Innovation strategyroadmap ppt

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  • 1. Innovation Best Practices
  • 2. Senior Leadership communication across the organization about the importance and emphasis of innovation is critical Should we consider fielding our own internal Pulmuone study to see where we are? The People Ready Business Whitepaper, Roadmap for Innovation Success Report
  • 3. A recognition that ideas can come from everywhere not just Marketing
  • 4. The three platform areas of Taste & Variety, Health & Wellness and Convenience continue to be what consumers desire
  • 5. Having a Vision and Roadmap for Innovation Strategy is important Innovatio n Vision Need States Opportun ity Platform s Consumer Targets Developm ent Platforms Concepts
  • 6. Truly delivering on Consumer Needs/Wants is important First & Second Moment of Truth First Moment of Truth: "Packaging That Sells" is key UK Pringles learned that brand recognition tied to package shape • 69% recognize Pringles with packaging shown in picture • 67% recognize Pringles without Pringles man • 9% recognize Pringles without carton-shaped package In 2002, P&G decided to launch Pringles chips with jokes, pictures and trivia printed on them Second Moment of Truth: Experience drives re-buy P&G invited heavy Pringles users to a computer and online gaming event to understand their specific product needs • Product tests while gaming They learned that Pringles consumption tied to product handling and grease slid from fingers to console • Chips should not grease fingers • Chips should be accessed without moving the eyes from the screen After the study, P&G has announced an agreement that teams Pringles with G4, the Comcast-owned cable TV network dedicated to video games and the video game lifestyle In 2003, Pringles did in-store promotions, online co-branding and POP displays together with G4 Source: P&G Internal Documentation; BCG analysis • Three-year deal worth more than $2 million • Launch of "Cheat! Pringles Gamers Guide," a half-hour weekly show offering viewers tips on how to get through challenges in video games
  • 7. Project portfolio analysis provides health check of existing pipeline Approach Financial attractiveness Very high Build portfolio of current projects • Determine financial attractiveness and feasibility as detailed in Idea Management • Represent planned PD expenses as bubble sizes (excluding past expenses/sunk costs) Review "health" of current portfolio – address key questions in management dialogue: • Are we investing enough in our most important projects? • Do we fragment our resources across to many projects in parallel? • Do we face "congestion" in our project pipeline? • Is our average time-to-market acceptable or do we miss windows of opportunity? C3 C5 High C4 Projects to pursue with high priority Medium C2 Projects to pursue if resources are available and overall targets not met without them C1 Low Projects not to pursue further Guidelines from top-management for portfolio prioritization and resource planning Very Low Very low Low Current projects Innovation Best Practice Resources, January 2011 BCG Medium High Very high Feasibility
  • 8. Attractiveness Summary Tool NorthEastern University Model Competes in an Attractive Market Category is large enough to realize good growth Specific segment exists with unfulfilled demand Has compelling value proposition Compelling for the consumer & Different consumers Compelling for the trade Strategically – financially attractive Scale Opportunity Leverages Pulmuone Strengths Integrated portfolio strategy in place Strategy is sustainable Portfolio vision developed
  • 9. We cannot be afraid to start building external innovation networks…Our own internal capabilities should not limit innovative ideas. Sources: Symphony IRI, Accenture, GMA report, CPG Innovation & Growth and Mastering Innovation, The Desai Group
  • 10. Innovation management Key lessons from BCG experience Leadership science in select areas Meaningful advances Early crossfunctional input Ideation Invention Clear Milestones Commercialization Focus resources Mix of inside/ outside experts Tight feedback loops Systematic process Outsource to accelerate Innovation P&L’s Wide funnel Driven by consumer needs Senior engagement Crossfunctional guidance Breakthrough ideas require breakthrough process Innovation Best Practice Resources, January 2011 BCG Nurture and refine Manage the critical path Manage the portfolio Communication mechanism Execution Next generation
