Incubating New Ventures

Why CPG firms should leverage incubator partnerships

Incubating new brands or product lines and making them independently successful is quite different from growing established ones. Although the competencies required are similar in nature, the context under which both objectives are pursued are widely different. When growing established brands, a lot of information – awareness & equity of the brand, pricing benchmarks & power, costs, competitive differentiation etc. – are already known. Whereas, when incubating a new brand, these building blocks – and many more, have to be built and made to work well together, for the brand to sustain independently.  In theory, one can accomplish this feat with enough grit and trial-and-error, provided there are enough resources to burn through. In reality though, the task is to get there before competition catches up – or the venture runs out of funds. Therefore, in the case of incubating ventures, prior experience incubating an innovation, relevant consumer insights,  experience in keeping a venture afloat with little information and managing risks – all become huge advantages. But by the intrinsic nature of CPG product cycles, new incubations or product innovations aren’t undertaken very frequently and hence the above competencies may not exist or be available in-house. It is also difficult for firms to attract talent seasoned with incubations since it provides a limited canvas for them. Rather, CPG firms can access these competencies by way of partnerships with incubators. Full-scale incubators deeply augment a promoter firm’s existing capabilities and provide great leverage. Incubators offer venture incubation as a service by bringing enterprise, strategy, research, design, product, marketing and project management under one-roof with domain expertise and experience. The key tangible benefits of these partnerships are: Faster to market Due to their extensive experience with projects of varied nature, incubators knowledge and insights which is otherwise time consuming to generate, thereby being able to build a convincing business and investment case faster. Incubators have a well-oiled team with cross-functional capabilities in-house, which can otherwise take months to gather, just to get the project started. Incubators also have well tested frameworks, models and execution capabilities, which quickens the process through conceptualization, design, go-to-market and operations, without having to reinvent the wheel. Cost effective Incubators bring flexibility in deploying human resources as and when required, thereby bringing predictability and lower fixed costs. With proven models and frameworks incubators can help avoid a lot of wasted costs and optimize investments which are commensurate with the business scale. Better outcomes Prior expert experience that incubators bring help avoid common pitfalls thereby controlling risk to the venture. Expertise and superior operational capabilities increase the gamut of tasks that can be executed well, thereby giving the venture more shots at success. A broader understanding of the market, consumer, proposition development and competition greatly increase the chances of developing solutions that are really differentiated and motivate consumers to act. In conclusion, leveraging incubators greatly pushes the odds of success in favor of the promoter firm, at lower cost and time. NorthSide anticipates this to become a norm in the years to come.