The Biggest Obstacles Internal Teams Face When Innovating06.24.19 / David Lemley
For large better-for-you (BFY) companies, keeping up with rapid-fire changes in consumer preferences and behavior, and moving quickly enough to innovate new products is challenging enough. For niche brands, limited R&D and production capacity make it even more so.
But the biggest obstacle to innovation that we encounter in BFY is a surprising one: people. Even organizations that embrace product innovation get in their own way.
Often, we see that BFY brand teams take a less-than-courageous approach to new product development, reluctant to do more than extending their current line with new flavor profiles or trendy ingredients. That’s problematic, because true innovation is the way to future-proof your brand.
The Leadership Challenge to Food & Beverage Innovation
Corporate CEOs talk a good game when it comes to innovation. But they can be the spike in the R&D wheel. Why is that? We see a few reasons at play.
Leaders, especially those brought in to turn a brand around or prepare it for sale, want to keep profit high on their watch. They need growth to happen, but they don’t want to risk a product that’s unknown or unproven, even it it may have great prospects. We call this “short-termer disease” — a focus on immediate, guaranteed results instead of the long game.
Some of this subtle opposition to real innovation, unfortunately, is a matter of ego and self-interest. Dynamic leaders may not embrace ideas that aren’t their own, or that run in opposition to what they’ve pursued in the past. They may not “get” the brand’s target audience or the proposed new product, and they don’t want to let on that they don’t understand. Or they may be fearful of jeopardizing a hard-earned professional reputation by being wrong or looking out of touch. They’re protecting their career interests in sacrifice to the brand’s interests.
Driving Innovation on Consumer Need
Deep consumer insight is the true driver for food and beverage product innovation. Armed with qualitative and quantitative data — plus real analysis through the lens of your brand — you can answer key questions. Will consumers give the brand permission to extend into a new space? How will this new product fit into their lives? Do they need it, even though they may not know they do?
That said, we don’t advise you to turn product development entirely over to your audience. Why? Larger food and beverage companies particularly have a tendency to focus-group products in their R&D pipeline, stacking the deck with questions that confirm bias (of both brand managers and consumers) rather than revealing deeper insights that break new ground.
By truly understanding their consumers, leaders charged with R&D avoid the most common problem we see in innovation. In the BFY space, the leadership team is comprised of people who are true believers themselves. When those folks conflate themselves with their customers, they make products that fit into their own lives, right now, disregarding the fact that their lifestyles and profiles don’t match younger customers. Innovation solves their problems, not consumers’. If you think you’re your best customer, that’s a great way to build an entrepreneurial brand, but it’s not a good way to operate moving forward because you need to start inviting others into the tribe.
Innovation Lies in Whitespace
We help BFY brands identify what we call whitespace — categories or niches where consumers would welcome the brand to engage, and where there’s little well-funded competition.
Our thorough competitive audit for BFY brands creates a profile of the market space, maps competition and what they’re not doing, and reveals opportunity for innovation. Given the brand’s existing knowledge, reputation, customer halo, and other intangibles, where does it have the right to play in new categories? What else could you make? If you’re a cereal brand, for example, could you make something else around that daypart, or use your ingredient knowledge to create products for other parts of the day?
This approach leverages the marketing theories outlined by W. Chan Kim and Renee Mauborgne in their book, “Blue Ocean Strategy.” Cirque de Soleil is a classic example of this approach. In its early days, Cirque used to look like the traditional circus, with elephants and tigers and bears. To grow, Cirque’s founders used Blue Ocean strategy to envision what the Cirque brand would look like if it was not about performing animals, but instead about performing people — the physicality and music and spectacle. They looked at what the circus historically wasn’t to find what it could become: exotic, elevated, human, otherworldly, spiritual. That differentiation allowed Cirque de Soleil to find new audiences and, notably, charge high ticket prices. The brand created a category of one.
Setting Innovation Apart
We’ve seen the most successful product innovation happen when it happens outside traditional corporate structures. We guide brand leaders to create a “skunkworks” — a hub for research, iteration, and development that lives outside the P&L for a specific period of time. To be effective, these innovation labs need to be free from executive oversight, empowered to connect directly with consumers, and fully autonomous with only quarterly reporting. That’s where true disruption really happens.
If your team is struggling to identify the right kind of opportunity, we’re ready to assist. Read how we’ve helped brands like Kar Nut Company leverage innovation to emerge as a national brand.