  • 11. How do you judge yourself with respect to innovation management? Key strengths 1 2 3 4 Clear and defined innovation strategy Enough ideas to support your innovation strategy Regular and adequate top management involvement in innovation process Disagreement within the organization 1 3 Major milestones (4/5) in innovation process to review status of project Organization/culture that rewards entrepreneurial freedom and allows mistakes 5 Innovation Best Practice Resources, January 2011 BCG Transparency/overview of the innovation pipiline and the status of each project? Prioritization of projects is determined by transparent criteria in a formalized way across all brands? Quantification of "business potential" of each idea? Standardized documents accompany the process to exchange key information among team members? Project champion with adequate power to control and manage a project across all functions? 1 Innovation process too long 2 High level of local developments for local needs (too high?) 3 Lack of transparency of innovation process 4 2 4 5 Weaknesses Organizational structure seems to inhibit the marketing strategy 5 Inefficient/low usage of external sources to generate ideas 6 Low reliability towards trade concerning launch dates of new product
  • 12. Following a clear and simple stage gate process is also helpful Idea generation Actions Ressources • Purchasing simulations in own locations and core regions • Annual category studies, focus groups • Consumers accompanied 12 hrs./day for 1 mo. • Regular meetings with "idea generating companies" • Cross-category and cross-country innovation meetings Brand manager/ director for new products Preparation • One- and multidimensional concept tests at POS • International concept and market tests • Feasibility studies • Estimation of market potential • Preview tests of new products by retailers • Supplier involvement in development of new materials and ingredients Category Planning Team (3 FTE: brand manager, market researcher, engineer) Decision • Internal benchmarking of new products relative to existing portfolio, corporate targets and strategy fit (own database) • Quality and product use tests by consumers in their homes • Financial business case (NPV) Decision Team (GBU Leadership Team, R&D Functional Leadership Team) Implementation • Supply concept and production • Marketing concept, “go-to-market” strategy, advertising readiness • Clear milestone and action plans for all kind of contingencies when product is launched • Regulatory application • Training and deployment of sales force. Program Team (several FTE from market research, production, supply chain, sales, marketing, law, finance) “It was clear that we did not know how to do it. There were lots of evidences of teams doing the right things... the right market studies, superb product development and testing, and so on. The issue was one of consistency. We did some plays well, some projects, some of the time. But that is not how you win the Championship year after year” - Senior P&G executive Source: Expert interviews; BCG analysis
  • 13. Execution is Critical! Consistent project leadership Project leader follows project from conception past launch • Accountable for project success, launch • Authority to ensure proper plan execution • Ability/experience to manage multi-functional team (R&D, Trade, Brand, Finance) • Should be our best people, and a career-making move Challenge focus to tollgate review (Stage gate decisions) Tollgate reviews focus on finding the holes in the business case • Tollgate presentation limited to 10% of review, remaining 90% questioning, challenging plan assumptions and progress • Ongoing scorecard distributed beforehand to highlight progress since last review • Projects do not advance unless committed deliverables are achieved Project reviews elevated to BU leadership Consistently updated view of portfolio Early line involvement in market launch plan NPD Organization category, functional leaders chair regular pipeline reviews • Play devils advocate role in challenge meetings for projects • Add credibility to process – share responsibility for killing or altering project • Provide category and portfolio perspective Brands/Finance maintain “big picture” perspective of projects • Works with all constituents (R&D, Trade) to communicate available capital and marketing resources • Maintains master schedule of when, how launches will be sequenced Brand, Trade involved early to develop budgets plan • When dollars are being discussed, brand/trade becomes involved • Market realities, trade capability realities reflected through line involvement • R&D, Brand, Trade organizations all sign-off and commit to delivering plan by market launch - Each individual held accountable to plans Innovation Best Practice Resources, January 2011 BCG
