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Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
Food, Beverage and CPG: Organic Growth through Innovation in 2013
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Food, Beverage and CPG: Organic Growth through Innovation in 2013

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Bryan Seyfarth, PhD defines four key areas of the innovation lifecycle: innovation planning, idea and concept development, gated process management and portfolio optimization. He also describes new …

Bryan Seyfarth, PhD defines four key areas of the innovation lifecycle: innovation planning, idea and concept development, gated process management and portfolio optimization. He also describes new practices emerging in each area that leading companies are using to differentiate themselves from their competitors.

Seyfarth is an acknowledged expert on product development process optimization for consumer goods. He has advised consumer goods companies throughout the world on the use of innovation best practices to improve new product output and financial success.

To view this webinar in its entirety, please visit http://budurl.com/86m3

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  • 1. Food, Beverage and CPG: OrganicGrowth Through Innovation in 2013“Innovating on Innovation”This session will begin shortly
  • 2. 2Today’s Reality forCG Business LeadersAdapted from 2012 KPMG F&B Industry Outlook Survey
  • 3. • Competitive pressures from privatelabel, demanding trade partners, andtraditional and emerging brands• Recognize and respond to constantlychanging consumer needs/trends inincreasingly fragmented markets• Volatile commodity costs make ithard to maintain and grow marginsThe Connection to InnovationBusiness ChallengeProduct InnovationHow can we continually differentiate ourofferings from the competition?Product InnovationHow can our innovation portfolios adaptmore quickly to new consumer needs?Product InnovationHow can we improve margins by creatinghigher-value new products?Innovation Implication3Process InnovationHow can we improve margins via moreeffective cost reduction initiatives?
  • 4. LONG-TERM• 50%+ fail to sustain Year 1performance in Year 2*• 66% fail to sustain Year 1performance in Year 3*4But Wait, More Bad News…Innovation is Also Difficult…* Nielsen, The BreakthroughInnovation Report, 2012**.“New Product Pacesetters”SymphonyIRI Group, 2012SHORT-TERM• Companies average $15M in marketingspend on new product launches*• 81% are below $7.5M in Year 1 Sales**• Only 10% of new products succeed*
  • 5. 5The Good NewsThe Promise of Innovation…Food & Beverage New Product Launches 2001-2010“New Product Pacesetters” SymphonyIRI Group, 2011Average Year-One Dollar SalesAcross Food & Beverage Pacesetters Launched 2001-2010
  • 6. 6Our Experience: Innovation inWorld-Leading Consumer Goods Firms
  • 7. Enabling Cross-FunctionalDecision-Making to Defineand Manage InnovationInvestments7Our View: the Key is Applying New Practices in...Enterprise Innovation PerformanceCorporateStrategic PlansExecution ActivitiesR&D Supply Chain Production Sales/Mktg FinancePDM SCM MRP CRM ERPEnterpriseInnovationPerformance
  • 8. Enabling Cross-FunctionalDecision-Making to Defineand Manage InnovationInvestmentsInnovativeProducts &Initiatives8Our View: the Key is Applying New Practices in...Enterprise Innovation PerformanceSustainable,ProfitableRevenueGrowthCorporateStrategic PlansExecution ActivitiesR&D Supply Chain Production Sales/Mktg FinancePDM SCM MRP CRM ERPEnterpriseInnovationPerformance
  • 9. Enabling Cross-FunctionalDecision-Making to Defineand Manage InnovationInvestmentsInnovativeProducts &Initiatives9Our View: the Key is Applying New Practices in...Enterprise Innovation PerformanceSustainable,ProfitableRevenueGrowthCorporateStrategic PlansExecution ActivitiesR&D Supply Chain Production Sales/Mktg FinancePDM SCM MRP CRM ERPSuccess Rate = ~50-55%Value = +75%-100%Time to Market = -15-30%~75-85%EnterpriseInnovationPerformance
  • 10. Total Number of Projects -27% 50 projects killed overallTotal Number of LineExtensions-30% 35 line extensions killedTotal Value of Portfolio +36% +~$30MM in NPVAverage Value per NewProduct Candidate+88% +$400K in NPV per projectCase Example:$12B+ Food & Beverage FirmA division conducted a pre- and post-test after implementingnew innovation practices. Their results after ~18 months:“Fewer, Bigger, Better”10
