{"id":6052,"date":"2025-08-20T07:42:48","date_gmt":"2025-08-20T07:42:48","guid":{"rendered":"https:\/\/prelaunch.com\/blog\/?p=6052"},"modified":"2025-08-20T08:18:08","modified_gmt":"2025-08-20T08:18:08","slug":"shift-from-incremental-to-bold-innovation","status":"publish","type":"post","link":"https:\/\/prelaunch.com\/blog\/shift-from-incremental-to-bold-innovation","title":{"rendered":"The Profit Trap: Why 2025 Is Your Window to Shift From Incremental to Bold Innovation"},"content":{"rendered":"\n

If you\u2019re anything like me, you\u2019ve spent the past few years watching your company become a shrine to short-term profitability. Maybe you\u2019re nodding along to every new cost-cutting push, or quietly wondering how your team\u2019s \u2018new\u2019 innovations somehow all turn out to be more kiwi-scented shower gel. <\/p>\n\n\n\n

Welcome to post-COVID innovation management, where game-changing bets have taken a backseat and finance is running the show.<\/p>\n\n\n\n

Aggressive post-covid price increases are the new normal and as volumes suffer, big corporates struggle with sales value. Boards should really be focusing on growth again, and a fresh window for real, bold innovation is opening. Of course, saying \u201clet\u2019s do some disruption!\u201d is the easy part, the hard part is getting your organization to change gears after years of de-risking and margin worship.<\/p>\n\n\n\n

These are not my words, but Joachim Bolz<\/a> whom I\u2019ve interviewed. He has spent his career moving between senior roles and high-stakes global projects, most recently leading disruptive initiatives at Henkel, one of the giants in personal care, laundry, and home care. If there\u2019s anyone who can honestly explain where the real opportunities and roadblocks lie in 2025, it\u2019s him.<\/p>\n\n\n\n

In the rest of this article, I\u2019ll take you inside that conversation that focused heavily on the need to pivot from the familiar, and some genuinely practical advice on how to push radical ideas through the finance-driven maze most of us are stuck in. <\/p>\n\n\n\n

Focusing solely on profitability is a dangerous game. <\/h2>\n\n\n\n

Before the pandemic, smaller, independent brands were a significant driver of growth in the consumer goods sector Bolz says. \u201cUntil 2019, large parts of global Consumer Packaged Goods (CPG) growth came from smaller brands, emerging markets, e-commerce, and DTC. Big corporations were really lagging behind in terms of sustainable growth.\u201d <\/p>\n\n\n\n

Then COVID came with all its \u2018wonderful\u2019 side effects: supply chain disruption, raw material price increase, and \u201cwith very few exceptions every major FMCG company was struggling financially.\u201d Of course then, companies switched their financial strategy to focus on profitability. <\/p>\n\n\n\n

But focusing solely on profitability is a dangerous game. You might be able to deliver record margins that look great on quarterly reports, but with a closer look, you\u2019ll see the engine sputtering and that organic growth is flatlining.<\/p>\n\n\n\n

And without organic growth, your profitability likely becomes irrelevant. <\/p>\n\n\n\n

As Bolz says: \u201cI do believe that in the next four to six quarters, we will see more big companies publishing results where they don\u2019t match the expectation on growth and also also have issues on profitability again. This is because the only reliable source of profit is volume growth.\u201d<\/p>\n\n\n\n

Post-COVID, your company probably went \u2018back to basics. You streamlined, you sold off non-core assets, and you cleaned up your portfolio. The result? Your innovation pipeline is likely filled with marginal tweaks: the kiwi-scented shower gel replacing the orange-scented one. <\/p>\n\n\n\n

As Bolz says, the difference is very marginal. The real, game-changing innovation has been happening outside your walls, driven by indie brands and entrepreneurs. And here\u2019s the kicker: even when corporations acquire these disruptors, they often kill the magic. Post-acquisition, these brands often lose the innovative edge and agility that made them successful.<\/p>\n\n\n\n

This is the profitability trap. Your company is so focused on protecting today’s P&L, upholding strict processes, and de-prioritising innovation in culture, and that it’s sacrificing tomorrow’s growth. <\/p>\n\n\n\n

Bolz, however, argues that there\u2019s a critical window for you to break this cycle, especially now in the context of post-covid. As the world is coming a bit more back to normal, you should now focus on more disruptive innovation. But that is easier said than done. <\/p>\n\n\n\n

Your company\u2019s current focus on profitability and de-risking will likely be a roadblock for you. Why? And how do you get over it?<\/p>\n\n\n\n

The Two Worlds of Innovation: Corporate vs. Startup<\/h2>\n\n\n\n

To understand why bold innovation stalls in large organizations, it’s essential to recognize the two distinct worlds they operate in. Joachim Bolz argues that the core of the problem lies in a fundamental clash of cultures and processes between established corporations and agile startups.<\/p>\n\n\n\n

