The Rabbit runs faster than the Fox
Painting: Jackie Morris, UK; http://www.jackiemorris.co.uk/blog/circling-work-in-progress/
Recently, I received a number of messages about some comments I made in my LinkedIn article - A New Reality for Craft Beer. In particular, the following comment drew some interesting reactions, both positive and negative.
"...macro beer does not possess the capability to maintain the highly dynamic and spirited culture of craft breweries that they acquire."
Let me state upfront that this view and general observation does not just pertain to macro beer companies and craft breweries. It also pertains to the reality and increased activity related to the acquisition of fast-growth or highly innovative startups by larger CPG companies and multinationals.
To be clear, it is not that larger incumbents do not have the willingness and ability to successfully integrate and successfully scale the companies that they acquire. Success is possible and it has been achieved. The integration and continuation of the vibrant and innovative culture that defined those startups is tough, frustrating and hard work. But it can fail because ability is not always transformed into capability.
Fundamental to the difficulty and the challenge that incumbents face when acquiring and integrating nimbler brands is the dynamism and spirited culture that is inherent in the DNA of those founding teams. Often, the personas and cultures are remarkably different and a clash is likely to occur. It is no secret who wins and what eventually prevails.
A tweet, that I coincidentally came across yesterday from Elad Gil, sums up this situation quite well.
Elad Gil, previously a VP at Twitter, is a serial entrepreneur, investor and advisor to companies including AirBnB, Pinterest, Square and Stripe. Tweet: Apr 11th 2019
(The quote is from Richard Dawkins' book, The Selfish Gene)
Dawkins' message resonates, because it appropriately describes, a distinguishing difference between the cultures and ethos of many (but not necessarily all) large incumbent companies and many (but not necessarily all) smaller startups or challenger brands.
It also describes the difference between "tenured" employees (once again, many but not all) who receive a stable and "guaranteed" monthly salary, irrespective of the market conditions, and founders who often have to work 7-days a week and who often have go without pay as they zig and zag to find ways to meet payroll. For founders, this is especially true during those early unpredictable time periods. It is this scrappiness, grit and sacrifice that defines and often differentiates whether you are running for your life or just running for your dinner.
A few years ago, an EVP of a large CPG company conveyed the following to me -- a week after they had acquired a much smaller, innovative player who was an awesome guerrilla marketer of dynamic brands in the same market.
"It won't take long. We will soon performance manage the creativity and spirit away from them."
And so, they did. Dinner had been served.