  • 11. New Leading Practices in Food, Beverageand Consumer Goods Innovation11
  • 12. Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsKey Decision:Which strategiesshould we fundto achieve ourgrowth goals?Key Decisions:Which initiativesshould we fund toachieve our strategies?Key Decision:Should this newidea/ conceptbecome aninitiative?Key Decision:Should this initiativeget funds/resourcesto move intodevelopment?ExecutionFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus12
  • 13. Different Processesfor Different RiskLevelsAssess Each InnovationInvestment withStandardized Value andFeasibility Criteria65Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus13“Assisted” PortfolioOptimization"Top-Down” ResourcePlanning87Innovation StrategyMapping1Identify Gaps betweenthe Plan and Portfolio2Only Ideate Once YouKnow What You KnowConnect the Front End toConsumer Research andIn-Market Test Data34Execution
  • 14. 14Survey QuestionDo you have formal systems/processes to align innovationportfolios with corporate strategies and targets, including theidentification of gaps?A. Yes, we have effective systems in place to align our innovation portfoliowith strategic goals. Gaps are clearly identified.B. Yes, we have systems in place to align our innovation portfolio withstrategic goals. However, gaps are not well-identified.C. We have some portfolio management practices, but portfolio decisionsare not linked to corporate strategiesD. We have minimal/no processes to align our portfolio with strategic goals
  • 15. Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsExecutionFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus15“Assisted” PortfolioOptimization"Top-Down” ResourcePlanning87Innovation StrategyMapping1Identify Gaps betweenthe Plan and Portfolio2Different Processesfor Different RiskLevelsAssess Each InnovationInvestment withStandardized Value andFeasibility Criteria65Only Ideate Once YouKnow What You KnowConnect the Front End toConsumer Research andIn-Market Test Data34
  • 16. 16SURVEY RESULTS
  • 17. Future MarketOpportunitiesValue (e.g. Revenue,Profit, Volume)TimeToday Tomorrow BeyondCurrent/ExistingProductsInitiatives inDevelopmentStrategic Ambitions/Growth TargetsThe Planning Challenge
  • 18. Case Example – Innovation PlanningElectrolux• Challenges: Needed better wayto analyze opportunities todeliver on long-term plans• Initiatives are lines in differentportfolios; no integrated view• Solution: Linked top-down,long-term business goals tobottom-up innovation plans• Consolidated views showbusiness impact of current andfuture products against growthtargets.“… these capabilities are game-changing.For Electrolux, they are indispensable.”Johan SkåntorpVice President, Global Product Planning
  • 19. • Idea Development: Increase the number of ideas &concepts relevant to your strategies• Portfolio Prioritization: Take resources from low-value, non-strategic projects and shift them to thosethat are aligned with your strategy• Revise the Plan: If the plan is not feasible now due toa change in market or business conditions, modify itMany Ways to Close the Gap!19
  • 20. 20Survey Question #2Do you have standardized systems/processes for your frontend of innovation that extend across your business?A. We have standardized systems and processes for the front end thatenable collaboration across all business silosB. We have standardized systems and processes for the front end but theseare different in each business unit, brand, region or product lineC. We have loosely-organized tools and processes for the front end inpockets of our organization.D. We have no formalized tools and processes for the front end of innovation
  • 21. Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsExecutionFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus21“Assisted” PortfolioOptimization"Top-Down” ResourcePlanning87Innovation StrategyMapping1Identify Gaps betweenthe Plan and Portfolio2Different Processesfor Different RiskLevelsAssess Each InnovationInvestment withStandardized Value andFeasibility Criteria65Only Ideate Once YouKnow What You KnowConnect the Front End toConsumer Research andIn-Market Test Data34
