Buying Our Way to Innovation

On today’s (June 13th) Marketplace broadcast, Marielle Segarra and Rita McGrath (with other experts) explore what happens when a small, born-digital, hip brand, like Harry’s, gets bought out by The Man. Harry’s was acquired for a cool $1.37 billion, 9 years into it’s rebellious, anti-big shave, existence. Going to market with a message that basically said to guys, “you don’t need expensive shave tech to get a decent shave,” Harry’s and a comparable shaving startup Dollar Shave Club, put a major dent in the fortunes of incumbents like Gillette, long the dominant player in the business with it’s slogan “the best a man can get”. Scrambling, Gillette has dropped prices, launched its own shave club and tried to convince guys that they deserve a premium offer.


This sounds like another story of disruption. It upsets the carefully constructed sustainable competitive advantages of incumbent players, with a cheaper but “good enough” product displacing one that has gotten too expensive, inconvenient or just tired. There’s another aspect of this, though, that strikes me. That is that so many of the acquiring companies struggle to fund and launch home-grown innovations, yet are perfectly prepared to spend billions buying fast-growth upstarts. At the same time, the track record of an established firm preserving the secret sauce that made the target so compelling is mixed at best.

Read the complete article by Rita McGrath: Here