Corporate incrementalism<\/strong><\/p>\n\n\n\n

The process pushes you toward safety. When the head of finance asks for a 3-5-year P&L on a truly new idea, you often have no credible answer. As Bolz describes, this pressure often leads innovators to default to safer, incremental projects like changing a detergent\u2019s scent from lemon to basil. <\/p>\n\n\n\n

The financial risk is minimal, the business case is easy to build, and the outcome is a predictable, marginal gain. This system is designed to produce products that are 5% better, not five times different.<\/p>\n\n\n\n

\n

\u201cYou find yourself in a discussion with a controller… and then you say, ‘well, maybe it is easier for me to work on a project where I go from the pods that have a yellow color and a lemon smell to a green color and it has a basilic smell.’ And I’m pretty sure that even if I really screw it up, I will not lose more than 5%, but maybe I will win 7%. So I make a business case of plus two and the controller is happy.\u201d<\/p>\n<\/blockquote>\n\n\n\n

This system is designed to produce products that are 5% better, not five times different.<\/p>\n\n\n\n

The Startup Mindset: Conviction and Iteration<\/strong><\/p>\n\n\n\n

Entrepreneurs operate on a different plane. They aren’t choosing from a portfolio of initiatives; they are obsessed with a single, powerful idea. For them, the question isn’t if they will launch, but when and how.

Bolz explains their mindset is driven by conviction: \u201cI\u2019m so convinced about my idea that I\u2019m going to execute this.\u201d They launch an imperfect but viable product, gather real-world feedback, and relentlessly iterate until the offering is exceptional.<\/p>\n\n\n\n

This is a world of agile methods, rapid learning, and a relentless drive to improve. It’s a culture that corporate processes can sometimes extinguish.<\/p>\n\n\n\n

Here\u2019s an overview of the different perspectives. <\/p>\n\n\n\n

Aspect<\/strong><\/td>Corporate Mindset<\/strong><\/td>Startup\/Disruptor Mindset<\/strong><\/td><\/tr>
Focus<\/strong><\/td>Portfolio Management:<\/strong> Steering a portfolio of different SKUs. The goal is assortment renewal<\/td>Individual Idea Focus: <\/strong>\u201cThey have this one idea.\u201d The focus is on making a single, powerful concept succeed<\/td><\/tr>
Driving question<\/strong><\/td>\u201cWill I launch something?\u201d <\/strong>(Selection): Choosing the best option from many initiatives based on risk\/reward<\/td>\u201cWhen and how do I launch it?\u201d<\/strong> (Execution): It\u2019s assumed the idea will launch. The question is how to optimize it for success. <\/td><\/tr>
Innovation type<\/strong><\/td>Incremental: <\/strong>\u201cMuch more into incremental innovation\u2026 the shower gel that is kiwi instead of orange.\u201d Driven by finding a \u201c5 percent better than current\u201d metric. <\/td>Disruptive\/Breakthrough:<\/strong> Creating new categories or fundamentally changing existing ones (e.g., vegan chocolate, organic detergents)<\/td><\/tr>
Core Process<\/strong><\/td>Stage-Gate & Financial Justification: <\/strong>Heavily reliant on business cases and long-term P&L projections. \u201cThe head of finance asks you, what is the P&L looking in 10 years from now?\u201d<\/td>Agile & Iterative:<\/strong> \u201cTest and learn and improvise.\u201d Launching an imperfect \u201cbeta\u201d version, gathering real-market feedback, and relaunching. <\/td><\/tr>
Core Motivation<\/strong><\/td>De-risking & Predictability: <\/strong>The system incentivizes projects with predictable, marginal gains. \u201cEven if I really screw it up, I will not lose more than 5%.\u201d<\/td>Conviction & Vision: <\/strong>Driven by a founder\u2019s belief in the idea\u2019s protential to disrupt a multi-billion dollar industry. <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Your Mandate: How to Build a Space for Real Innovation<\/h2>\n\n\n\n

Your job isn’t to turn your entire company into a startup. Rather, he argues, it\u2019s to carve out a space where disruptive ideas can survive and thrive, protected from the corporate immune system.<\/p>\n\n\n\n

So how can you do it? There\u2019s not one answer. But these recommendations can nevertheless push you in the right direction. <\/p>\n\n\n\n

1. Create a Ring-Fenced Innovation Unit<\/strong><\/p>\n\n\n\n

\u201cI believe it makes a lot of sense to have a separate division in a company with a ring-fenced budget to work on long-term innovation ideas that are very much out of the scope of the traditional business model\u201d. <\/p>\n\n\n\n

A core philosophy here is:<\/p>\n\n\n\n

First, to separate this department from the same financial director who is dealing with the traditional business, and second, to have the freedom, as a department, to choose one\u2019s own processes – especially purchasing. <\/p>\n\n\n\n