  • 22. 22SURVEY RESULTS
  • 23. 23Innovation Funnel Challenges
  • 24. 24Innovation Funnel Challenges
  • 25. Barriers to the Creation ofHigh-Value Ideas/Concepts
  • 26. Case Example – Front-End of InnovationKimberly-Clark26Webinar for ConsumerGoods Technology:• Global implementation• Why? Transform idea &concept development• 75% increase inportfolio value in 2years• From 5 to 7 brandsworth over $1 billionView webinar at: www.budurl.com/TransformFEI
  • 27. Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsExecutionFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus27“Assisted” PortfolioOptimization"Top-Down” ResourcePlanning87Innovation StrategyMapping1Identify Gaps betweenthe Plan and Portfolio2Assess Each InnovationInvestment withStandardized Valueand Feasibility CriteriaDifferent Processes forDifferent Risk Levels65Only Ideate Once YouKnow What You KnowConnect the Front End toConsumer Research andIn-Market Test Data34
  • 28. Stage 1DefineConceptConceptReview28Gated Processes Must Match toAppropriate Level of RiskChoose the RightModel Based onFeasibilityGo toDevStage 2Build Biz CaseStage 3DevelopmentStage 4Test/Validate,Launch PrepStage 5LaunchExecutionGo toTest/ValGo ToLaunchStage 2-3Business Case& DevelopmentGo toIntent toLaunchStage 4Test/Validate,Launch PrepStage-Gate Express Process“Just Do It” (JDI) ProcessFull Stage-Gate ProcessStage 5LaunchExecutionGo toLaunchStages 2-4Develop, Test,LaunchLow Risk/ComplexityHigh Risk/ComplexityModerate Risk/Complexity“Consumer firms with rigid stage gatesaverage 130% more new product revenuethan companies with loose processes.”– 2010 Nielsen Study
  • 29. Stage 1DefineConceptGo toDevStage 2Build Biz CaseStage 3DevelopmentStage 4Test/Validate,Launch PrepStage 5LaunchExecutionGo toTest/ValGo ToLaunchConceptReviewStage 2-3Business Case& DevelopmentGo toIntent toLaunchStage 4Test/Validate,Launch PrepStage-Gate Express Process“Just Do It” (JDI) ProcessFull Stage-Gate Process29Stage 5LaunchExecutionGo toLaunchStages 2-4Develop, Test,Launch“Consumer firms with rigid stage gatesaverage 130% more new product revenuethan companies with loose processes.”– 2010 Nielsen StudyHigh TechnologyRisk/ComplexityStage 2FeasibilityGo toCapabilityDevStage 3CapabilityDevelopmentTechnology Development ProcessStage 5TechnologyTransferGo toTechTransferGated Processes Must Match toAppropriate Level of Risk
  • 30. Case Example – Managing Product and Process Innovation~$20B+ FoodCo• Products in 97% of U.S. homes. Most are 1st or 2nd in category• Business Challenges: No visibility. Poor decision-making. Gatedprocess not adopted. Inability to prioritize projects.• Standardized, automated gated processes both for NPD and CostReduction. Different processes for high and low complexity.• Thousands of initiatives now managed with automated solution• 4x as many cost reduction initiatives as new product initiatives• New products on “IRI Pacesetters” 4 years in a row• Achieved nearly $300M in cost savingsResultsOverview
  • 31. CUSTOMER VALUE1. Customer/Consumer Need2. Customer/Consumer BenefitSTRATEGIC VALUE3. Alignment with Market Strategy4. Alignment with Technology StrategyBUSINESS VALUE5. Financial Reward6. Market/Customer AttractivenessBest-Practice Questionsfor Innovation InitiativesValueFeasibility7. R&D Feasibility - How hard is it to invent/design it?8. Manufacturing Feasibility – How hard is it to manufacture it?9. Supply Chain Feasibility – How hard is it to source it?10. Competitive Feasibility – Can we beat the competition?11. Sales/Distribution Feasibility – How hard is it to sell?12. Investment Feasibility – How many resources are required?CustomerValueStrategicValueBusinessValueLevel of Risk/ComplexityAssessed by Function
  • 32. 32Survey Question #3Which of the following best describes the current state of yourportfolio management and prioritization processes?A. We have effective systems/processes to prioritize our portfolios, withclear visibility to where we exceed our resource constraintsB. We have systems/processes to prioritize our innovation portfolios but wehave little visibility of where we exceed our resource constraintsC. We have some portfolio management practices, but they consistprimarily of rolling up all of our projects and monitoring for risk and valueD. We have minimal/no processes for portfolio management or resourceplanning
