Cleopatra Dunns, CEO of Dunns Cosmetics, wrapped her annual speech to the staff, laid out her plans for 2022, just as she’d done for the past six years, on the last Friday of every January. Once again, the popular keyword was innovation.
She opened with a vision statement, “Be the most innovative cosmetic creator out there,” and a mission statement, “Consistently provide innovative products to delight our customers.”
The rest of her speech covered prior year sales, next year’s targets, plans to expand into new regions for targeted revenue growth, and more innovative ways to engage consumers online. There was no mention of any new products because there were none. But she did use a new term: conscious capitalism. She defined it vaguely. No one understood it. And there was no specific initiative to undertake.
The annual award for the most valuable player went to the Director of Social Media for innovative online sales growth during the COVID lockdown. Everyone knew online sales were skyrocketing, but the Director of Social Media had changed nothing.
And despite losing several employees during pandemic, Cleo didn’t touch the hot topic of The Great Resignation.
Turn Out the Lights
After the speech, Mike Techie, the new products manager, engaged Joe Cool, the COO, in a candid conversation behind closed doors.
Techie: What’s my budget for new product research this year?
Cool: We haven’t allocated one yet. But I can assure you it won’t be less than last year because sales have been good. We may have to adjust a little to cover new employee onboarding and training, which is substantially more this year.
Techie: Last year, you only gave me $1.5 million. That’s pocket change compared to sales of, what, almost $2.5 billion? And most of it went to fixing production issues in the name of lean innovation. None of our proposed projects made it to the funded roadmap. Given the speech we just heard about innovative products and online sales, I was hoping my budget would be bigger this year.
Cool: I hear you. But Cleo decides these things. She owns this company.
Techie: You know, our Multi-Functional Face Cream product is catching on. It’s in line with conscious capitalism. We make money by providing healthy cosmetics. We need a couple of years to mature the product and get FDA approvals. But we’ll be behind our competition if we don’t start now.
Cool: I don’t disagree with you Mike. But Cleo owns the company, which means she writes the strategy.
Techie: Cleo is clearly focused on sales. Have we thought of new business models, like subscriptions? They’re easy to try and don’t need FDA approval. We can sell cosmetics on our own website.
Cool: We discussed that after you brought it up last year and decided we don’t want to risk what’s working now by confusing customers with choices. I’m sorry we didn’t give you any feedback. We should have a process for ideation
Techie: We definitely need a process. By the way, who’s responsible for innovation? Who should write or own the process? Or, to be blunt, whose metric is it?
Cool [getting uncomfortable]: Everyone is expected to be innovative. We don’t need a metric.
Techie: Sorry. That came out wrong. Going back to Multi-Functional Face Cream, is it still possible to get some funding this year? The business case is strong. I know I’m asking for $3 million over two years, almost double the budget. But the five-year ROI is more than 20x if we get to market before the competition. More important, the cost of not doing it could cost as much as $500 million in sales when our current product goes out of fashion.
Cool: In addition to your R&D budget, we also have to allocate money for marketing. So we won’t get 20x ROI. Maybe 5x at best. With the FDA busy with COVID demands, delays can further reduce our ROI. Your logic around the cost of doing nothing is hard to substantiate. Cleo won’t buy that. So, we can’t take that into the equation. Between you and me, my fear is if we fail to deliver, we’ll both lose our jobs. Cleo has a low tolerance for failure.
Techie [thinks]: No budget. No accountability No process. No willingness to risk. No tolerance for failure. Just talk about innovation. Joe, I know you won’t like my saying this, but I’ll say it anyway: This sounds like innovation theater, and this year’s show is over.