So I really love packaging, by the way. One of my favorite innovations of the last few years is the Bisquick® Shake 'n' Pour™ pancake mix. When I saw it the first time, I was literally slack-jawed in amazement. Bisquick basically took their standard pre-made powder pancake mix, which normally comes in a cardboard box, and put it in a plastic bottle. The innovation here is that they only filled the bottle half-way. This allows the consumer to ‘just add water’ and pour out the batter into the pan. Amazing, right?

There are two reasons why I love this innovation:

1. It’s so damn simple. If you’re the COO of Bisquick, you call up one of General Mills’ other brands to get a contract for their plastic bottles and when they show up you just fill them half-way. Done.
2. It’s target demographic is lazy, lazy people. I’ve made pancakes without this miraculous innovation and, believe me, it’s not that hard. The only step they’re cutting out with this is the part where you pour the mix into a bowl and add water, which (including cleaning the bowl on the back end) takes all of 30 seconds. Meaning the only ones who are buying this for its functionality are the laziest (or busiest) members of an already lazy group.
   And yet I buy it.

But I’m not lazy and I’m not dumb. And I’m guessing most of the people who buy this product aren’t either. They just act like me - fascinated when new things show up on my grocery shelves. Or in my record store, or on my new car lot, or on the next ad on my TV. People love looking at new stuff. And many people will also pay for new stuff, providing it’s no worse than the similar stuff it’s replacing. It doesn’t matter if it’s dog food or a new Rolex, if it pops out from it’s previous version, people will pay attention. In this way, product innovation -useful or not- drives sales.

At least, temporarily. Eventually every innovation is surpassed or copied in some way and the revenue dries up. Everyone knows movies have their biggest weekends on the first weekend they’re released. This makes sense for many reasons – low-hanging fruit, dispersal of bad criticism, short consumer attention spans- and is applicable to many markets.

Let’s say you are a CEO of a CPG manufacturing company and your lead engineer shows up to your office one morning claiming he had a dream last night and in it he came up with 25 profoundly new innovations to your highest-selling product. You know you could introduce all these improvements at once and completely revolutionize the market by the next quarter. This would make sense if you were a marginal player in this market and your upside was tremendous. However, if you are already the market leader, your best option will probably be to incrementally update your product over the course of months or years in order to gain the biggest payback. This is the more interesting scenario, because who really knows how long your product, even with these innovations, will be relevant? Will you wait to introduce improvements only when your nearest competitor catches on or will you accelerate the process to make sure you are not undone by some drastic shift in the market?

Assuming you have these ‘improvements’ piling up in some engineer’s hard drive, waiting to be released to the market, you are not in such a different situation from an inventory manager who has product piling up waiting to go out the door. In the former situation your costs are opportunity costs – if you release innovations ‘too early’ you will leave money on the table, if you release them ‘too late’ you will miss opportunities in the future. In the latter, you have carrying costs – rent, insurance, taxes, etc. And while the main differences are A) predictability of demand (in the former situation you know very little about demand) and B) control over supply (It is much easier to assemble a product than create an idea), the way to manage these situations can be very similar: you must reconcile the current supply of information or product with it’s future demand. (Simple, right?)

Bringing up Betty Crocker again, I think the Shake 'n' Pour miracle happened about three years ago, and from a quick Google-ing, I can’t see that it’s been replicated (although they have introduced a blueberry version! ). Which then begs the question: how long does something this good stay relevant? I know I still buy it, but that might have to do more with being OCD than anything else. I mean, I also still buy CDs, and those are clearly obsolete. I guess more specifically, the question is: how long do I have to wait before Betty Crocker reaches into her treasure-trove of packaging brainstorms to release the next grocery aisle jaw-dropper?