- Introduce Yourself
- Today I’m going to talk about something I think everyone in this room wants to create for their business – an enduring and dynamic culture of innovation.
- I’ll share some of the challenges, and some of the things I’ve learned
- First let me tell you about Diageo
- 200 brands, 180 countries, 28,000 people
- Topline financial information from interim results
- Innovation is part of Diageo’s global marketing organization, with teams in New York, Miami, London, Singapore and Bangalore staying close to market trends.
- Location of R&D labs
- 60% Of Diageo’s innovation team members are women
- We had XX product launches in 2019 alone
- 4 R&D Centers around the world to service the global scale of our business in 180 countries
- This year we expect more than 50% of innovation projects to be within this recruit category, compared to around 25% four years ago
- Innovation roles include: Marketers, Liquid Scientists, Sensory Scientist, Commercial Innovation Managers and Supply project experts.
- So what’s the biggest challenge to creating an enduring culture of innovation? Shortermism.
- IPA data tells us that 75% of marketers and agencies agree that short term priorities are trumping long term thinking. [I wonder if there’s a better stat about innovators?]
- Content clutter is driving ‘goldfish’ attention spans which focuses our outlook on a quick bump in sales or a blip on someone’s news feed.
- We have making the plan, growing market share and shareholder pressures just like everyone else – but all of us need to think about the short, medium and long term.
As innovators and marketers we are the strategic engine of growth of the company – if we are not delivering across all 3 time horizons, we’re not delivering.
There is no long term without delivering the short term.
- At Diageo our innovators today follow on from and are inspired by the incredible entrepreneurial legacy of Arthur Guinness, Pierre Smirnoff, John Walker, Elizabeth Walker, Charles Tanqueray and many more over hundreds of years.
- Today, we stand on the shoulders of these giants and, inspired by their ideas, philosophy and audacity, act with the same entrepreneurial spirit and determination.
Take Guinness as an example. Guinness is 260 years young, so short-termism would feel like short-changing. I often imagine how Arthur Guinness felt when he signed a 9000-year lease on the St James Gate brewery in Dublin. An easy decision? No. But the right one given his passion for the brewery and his community.
But thinking about longevity doesn’t mean standing still….and Guinness is a great example of this.
- When your product was invented in 1759, you need a culture of relentless innovation – in line with our founder’s values – to keep it relevant.
- You also need new technological solutions – not just flavour solutions – to meet or even leapfrog consumer demand.
- This was true in 1959 when, a brilliant mathematician called Michael Ash who worked for Guinness invented using nitrogen (instead of carbon dioxide) to give the unique creamy head. This Guinness that we now know and love was launched to celebrate our 200th anniversary back then.
- In 1989, we invented the widget, helping people to enjoy the taste of Draught at home.
- A few years later Guinness won the Queen’s award for technology for creating the widget – second place that year was something called the internet
- And when beers of taste and craft had a recent resurgence, we looked back into our business and realized that we needed to find different stories to tell.
We have had a small experimental brewery in Dublin for over 100 years, in 2015 we opened the gates to anyone to come and visit. It’s a place where our brewers are free to experiment, and people can come and drink whatever has been brewed that week. We have opened subsequent Open Gate breweries in Baltimore, Nairobi and xx (?).
My point here is that our centuries-old brands like Guinness, Tanqueray, Johnnie Walker and Smirnoff do not stand still.
We innovate to ensure we build on their great legacies and create stronger brands that future consumers will love.
We also need to develop and nurture the next great brands in our portfolio.
- For Diageo and our brands, creating an enduring culture of innovation is not a nice to have – it’s crucial to our future growth.
And it doesn’t happen on its own. It takes team work & partnership, an obsession with consumers , a constant learning mindset and a deep understanding that each of us are simply custodians of a great company for a very small part of its lifetime, keeping it vibrant and in health for future generation.
Let’s start with what makes or breaks innovation success – teamwork.
Innovation is a team sport. I want Diageo to be a business where everyone, regardless of their role, feels like an innovator.
Diageo has over 200 people with innovation in their job title, but I need all of Diageo’s 28k people feeling like innovators...
How do you do this?
You recruit and develop talent with a diversity of experiences, backgrounds and styles. And you look for the right balance of hard and soft skills that I will outline in much more detail in a minute.
In addition to building a great team, you need brilliant partners as well – and this has been an area of real focus.
JW and HBO
- “White Walker by Johnnie Walker” is the biggest cultural collaboration within the history of this 200-year-old brand. In association with
- With this innovation we are opening up scotch to a whole new audience thanks to the global cultural phenomenon that is Game of Thrones.
- This is a limited edition, brand new blend, drawing cues from the TV series story-line and executed in a stunning pack.
- White Walker became the number one most watched video ever on Johnnie Walker Instagram and became the most talked about Whisky on social media.
Distill Ventures
- We know that sometimes it’s better for founder led brands to be supported to grow from outside our business. So a few years ago we partnered with Distill Ventures – the world’s first and only independent drinks accelerator. DV is founded and led by entrepreneurs to support founders, allowing them to build brands of the future.
