You need real innovation for real profit

Despite frequent visits home, my long suffering and long time ex-pat American wife still finds some elements of the US strikingly different.

Life in England was hardly Soviet style privation (well not in recent years) but the sheer number of grocery items in the US still surprises. It’s not that there are so many different categories, it’s the number of brands and varieties in each category that adds up.

A recent quick count of SKU’s gave me 98 Chicken Soups, 16 Blue Cheese Salad Dressings, 54 versions of Macaroni Cheese (18 of them from Kraft) and nearly 100 Orange Juices from 11 Brands in one store!

It’s choice, it’s freedom, it’s capitalism, it’s America – but is it good business?

I know the arguments about shelf presence, about family size vs. singles, about brand preferences, and consumer typologies, but how many of these items are paying their way?

Next time you are considering extending a line, calculate really honestly the investment costs - market research, design, art work, pack, ingredient and product inventory, change parts, down time between varieties, salaries, promotions, listing costs, maybe advertising - then account for cannibalization from your current range, and work out the really honest pay back period. I think many will be faced with an unpleasant surprise.

All that activity just for a me-three or me-four proposition and then such a poor return.

Real innovation is of course much harder and much riskier but it’s where the ultimate rewards are.

Real profit comes from thinking and acting differently, not from launching the 55th Macaroni Cheese.

Is half full, too full, or not full enough?

Years ago when I was working in a London Ad Agency we had a real fire alarm. It was mid-morning and everyone left the building in an orderly fashion to be counted and checked. The creative teams slipped away to their favorite bars and were never seen again that day. At the time it didn’t really seem unusual. It was normal for many jobs to lunch in a Pub and highly unusual not to down several large ones at Friday lunch times.

Times and attitudes change and the English pub lunch has become rare (with average lunch times down to 19 minutes, it has be!) but presently back in the UK for a few days, I see that the leading Lager brand has launched a “mid-strength” variant at 2% ABV (Alcohol by Volume) rather than 4% and is promoting it as “the lunch time pint”. German Brewer, Becks, is trying something similar and even Guinness is testing a mid strength Stout in Ireland.

I worked on low alcohol beer npd in the past and always personally felt the route made sense in that it tasted like a real drink instead of no alcohol beers which tasted awful and which nobody would even consider drinking in a session.

Half alcohol didn’t work in the past because no alcohol beers were a clearer proposition versus drink drive laws.

But now, is there a route which avoids all thought of driving and merely suggests a lunch time drink for a public transport commuter, or a pint after training, or at the 19th hole, or because of a big meeting tomorrow?

Or a beer instead of a soft drink.

Or two beers instead of one?

Or an evening drink that lets you join in the fun but still, how shall I put it, perform?

I wonder would Americans see “medium strength” as a half full or a half empty glass?

How Fast Is Your Innovation?

“No company is smart enough to know what to do with every new opportunity it finds and no company has enough resources to pursue all the opportunities it might execute” John D Wolpert in Harvard Business Review, August 2002.

“Under pressure in the market and under pressure from the board, the innovation team generates many ideas but, incapable of choosing from them, clogs up and in the end achieves nothing. Nick Sawbridge The Morning Cup November 8th 2006”

In food and drink there are so many markets, sectors and niches that choosing which ideas to progress is frequently a slow, inefficient and subjective process and yet this stage is probably the most important of all. Do you recognize any of these reasons in your company?

● Inconsistency of judgment criteria. “Someone keeps moving the goal posts.”

● Focus on business as usual. “It’s hard enough keeping up with today’s problems let alone creating more for tomorrow.”

● A lean organization with no spare capacity. “We’ve just had another re-organization”

● Concept confusion. “The idea was never clearly written with a proposition, reason to believe, and target consumer that we could all understand”

● Ideas are cheap. “We’ve been working on these ideas for months without real progress. Lets have an away day and generate some easier ones”

To be really successful you need to be able to allocate sufficient resource to developing an idea – and although it’s difficult and risky, that means making a decision.The question is do you want to progress 100 projects at 1 mph each or 1 project at 100mph?

How Many Ideas ...
It’s said that it takes 3000 early stage ideas for each commercially successful new product launched, and whilst I like to think that my own firm somewhat betters these odds, it is clearly true that generating successful ideas is a major task. Idea generation on this scale needs direction and dedication.
Whether you have a formalized procedure for regular sessions, frequent ad hoc sessions, or contract out your generation, you need focus if you are to create and filter so many ideas.
As a marketer I feel a natural affinity with any process which begins with clear consumer insights, but I know how easily a blue sky session runs off into a never never land in which real world production and costing issues are rapidly abandoned.
There are I think three main areas of focus for most [food] companies.

● The classic Marketing group area best defined by Consumer Trends, Brand Values and Consumer Insights.

● The R&D groups responsibility for awareness of emerging technologies and the product possibilities that they may bring.

● The joint responsibility area best described as Brand Evolution in which product and pack developments are merged with consumer insights to develop fast track opportunities.
Focus on these three areas and even 3000 ideas may not seem too hard to achieve, as double Nobel Prize winner Linus Pauling said, “the best way to have a good idea is to have lots of ideas”.
Now all you need to do is decide which one is the winner!