This unit must have the freedom to deviate from standard procurement, hiring, and reporting. It needs to be flexible enough to partner with new, innovative suppliers and organizations.<\/p>\n\n\n\n

The time horizon should be mid to long term (not by the quarter) and should have strictly different KPIs to the core business. <\/p>\n\n\n\n

Where the core business could have a KPI of \u201csales value of products launched within the last 12 months\u201d, the ring-fenced department should rather be assessed by objectives like 1) number of projects, 2) success rates of different gates, 3) business cases with high variation (for mature projects). <\/p>\n\n\n\n

That means, forget P&L targets. Focus on the number of experiments run, learning velocity, and the success rate of pilot projects.<\/p>\n\n\n\n

Realistically, try to bypass mid-level financial controllers. Their job is to kill uncertainty – which is often not a good environment for true innovation. <\/p>\n\n\n\n

Depending on your organisation, you could even let this unit report directly to the C-suite or a board-level committee, rather than mid-levels. <\/p>\n\n\n\n

2. Shift from Products to Ecosystems<\/strong><\/p>\n\n\n\n

Right now, if potential customers Google solutions to a wine-stain, they’re more likely to find a link to vinegar than to your brand. That’s a massive failure, Bolz says. This requires a difficult cultural shift for large corporations: from leading and controlling an initiative to being an active participant within a broader ecosystem.<\/p>\n\n\n\n

An ecosystem mindset forces you to think about partnerships. Could you partner with an appliance maker? A laundry service? A tech platform? <\/p>\n\n\n\n

However, there are pitfalls. Many companies have “open innovation” departments that are, frankly, proved to be ineffective. Real partnership requires a willingness to not be the sole leader and to accept that you won’t capture all the value yourself. If your company’s first instinct is to try and do everything itself, your ecosystem strategy is already dead.<\/p>\n\n\n\n

All in all, shift your mindset to ecosystems thinking: try not to lead and guide something but instead focus on being part of something. It might feel risky and uncomfortable, but this change, Bolz explains, is the key to identify and act on huge and innovative opportunities – especially now in the current window of opportunity for bold innovation. <\/p>\n\n\n\n

3. Execute with Granular, Micro-Market Insights<\/strong><\/p>\n\n\n\n

A product that works in an innovation-hungry market like France might fail in a more conservative one like Germany. Your targets for new product turnover may need to be 10% in one country but only 3-4% in another. This, Bolz argues, presents a huge opportunity for a more granular approach, testing and optimizing ideas in specific, relevant geographies rather than assuming a single global solution will work everywhere.<\/p>\n\n\n\n

This is where platforms like Prelaunch come in handy. Bolz argues that to stay competitive, it’s important to use new tools on top of traditional methods. Pre-launches, for example, are scalable. Without being extremely costly, you can check your ideas in different geographies simultaneously and fast. This large-scale testing is ideal for large corporations especially also combining qualitative input on how to optimize or improve an idea.<\/p>\n\n\n\n

Prelaunch does not have “traditional” sets of benchmarks (Top Box 1 or 2) that corporates love to use when choosing which initiative to launch, but the advantages of quality data and big target groups largely outweigh that issue<\/p>\n\n\n\n

This micro-level testing is crucial. It can reveal whether communicating a different benefit for the same product could unlock a specific market segment. While Prelaunch does not have \u201ctraditional\u201d sets of benchmarks like Top Box 1 or 2, Bolz argues that the advantages of quality data and big target groups largely outweigh it. <\/p>\n\n\n\n

Your Window of Opportunity Is Now<\/h2>\n\n\n\n

For the past two years, CPG companies have impressed analysts with their profitability. But now, the cracks are showing. Even giants like P&G are struggling to hit growth targets. Both private labels and smaller and regional brands are surging back. This is your moment.<\/p>\n\n\n\n

The focus on profitability has given your leadership a false sense of security, but that won’t last. As Bolz noted, we will soon see more companies have issues of profitability again, simply because there\u2019s too little organic growth.<\/p>\n\n\n\n

When that happens, the pressure on you to cut costs will return and it will be even harder to push for bold innovation. Your challenge for 2025 is to act now. Use the current stability to make the case that sustained volume growth is driven by real experimentation, ecosystem thinking, and granular market execution. <\/p>\n","protected":false},"excerpt":{"rendered":"If you\u2019re anything like me, you\u2019ve spent the past few years watching your company become a shrine to…\n","protected":false},"author":27,"featured_media":6055,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-6052","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uncategorized"},"acf":[],"yoast_head":"\nThe Profit Trap: Why 2025 Is Your Window to Shift From Incremental to Bold Innovation - Prelaunch Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/prelaunch.com\/blog\/shift-from-incremental-to-bold-innovation\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Profit Trap: Why 2025 Is Your Window to Shift From Incremental to Bold Innovation - 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