  • 14. Understanding the Customer key planogram windows can help improve innovation execution • Top customers (i.e. top 10/15) typically introduce or cut in new items at planogram timing. Planogram timing over the years has reduced at many customers to once a year due to the resources involved with changing the sets. • Mars Foods has two primary launch windows a year: First half of the year launches: – April – Decisions are made at leadership team level of go/no go launches for first half of the following year. – June/July – Samples to sales force for January launches (6 months advance sell in) Second half of the year launches: – October/November – Decisions made at leadership team level of go/no go launches for back half of the following year. – January/February – Samples to the sales force for July launches (6 months advance sell in)
  • 15. Reinforce transparent, disciplined payback metrics Peers measure innovation success primarily by revenue growth... “How does your company measure its success with innovation?” ...and only half measure performance of innovation process “My company collects and uses metrics to assess the following:” % Agree Overall revenue growth 56 % of sales from new products/services 80 78 50 Customer satisfaction Return on investment in innovation 60 60 47 52 30 40 Number of new products/services Agree 30 20 20 New-product success ratio Strongly agree 11 Higher prices 0 0 20 40 60 Respondents (%) Source: BCG analysis Innovation outputs Innovation inputs Innovation process performance
  • 16. Active monitoring determines product innovation success • Initial launch reviews take place 12 weeks, 6 months, 9 months and one year after launch – Later reviews happen every 6-12 months • Results are reviewed by cross-functional teams and include senior management involvement to highlight relevance of process – A number of indicators are tracked • market share and consumer behavior • sales both for the product and for the category as a whole (consider cannibalization and/or real category growth) • EBIT performance • return on investment (ROI) – Performance is evaluated vis-à-vis business plan and supporting materials used during decision-making phase • Review sequence Under performing launches are put under close watch (“kill or cure”) – Usually given a defined period of time to design and implement turnaround measures – The decision to withdraw new products can be taken from as early as 6 months after launch • usually “kill” decision is followed by an orderly withdrawal plan to avoid channel conflict KPIs Sanctions Enables transparent risk management for everybody Source: BCG interviews; public information about P&G; BCG analysis
  • 17. The Innovation Path Paving the Road To Success For Pulmuone Foods USA, Inc.
  • 18. Pulmuone Foods USA, Inc. Innovation Vision & Mission Pulmuone US Situation Analysis Summary Implications Consumer Trends:  The Boomer generation is getting older Consumers:  Asian & Hispanic populations are on the rise Change is implicit, identify and react quickly  Households are decreasing in size Build competence in convenient, portion controlled items  Generation Y is coming into prominence  Ethnic foods are quickly emerging into the mainstream  Convenience factor is still important given busy lifestyles  Consumers have defined that they want ‘wholesome’ foods, not foods to treat specific disease states  With global obesity crisis, focus on healthy eating is more important than ever. Competitive Trends: Leverage Mega Brands  Consolidation of brands into top 15 food companies  Acquisitions have led to new segment opportunities and capabilities  Pasta competitors are crossing over into different temperature states  Restaurant/Chef inspired brands translating to Retail Customer Trends: Focus on own label  Increased pressure by retailers becoming their own marketers and creating mega brands that cross categories and temperature classes  New alternative retailers filling needs of consumers desire for fresh, prepared, healthy products Competencies: Needs Gap  Largest Pesto manufacturer in the U.S.  Tofu expertise – U.S. and Korea  History and Track record in understanding Fresh Vision Authentic Wholesome Foods Pulmuone will make healthy, delicious food that our consumers will be proud to serve their families. Focus on how to win in ethnic – Asian and Hispanic targeted offerings Significant economic pressure leads consumers to look and challenge their definition of value by brands Competitive Increase partnership competencies to leverage brands into new temperature classes and increase presence across categories Need to have broader appeal to Generation Y and early adopters to build cache and awareness for a lifecycle Mission Create products that consumers and customers regard as their partner in leading fuller, healthier lives Consumers will