When Innovation Speed Beats Innovation Volume: The New CPG Reality 

For more than three decades, from 1980 to 2012, consumer packaged goods (CPG) companies consistently outperformed the S&P 500 (McKinsey). Every shareholder wanted a piece of these brand stocks because they delivered reliable revenue growth, quarter after quarter.  CPG companies were the star performer in investment portfolios.

That’s changed. Revenue declines are hitting the industry hard due to tariffs and inflation. Globalization and lower barriers to entry have created an intensely competitive landscape. Adding to this pressure, the rise of private label brands means retailers are no longer just trading partners and channels to consumers—they’ve become formidable competitors. Your shareholders are looking at you asking the inevitable question: “What’s next?”

Here’s the challenge: when revenue started declining, the only lever most CPG companies had to keep shareholders happy was cost reduction. You cut here, you trim there, you optimize everything you can think of. But you can only do that to a certain extent. You can’t keep cutting costs and keep growing your company at the same time. Nor can you continue cutting costs and come up with radical innovations either. 

So, what do you do as a major multinational brand, or as a small CPG company trying to break through? How do you work within these constraints when your traditional playbook isn’t working anymore? 

The real innovation problem 

Let’s look at the numbers: over 30,000 new consumer packaged goods are introduced every year, and according to Harvard Business School research, around 75% to 95% of product launches fail. Studies show that only a quarter of new products survive their first year on retail shelves, with survival rates dropping even further in subsequent years. 

But here’s what those statistics don’t tell you: it’s not just about product quality anymore. The real killers are retailer delisting decisions, private label competition squeezing margins, and supply chain disruptions that make consistent availability impossible. You can have the best product in the world, but if a major retailer decides the category is overcrowded or your product’s inventory turns aren’t hitting their scorecard goals, you’re done. 

Think about what that means for your P&L. You’re doing all this very time-consuming, very expensive innovation. You’re convincing retailers to give you more shelf space, which is increasingly difficult as they develop their own private label products, and product variations have generally increased. You’re competing for consumer attention in an oversaturated market. And twelve months later, you’re often asked to take your product off the shelf. All that innovation, all that investment gone. 

This isn’t just waste. This is existential risk in an environment where you can’t afford to keep missing. 

We should ask ourselves the question: what separates the handful that survive from the thousands that don’t? We know it’s about innovations that answer ever-changing consumer preferences. But it’s more than that. It is also about the speed of these innovations. 

The speed advantage 

Remember when flavored waters hit the scene? They were innovative, caught consumer attention and carved out a new category. And then what happened? Suddenly, everyone had their own version on the shelf. The snack aisle tells the same story with energy bars. Innovation that took years to develop and launch can be replicated and flooding retail within months. 

The speed of competitive response has only accelerated. What used to take competitors a year or two to copy can now happen in months, sometimes weeks. Social media amplifies successful launches instantly, and contract manufacturers can pivot production lines faster than ever. 

The insight most companies are missing: winners aren’t necessarily creating better products—they’re creating products faster that also meet market needs and with higher survival probability. They’re getting to market 6-8 months ahead of competitors, which means they own the retailer relationship, they establish the consumer-brand connection, and they have time to iterate based on real market feedback before copycats arrive. 

The name of the game is: listen to consumers for innovation ideas, quickly turn those into new innovative products, and create a barrier to protect your first-mover advantage. You can’t do that with every innovation, but when you can build in barriers, the advantage becomes sustainable. 

For example, when P&G came up with Tide Pods in 2012, they didn’t just create the pod format—they also developed the manufacturing machines that produced them. No one else had those machines. As a result, competitors couldn’t just copy the product; they needed entirely new manufacturing capabilities.  

The companies achieving this speed advantage have one thing in common: they’ve broken down the silos. 