  • 33. Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsExecutionFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus33“Assisted” PortfolioOptimization"Top-Down” ResourcePlanning87Innovation StrategyMapping1Identify Gaps betweenthe Plan and Portfolio2Different Processesfor Different RiskLevelsAssess Each InnovationInvestment withStandardized Value andFeasibility Criteria65Only Ideate Once YouKnow What You KnowConnect the Front End toConsumer Research andIn-Market Test Data34
  • 34. 34SURVEY RESULTS
  • 35. Cadence of InnovationDecision-MakingJ F M A M J J A S O N DCandidateInvestmentsCandidateInvestmentsCandidateInvestmentsCandidateInvestmentsQ1 Q2 Q3 Q4Long-Range/Strategic PlanAnnual OperatingPlan/BudgetTargets &StrategiesTargets &StrategiesTargets &StrategiesTargets &StrategiesH1 H235
  • 36. • $10B F&B manufacturer - segment leader in 200+ countries• Weakening economy & high commodities costs led to adecline in sales of premium brands; required fast shift tofocus on “value shoppers”• Used Accolade to make quick changes to portfolio:– Placed 150+ current candidate products on hold– Defined and prioritized 1000+ new candidates in fewer than 90 days– Brought 100+ new products to market in 3-6 monthsCase Example – “Adaptive” Portfolio Management$10B+ Global Food & Beverage Firm36
  • 37. “Vision without resources is hallucination.”- Robert Bruininks, Former President, University of Minnesota
  • 38. For Enterprise Portfolios,Plan Resources Top-DownTopBottomPool-Level(ROM: “Rough Orderof Magnitude”)Individual-LevelTask-Level• High-Level Data• Strategic Decisions• “Shirt-Size” Resource Models• Updated Monthly/Quarterly• Moderate Discipline to Maintain• Granular Data• Tactical Decisions• Each Project is Unique• Updated Daily/Weekly• Very High Discipline to MaintainRecommended Approach forEnterprise Portfolio Management
  • 39. Resource Data ExplodesAt Each Lower LevelPool-Level(ROM: “Rough Order ofMagnitude”)Individual-LevelTask-LevelPROJECT X NEEDS:• 3 Chemists for June, July and AugustPROJECT X NEEDS:• Joe for June, July and August.• Bob for June, July and August.• Jane for June, July and August.PROJECT X NEEDS:• Joe for Tasks 1,2,3 for June, Julyand August;• Bob for Tasks 4,5,6 for June, Julyand August;• Jane for Tasks 7,8,9 for June, Julyand AugustPool June July AugChemists 3.0 3.0 3.0Pool Name June July AugChemists Joe 1.0 1.0 1.0Bob 1.0 1.0 1.0Jane 1.0 1.0 1.0Pool Name Task June July AugChemists Joe 1 .33 .33 .332 .33 .33 .333 .33 .33 .33Bob 4 .33 .33 .335 .33 .33 .336 .33 .33 .33Jane 7 .33 .33 .338 .33 .33 .339 .33 .33 .333 Data Points9 Data Points27 Data Points
  • 40. Resource Data ExplodesAt Each Lower Level18 Month Projectx 10 Resource Pools= 180 Data Points18 Month Projectx 10 Resource Poolsx 3 People per Pool= 540 Data Points18 Month Projectx 10 Resource Poolsx 3 People per Poolx 6 Tasks per Person3240 Data PointsX 100 projects = 18,000 Data PointsX 100 projects = 54,000 Data PointsX 100 projects = 324,000 Data PointsTYPICALPROJECTTYPICALPORTFOLIOTYPICAL DATATO MANAGEx =Pool-Level(ROM: “Rough Order ofMagnitude”)Individual-LevelTask-Level
  • 41. Different Processesfor Different RiskLevelsAssess Each InnovationInvestment withStandardized Value andFeasibility Criteria65Enterprise Innovation PerformanceEnabling Cross-Functional Decision-Making to Define and Manage Innovation InvestmentsFocus of Cross-Functional Innovation TeamsStrategyFocus of Cross-Functional Business LeadersLong-Term FocusNear-Term Focus41“Assisted” PortfolioOptimization"Top-Down” ResourcePlanning87Innovation StrategyMapping1Identify Gaps betweenthe Plan and Portfolio2Only Ideate Once YouKnow What You KnowConnect the Front End toConsumer Research andIn-Market Test Data34Execution
  • 42. Bryan Seyfarth, Ph.D.Director, Consumer Goodsbryan.seyfarth@sopheon.com651-216-2529Follow me on Twitter: @BryanSeyfarthThank You!Questions?
  • 43. …please visit:http://budurl.com/86m343To view the entire webinar…

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