“Consumers pull brands into their lives to address circumstances in which they need some help to resolve a struggle or fulfill an aspiration – to make progress,” Nielsen Innovation Practice Senior VPs Taddy Hall and Rob Wengel explain in the research firm’s 2015 Breakthrough Innovation report released June 24.
“Consequently,” they write, “for markets to develop successful innovations, they need a deep understanding that centers neither on a consumer nor on the product, but rather on the circumstances.”
For CPG firms this means looking not at what is selling well, but at what is not and asking why, the reports says. It encourages firms to ask if consumers are not buying products because they offer inelegant solutions or if they are using the product in unexpected ways or combinations with other products to create a better work around.
If so, then an opportunity lies in simplifying the processes to get a job done more quickly, easily and effectively, the report notes.
The theory that successful innovations are based on performing jobs well is derived from analysis of more than 20,000 new product launches in the past four years, with special attention paid to 74 products that earned from Nielsen the title “Breakthrough Innovation Award Winner” by selling at least $50 million in the first year, achieving at least 90% of year one sales the following year and delivering a new value proposition to the market, according to Nielsen.
According to the report, other best practices from the 12 brands that won the breakthrough innovation title this year, include:
Add a stage gate 0 – Many companies use the stage gate system to create a conceptual and operational roadmap for product development. By adding an extra gate at the start of the process, firms can insist a product development idea nails poorly performed jobs or clear consumer need – establishing a solid foundation for success.
Create inspired stage gates – Rather than pressuring managers to meet minimum thresholds at milestones, use milestones as a time to do a gut check and ask if the product development process is staying faithful to the consumers’ needs.
Prioritize category expansion – By adding new innovation to the same category, companies become an authority which is capable of redefining and creating new categories.
Establish cross-functional teams – Oscar Mayer’s Lunchable Uploaded, an innovation award winner this year, became a breakthrough success because leaders from different teams worked together to see how changes in specific areas would impact other areas and the overall product development process.
Have leaders take an active role in innovation – Leaders of successful innovation create incentives for managers to nail jobs rather than hit launch dates, allocate resources for innovation and protect product ideas from cost-cutting pressures that lead to an incremental rather than break through innovation.
Innovate with a community –“Active engagement in a diverse community of thinkers, doers and leaders is an indispensable innovation resources,” the report notes. It emphasizes that true innovation cannot happen in a silo.
Learn from the past but take risks – Companies can keep innovative employees and institutional knowledge by creating clear career paths internally to minimize transfers of key workers. But bringing in new blood and allowing teams to make mistakes also provides valuable learning opportunities, the report notes.
Act fast, but not too fast – Successful innovations can move more quickly when driven by clear consumer demand, but CPG firms still need to perfect a product as much as possible before the launch because consumers are less forgiving of reformulations and do-overs in this space than they are in the technology space.