The ROI of integration 

Most CPG companies are still working in silos. Your consumer insights team identifies a trend, brand management hands an innovation brief off to product development, who eventually hands it off to manufacturing engineering, who figures out how to scale it, after which they give the green light to marketing for the product launch. Each handoff takes time. Each handoff introduces the possibility of something getting lost in translation. Each handoff gives your competitors more time to notice what you’re doing and respond. And to be clear, there are many more handoffs. I am just mentioning the main ones. Let’s not forget about regulatory compliance, artwork design, packaging design, testing and validation. 

The companies that are winning and will continue to win are the ones breaking down these silos and fostering true collaboration and concurrent development. They’re connecting consumer insight to product development to manufacturing planning to launch execution in one integrated flow, where people are taking care of their part of the innovation concurrently with others, not sequentially. 

This transformation looks different in practice from what most companies expect. Instead of discovering manufacturing constraints after you’ve locked in your formulation, you’re running manufacturability assessments during early development. Instead of waiting for final packaging designs to test shelf appeal, you’re evaluating multiple variants simultaneously. Instead of sequential handoffs, you’re running parallel processes that can significantly compress your time-to-market. 

The benefits of concurrent integration? Companies are seeing meaningful reductions in development cycles, improved first-year survival rates and better margins  because they’re implementing a “shift left” approach—bringing cost optimization, sustainability considerations, regulatory compliance, and manufacturability into the design phase rather than discovering these constraints later. When people designing a product can optimize costs during design, margins improve. When they can read the sustainability footprint during design, environmental impact gets built in from day one. When they are confident during design that the product they are developing is going to comply with regulations, costly reworks are avoided. When they design for manufacturability from day one, they avoid retrofitting later. 

But here’s what hasn’t changed: the fundamental business requirements remain the same. You still need to understand your consumer, you still need speed to market, and you still need products that retailers will add and keep on their shelves. The companies that figure out how to achieve these fundamentals simultaneously through integrated processes, not just better individual components, are the ones that will thrive. 

The reality check: not every company that attempts this transformation succeeds. The ones that fail typically try to implement too much too fast, or they underestimate the change management required to get siloed teams collaborating. Success requires executive commitment to breaking down departmental barriers and measuring teams on shared outcomes, not individual metrics. 

Making it accessible across company sizes 

This speed-through-integration approach isn’t limited to Fortune 500 brands anymore. A startup beverage company launching their first three SKUs faces the same fundamental challenges as a major snack manufacturer managing 300 products: comprehensive specification management, regulatory compliance, brand consistency and speed to market. The difference isn’t in the sophistication of the tools they need—it’s in the scale of implementation. 

The barriers to a sophisticated product lifecycle management software solution, to underpin this integrated innovation, have dropped dramatically. Modern implementations of such software can establish fundamental specification management and regulatory compliance functionality in as little as 100 days—a dramatic improvement from traditional multi-year deployments. Companies can start with core capabilities and expand as they grow from managing 3 SKUs to 30 to 300, without switching platforms or rebuilding processes. 

This scalability prevents a common scenario where promising brands hit operational walls when their early-stage systems can’t handle increased complexity. The same foundational processes  and software solutions that help major brands compress development cycles can now be implemented at appropriate scales for up-and-coming brand companies. 

Answering “what’s next” 

Remember that shareholder question from the beginning: “What’s next?” The companies positioning themselves with an answer aren’t just cutting costs—they’re fundamentally rethinking how they innovate. They’re building integrated and concurrent processes that connect consumer insights directly to manufacturing realities, creating products that survive not just because they’re good, but because they’re designed from day one for speed-to-market, manufacturability, and market resilience. 

These companies understand that in an environment where 75 to 95% of new product introductions fail and competitive responses happen in weeks rather than years, the traditional innovation playbook is broken. The future belongs to those who can innovate faster while building in higher survival probability—companies that master the integration of speed and market intelligence. 

The question isn’t whether change is coming to CPG. The question is whether you’ll be leading it or reacting to it. While cutting costs can seem like the easier road to go down, the companies that figure out how to innovate faster and better, will own the hearts and minds of tomorrow’s consumers. 

Ready to assess where your innovation process stands? I’m more than happy to have a conversation and share what we’ve seen in the market – both the challenges companies are facing and the approaches that are actually working.