phone.

Innovation inherently destroys something in order to create something better. A company who does not keep up with new innovations, or rather one like Church & Dwight who believes innovation should only favor business, is going to encounter troubles.

Small firms should use innovation to their advantage by focusing on products which increase the value proposition to the consumer. If your company is in a market that you see as shrinking, figure out where the market is going. Short of a natural disaster, consumers NEVER disappear. A shrinking market indicates a shift in the market to a new product which fulfills the sames needs as your product, but with a better value proposition to your product. Understanding these market changes allows you to adapt to the changing situation and grow your company.

AVAS Partners helps companies understand the changes in their market and make the changes necessary to grow the company. Contact us for more information on how we can help you grow your company.