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Monday, December 01, 2014

Which brands innovated the most in 2014?

Nielsen did a study of over 17,000 new products that were launched between 2008-2012, and analysed 62 of the them, for how they introduced products that were scalable and loved by the customers. These products were not mere tweaks in packaging, ingredient reformulations, size changes, and re-positioning of existing brands. They had also generated sales of $50 million minimum in the first year, in the US. If these brands had achieved at least 90% of sales in the second year, then it confirmed consumer demand. So the criteria that were being looked into were: Distinctiveness, Relevance and Endurance.

The winners were fourteen US brands that we in India, are mostly not familiar with, but here they are: ZZZQuil, Mucinex Fast-Max, Meow Mix Tender Centers, Tide Pods, International Delight Iced Coffee, Sargento Ultra Thin Slices, Gevalia Kaffe Retail Coffee, Nature Valley Protein Bars, Febreze Car Vent Clip, Nabisco BelVita Breakfast Biscuits, Angry Orchard Hard Cider, Barcel Takis Corn Chips, Bud Light Lime Ritas, and Depend Silhouette Briefs for Women/Depend Real Fit Briefs for Men.

Excerpts from the ‘Breakthrough Innovation Report’ which was published this year (2014):
  •        Game-changing innovation is possible in any company or category.
  •        Managers offer many definitions of “innovation;” consumers use just one: a new offering that resolves a circumstance of struggle and fulfills an unmet aspiration.
  •        Breakthrough Winners overwhelmingly make Category Expansion a criteria for innovation ideas.
  •        Demand Driven Innovation is lean innovation in that waste, risk, and time are relentlessly and systematically removed from the system.
  •        Innovation success has very little to do with luck or genius – and even less to do with magic.
The report also suggests that “a consumer-centered behavioral definition of innovation turns out to be the only really reliable one when establishing criteria, beliefs, and mental models about what is and what is not “innovation.” 

“The right question and the trustworthy guide is “does the brand offer a benefit bundle that brilliantly performs an important job in consumers’ lives for circumstances in which previously available solutions were unsatisfactory or non-existent?”

Some brands did a great job of answering the above question and meeting needs in a more than satisfactory manner. Which is why Nielsen spotted them among a clutter of 3,463 products that were launched in 2012. Only 71 made the cut - of having sales of over $50 million. These winners paid attention to their existing customers and reached out to new ones by expanding category. They generated 45% of dollar sales on average from this.

The report states that “In our experience, and perhaps because of its inherent attractiveness, companies over-invest in sustaining improvements while under-investing in solutions addressing new user groups or circumstances of consumption.”

But their study has proved that “Innovations that address new users and new circumstances often command premium prices as a consequence.” What’s more, people are more than happy to pay this high price, if the product delivers what they were looking for. Nielsen’s researchers call the discovery of opportunities in unmet/unsatisfied customer needs as ‘demand driven insights’. Such insights are intuitive and cut-to-the chase. Customers don’t mince words if they are unhappy about products. This makes iteration possible and also kills bad ideas instantly. This helps organisations direct their financial resources to the big ideas that will work and bring in the bucks.

The vital point of a complete innovation job spec is to “understand the context, the emotions, and the desired outcome.” This can be done by framing products as services that has been designed for customers because this is the way that they will adopt and adapt products into their lifestyle. It also “guards against an overly narrow focus on the physical product attribute dimensions of innovations.”

The report also suggests that “Too many organizations design risk (and waste) into their processes by listening to innovation pundits who proclaim that bold leaps of faith are required, that true innovators embrace risk. This is bad advice. Successful innovators do not have supernatural risk tolerances. Quite to the contrary: they are systematic risk minimizers. Successful innovation is about minimizing, not embracing, risk. As management guru Peter Drucker wrote 30 years ago when asked about the entrepreneurial “type”: “I, too, know a good many successful innovators and entrepreneurs. Not one of them has a propensity for risk taking.”

Ultimately, listening to your customers and even those who do not use your products, is where you will get your new ideas from. So any demand driven innovation has the potential to make innovation success rates swing from 85% failure to 85% success.

Graphic is from the report. Read the full report here: Breakthrough Innovation Report 2014

1 comment:

Gajendra said...

Very nice article n report.