Don’t Get Comfortable with Extension; Pursue True Innovation

11.01.18 / David Lemley

For the 2018 Super Bowl, Procter & Gamble created a 15-second TV spot and social campaign touting Tide’s new Old Spice fragrance. It was a spoof, of course. But it pointed out the sometimes ridiculous approach CPG brands and others take to innovation: Let’s just bolt one popular product onto another, Frankenstein-style.

For food and beverage brands large and small, better-for-you or not so much, most innovation is incremental. Safe. Designed to tick sales upward with something that’s fresh yet familiar, attractive to just enough new buyers without alienating loyal users.

If you’re running a brand — or seeking to maximize your investment in a company — you’re naturally looking for growth opportunities. But extending your current line with new ingredients or flavors, chasing microtrends in response to soft sales, or adding SKUs simply because your retailers want them is not a recipe for real, sustainable, innovation-driven growth.

Most brands talk a good game about innovation. That may make it sound easy. It’s not.

5 ways to jump start your Research & Development efforts:

1) Go beyond the extension mindset.

Innovation falls into two buckets: 1) simple line extensions, and 2) new offerings that transform the way consumers think about your brand. There’s a right way to execute a line extension, when it meshes what’s true about your brand with what the audience needs. [To clarify: A line extension is not to be confused with a marketing tactic. Pumpkin spice is a seasonal marketing tactic that produces velocity and keeps you in sync with competitors who also have pumpkin spiced products; it is not a strategic line extension.] Beyond that, true innovation happens when you leverage your brand’s relationship with customers to deliver something unexpected but logically connected.

2) Understand the needs your audience doesn’t yet know they have.

Most new products are solutions in search of needs. Innovation happens when you tap into deep consumer insight (of your current and desired audience) to find their unmet needs and make brand-driven products to meet those needs. These new products will have legs; they’ll withstand fads, delight your fans, and win new ones.

But a caveat: Listen to your customers. Respond to their wants. Just don’t let them dictate your innovation process because they don’t always know what is possible. As inescapable a product as it’s become in our lives, the iPhone failed testing because consumers couldn’t imagine needing a computer in their pockets.

3) Create a culture of innovation.

Steve Jobs famously said, “It’s more fun to be a pirate than to join the Navy.” The Navy is meetings and spreadsheets and hierarchy. Pirates operate without rules and beyond boundaries, exploring wherever they want and taking whatever they find. Pirates are innovators. There’s a reason why so many multinationals are acquiring startups and are launching product incubators: They crave the people and teams that thrive on smashing rules, identifying unmet needs, and then working like crazy to create something new.

Too, innovation needs to exist outside of the P&L. Create a skunkworks department charged solely with developing new product ideas that operates outside the reporting structure and beyond budgets. Innovation doesn’t happen on a strict timeline, there are fits and starts, so designate a trusted manager who delivers quarterly updates but otherwise works autonomously.

4) Reframe your market opportunity.

A few years ago, a client came to us seeking to jump into the booming energy drink market. It was a crowded segment, and we used data to show them that the best they could hope for was to claim one tenth of 1 percent; they’d barely break even. As an alternative, we showed them trend analysis that forecast the beverage category’s future landscape. The opportunity wasn’t in energy drinks but in functional beverages. They stepped back, pivoted, and are now working to launch a new product with tons of potential.

5) Don’t navel-gaze; future-gaze.

When we consulted with our beverage client, we used a method called landscape scenario planning, which is a way of imagining different possible futures. We created a series of scenarios, all of them entirely feasible based on what we know, and worked with their leadership team to determine what was most likely to happen. While we don’t put much stock in the proverbial crystal ball, scenario planning gets us pretty close to seeing the future.

To blaze a true path of innovation, you have to be open to any possible direction and every possible outcome, not just to a singular vision. You must be brave. Willing to fail, to kill someone’s pet project, to start over. And you have to be OK with doubling down on an idea knowing that it could flop or it could explode and generate significant growth. It’s not for the faint of heart.

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