The Perfect Idea ? In Theory

So many new business ideas look great on paper. Consider the fact that up to 75% of the world’s population is lactose intolerant . Or the fact that oats provide an ideal balance of proteins, fats and carbohydrates for the human diet while effectively lowering cholesterol. Or the fact that growing oats is far less expensive than raising cows. If we could only create an oat-based substitute for products which require milk ? we could solve several problems with one product ? the world would surely beat a path to our door!

Theory Meets Market Reality

Or so thought Rickard í_ste. As a Swedish chemist and food science engineer, Rickard patented a process for extracting the nutritious elements from oats and convinced a Swedish foods producer to develop a diet soup which tasted creamy but was actually very healthy. Though it sounds like a winner, the soup was never successful ? perhaps because neither he nor the food producer funded marketing of the new soup.

Partnership Comes with an Opinion

And so Rickard pursued a new partner willing to make the investment in marketing oat-based products. But the partner he found had no interest in diet soup. The new partner wanted to offer a beverage alternative to dairy milk. So Rickard developed “Mill Milk”ù and with some marketing support the product gained tepid acceptance in the UK but not success. After that and another well-financed effort to create oat-based yogurt with Danone failed, Rickard decided he needed more control over the destiny of his business.

Back to the Farm

Frustrated with his initial partnership efforts, Rickard decided he wanted to own the product that went to market. Collaborating with another food products company was out. But it is expensive to launch a new food product and brand ? and Rickard did not have the money. After some discussion, Rickard found financial support from his own supply chain. The Swedish oat farmers, anxious to find new outlets for their crop, invested in Rickard so he could bring his own Oatly brand of oatmilk to the market.

Support the Market’s Decision

Oatly gained quick popularity in Sweden. And Rickard realized that he needed a range of products in several categories to get shelf exposure and to prove to the rest of the world that Oatly was in fact a true alternative to dairy. He quickly launched ice cream and cooking creams, flavored beverages and a ready to pour pancake batter. Today he commands 65% if the Swedish non dairy category, and Oatly is expanding across Europe, growing 70% in the UK this year alone.

On His Terms

Now that Oatly has gained credibility in the market, the team is going back to major food producers to talk about alternatives to milk in their finished products. And potential partners are also coming to him with ideas for new ways of replacing dairy with oats. Being in a position to influence who you want to work with and what you offer is one of the great rewards for creating your own opportunities ? though its still no guarantee of what the market will decide.

Fail Fast, Fail Cheap: Succeed Sooner

The next time you sit down with a cone of Oatly strawberry ice cream to consider future business ventures ? be wary of the ‘all-or-nothing’ plan. Rickard managed to experiment with different products and geographies, never letting any one project risk the future of the firm and incorporating learning from the last experiment into the next. He let the market guide him and his partners to the right product, and used the market’s decision to his advantage whether it was positive or negative.

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Stuart Read is professor of marketing, IMD, Lausanne, Switzerland. Robert Wiltbank is assistant professor of strategic management, Atkinson School, Willamette University, Oregon.

Publication:
British Airways Business Life
Author(s):
Stuart Read