consider our products as combinations of great taste, health and convenience that enable them to feel good about their purchase as they nourish their mind, body, soul, and values Customer Be nimble and flexible to take advantage of customer private label opportunities where appropriate. Competencies Identify ways to increase usage of Pesto Identify ways to introduce innovation to Tofu to help it become more widely accepted by US consumers Leverage the right partnerships/alliances to extend capabilities in the proper adjencies. Key Strategies Create new value for existing brands via Renovation & Partial Innovation Develop and leverage borrowed technologies/capabilities from Pulmuone corporate in Korea Creation of expanded market space with breakthrough ideas and entry into larger categories  Fresh pasta/sauce manufacturing Expansion of target consumers with focus on emerging growth areas (Kids, Gen Y, Asians, Hispanics and Aging Baby Boomers)  Open to alliances and partnerships Enhance internal capabilities - Gilroy  Pulmuone does not have core competency in Frozen or Ambient Enhance brand building and marketing competencies  Certified Organic positioning  Pulmuone weaker in the area of branding/Marketing
  • 19. Strategic Innovation Plan Health •White WW flour •Ancient Grains •To your health •Sauce Plus Flavors of the world Convenience •Empanadas •Calzones •Asian dumplings •Korean Rav •microwavable Stuffed Dough / Sauces Kids Culinary •Shapes •Crunchy Rav •PBJ Rav •Grilled Cheese Rav •Burger Rav •Sauce cubes •Pasta bites Snacks •Pan fried desserts •Dessert Sauces Circle Size = Market Size
  • 20. Pulmuone Foods USA, Inc. Innovation Roadmap Vision Need State Platforms Opportunity Platforms Authentic Wholesome Foods Health & Well Being MGF Simplify My Life Wildwood Consumer Targets Adults Kids Adults Taste Experience Convenient Product Forms, Convenient Cook Bolder, Ethnic Flavors More convenient, Disruptive packaging New eating occasions Kids Platform areas: Ready When I’m ready, Distinctive Purity, Full Flavor Savor the Moment, Instant Enhancement, Next Gen quick meals, No-Fuss Quick bites, Light meal parter, Functional Health Selections, Carefull creations, top chef transformations, impressive dinner experience, self driven Health and wellness, experiential eating, Absence of negatives, light and simple, fast favorites, fresh prep quality
  • 21. Last spring, we initiated a stage gate process with a crossfunctional leadership team to review the gates. Since Gilroy start up, we moved away from this. We need to get back to original process. Ideation Concept Development Launch Tracking • Idea in the shower • Framed ideation • Idea screening • Idea Approval (GATE #1) • Idea qualification • Market study • Concept development • Concept testing • Concept approval (GATE #2) • Item setup • Procurement • Production run • Sampling (Post Launch) • Target timeline: 1-2 weeks • Target timeline: 1-2 months • Culinary recipe • Bench top • Pilot test • Production test • Sensory • Shelf life test • Mfg location • Go or No Go (GATE #3, #4) • Package • Specification • Training • Target timeline: 1 -3 months • Target timeline: assessment 6 months post launch •SKIP for club items only if flavor extension • Target timeline: 4-6 months • Quality • Sales performance • Profitability
  • 22. Top Channel Trends
  • 23. Top 50 Grocery Categories
  • 24. Top Growth Categories & Top Kroger Categories
  • 25. Pricing & Price Elasticity Trends of Different Categories
  • 26. 2) Company core direction ☑ Concept development 3) Market fit ☑ Concept board 4) Consumer target ☑ Concept testing 5) Estimated size of prize 6) Margin target set 7) Estimated resources 8) Estimated timeline ☑ Idea Brief ☑ Concept brief ☑ GATE2: Go or No Go Decision ☑ Product Brief ☑ GATE1: Idea Screening ☞ SKIP for club items Only if flavor extension Deliverables Deliverables Idea or Product Brief Concept Brief Tracking 1) Strategic fit ☑ Market study Launch ☑ Thinking frame: ☑ Idea qualification Development ☑ Idea in the shower Concept Ideation Tasks & Sub Process by STEP
  • 27. ▼ Bench top formula ▼ Cutting (☞CLUB: 1-2-3) ▼ Internal panel huddle ▼ Pilot scale test or PTR ▼ Consumer panel huddle (☞CLUB: Optional internal sensory & Buyer’s approval) ☑ Equipment assessment ☑ Initial product info(cost, ▼ Consumer panel huddle (☞CULB: Skip this step) ▼ Shelf life test – 70 days target ▼ Product/Process spec ☑ GATE 4: Go or No Go ☑ Package development ☑ Label development ☑ Source identification Q/A nutrition, ingredients) ☑ GATE3: Go or No Go Deliverables Deliverables Sensory Report, CAPEX Assess. Sensory report, IPS Tracking ▼ Primary recipe ▼ Scale up production run Launch ☑ Formula/Process development Development cont’d Development Concept Ideation Tasks & Sub Process by STEP
  • 28. The basic process architecture established a common set of stages and stage decisions Learning loop Creation Idea brief SD1 Assessment SD2 Program charter Research charter Dedicated program team formed Source: BCG interviews; public information about P&G; BCG analysis Development SD3 Preparation AR signed SD4 Launch SD5 First launch Evaluation Audit review
  • 29. These are defined by key decisions Learning loop Creation SD1 Assessment SD2 Development Dedicated program team formed Stage decisions • Creation of Program Team, given prioritization • Approval of contract for next stage • Business case is proven • Commitment to target launch timing • Approval of contract and resources for next stage Source: BCG interviews; public information about P&G; BCG analysis SD3 Preparation SD4 Launch AR signed • Product definition is frozen • Commitment to launch volumes • Approval of AR submission • Approval of contract and resources for next stage SD5 Evaluation First launch • Agreement to start production • Commitment to launch plan • Approval of contract and resources for next stage • Approval of rollout plan for future markets • Decision on scope and timing of evaluation • Define when Program team ends Audit review
  • 30. Three teams are responsible for executing the process Category planning team Program charter Decision team–Senior Mgt Team Learning loop Creation SD1 Assessment SD2 Development SD3 Preparation AR signed Program team Source: BCG interviews; public information about P&G; BCG analysis SD4 Launch SD5 First launch Evaluation Audit review
  • 31. The category planning team owns stage 1 Category planning team Program charter Decision team Learning loop Creation SD1 Assessment SD2 Development SD3 Preparation AR signed Program team Source: BCG interviews; public information about P&G; BCG analysis SD4 Launch SD5 First launch Evaluation Audit review
  • 32. The CPT is responsible for generating and prioritizing ideas within their category • Populate new-product grid and technology grid – Underlying technical principles demonstrated – Economically attractive Idea s Blades & Razors – 2004 New Product Requests Innovation 2004 EB/ER 246 - Q1 Iterative process of evaluating and prioritizing ideas EB/ER-307 - Q2 ER-309 - Q3 Renovation Systems M3 Cham pion (GLA) - Q1 2005 2006 EB/ER- 313- Q4 EB/ER-320- Q2 EB/ER 265 - Q4 2007 EB/ER- 260- Q1 EB/ER- 290 - Q1 M3TurboBro3 - Q1 SD1 ER-246 Fashion 2 - Q1 ER- 283 Flanker-Q1 Custom Plus 3 S. Excel 3 - Q1 Disposables Market Penetration Elastomer Flanker - Q1 LHOB Plus - Q1 Vector Enhancem ent- Q1 Vector Plus - China - Q3 Vector Plus- IIPh NOTE: M3 Disposable - TBD 2004 SGP Key Issues / Opportunities - March 3,2004 8 • Complete program charter and stage contract for most attractive ideas Source: BCG interviews; public information about P&G; BCG analysis
  • 33. The program team/extended team is responsible for executing on the program Category planning team Program charter Decision team Learning loop Creation SD1 Assessment SD2 Development SD3 Preparation AR signed Program team Source: BCG interviews; public information about P&G; BCG analysis SD4 Launch SD5 First launch Evaluation Audit review
  • 34. Role of the program team/extended team Package development planning Package development Tech support services Mechanical development PE&I GEHS Product development Mfg engineering services Product analysis Contract fill Finance (cost estimating) Manufacturing technology management Factories R&D Engineering or procurement Product evaluation (sensory, microbiology, analytical, statistics, claims, consumer service) Program Team Leader MRD (consumer research, forecasting) Purchasing New products coordinator Value chain Fragrance development GBM New products planning Value chain Finished goods planning Design services Finance (financial analysis) ComOps (planning) Source: BCG interviews; public information about P&G; BCG analysis Business management Legal Package and graphics design ComOps (sales)
  • 35. Low complexity programs follow a simplified 'FastTrack' Decision team Learning loop Creation SD1 Assessment SD2 Development SD3 Preparation AR signed Creation SD1 Assessment, development, production, launch, evaluation Program team Source: BCG interviews; public information about P&G; BCG analysis SD4 Launch SD5 First launch Evaluation Audit review
  • 36. There is a common prioritization tool and process Portfolio Category planning team Decision team Program charter Learning loop Creation SD1 Assessment SD2 Development SD3 Preparation AR signed Program team Source: BCG interviews; public information about P&G; BCG analysis SD4 Launch SD5 First launch Evaluation Audit review