- Independently run, Distill Ventures receives funding from Diageo to support entrepreneurs as they both launch and grow innovative drinks brands.
- This combination of having a strong internal innovation team & partnering with the best entrepreneurs outside of business is our foundation for an enduring culture of innovation.
- To my second area – consumer centricity…
- The consumer must be at the heart of everything you do in innovation. We constantly look at near and long term trends and we have a consumer segmentation based on a deep understanding of occasions.
- I expect all our innovation teams to of course be looking at data, but I also expect them to be relentlessly curious - getting out into the trade & staying at the cutting edge of socializing experiences.
- Our focus on being consumer centric – has also led us to think about providing new and exciting experiences for consumers, whether they choose to drink alcohol on these occasions or not.
One of my mantra questions when “working the work” in my team is “what’s the gift to the consumer”. If there’s not a clear, tight response, I know we aren’t there yet.
We believe that consumers shouldn’t have to compromise on taste on occasions when choosing not to drink or to moderate their alcohol intake.
Ketel One Botanical
Consumers drinking better not more has been a long standing trend. But that has also extended into consumers being much more knowledgeable and conscious about what they are drinking – ingredients, calorie counting and focus on a balanced lifestyles
Vodka soda has been a consumer staple for these consumers and occasions. But we also knew this felt like a compromise choice to some of these consumers. By digging deeper into the tradeoffs, we developed Ketel One Botanicals – a deliciously complex and sophisticated vodka soda with a third fewer calories than a glass of white wine. Within weeks of launch in Summer’18, we knew we had a winner. And two years on, it’s the biggest spirits Innovation in the US.
Seedlip: Seedlip was launched by Ben Branson in late 2015 to solve the dilemma of ‘what to drink when you’re not drinking®’, change the way the world drinks and continue his family’s 320-year-old farming legacy.
- In the last three and a half years Seedlip has grown from Ben’s kitchen to a presence in more than 25 countries. Seedlip’s three variants [Spice 94, Garden 108 and Grove 42] are stocked in over 7,500 of the world’s best bars, restaurants, hotels and retailers including the majority of the world’s 50 best cocktail bars and over 300 Michelin Star restaurants.
- Seedlip will now join a strong collection of diverse, premium brands within our Reserve portfolio.
- And deeply linked to consumer centricity, is a learning mindset. There is much said about growth mindsets & learning from mistakes & indeed from successes – and in the business of innovation, this couldn’t be more important.
- At Diageo, 7 years ago we had an innovation pipeline, across beer, wine and spirits where we had a launch a week. Line extensions, new to world brands, you name it. We’d built a machine that said, ‘what could we do’ vs ‘why would we do it’ and we needed to change our approach. <<Check with Tara for sensitivities on SEC>>
- We learned some lessons along the way – but it’s made our approach now unrecognizably stronger & more focused.
- When we launch line extension now or new to world brands now, they are based in deep consumer insight.
- Let me give you two examples from the wonderful world of North American Whiskey.
- Crown Royal is a jewel in our portfolio. It’s the #1 by value NAW in the US (confirm) and has a deep affinity and connection with its drinkers. Despite its success, the brand did not have a breadth of consumer appeal – it was significantly underindexed with women and multi cultural consumers.
- Crown Royal Regal Apple has changed all of that. Targeting a different consumer and occasion with a differentiated serve – either straight or in a Washington Apple shot, Crown Royal Regal Apple brought in a legion of new, different consumers.
- 5 years on, it’s the #4 NAW in the US – and still growing double digits.
- A markedly different play is Cascade Blonde. For consumers, whiskey is what you drink after the sun has gone down. But we knew it could also be a fantastic long drink alternative – bringing sophisticated refreshment – and a welcome change from yet another light beer. Drawing inspiration from floating down a stream on a lazy summer day, we developed Cascade Blonde.
- A light, sipping whiskey that mixes perfectly in Lemonade, we created a product and brand world built to celebrate the perfect day on the water. We are patiently building this out in key markets like xx and yy, and importantly, sponsoring and organizing local clean up efforts to make a real difference on our lakes and rivers (will get specific details….)
Innovation is rooted in the idea that a great consumer idea must also be a great business idea.
- This requires an entrepreneurial spirit, alongside an ability to work effectively within the structure and processes of a larger organization.
- In a word – “intrapreneurs”
- Whenever I interview people for roles in Innovation, I’m always probing for the soft skills that make the biggest difference - resilience, curiosity and bravery
- Another of my mantras is “I’m incredibly forgiving of aggressive mistakes” – except on compliance of course!
- We have several current examples that highlight this kind of restlessness.
- “What’s Your Whisky” is a present pilot on the malt.com site in the UK. It asks consumers to input some of their favourite food flavors like xx and yy. It then uses an algorithm to recommend a whisky that best matches their flavor palette. It’s a brilliant way to use technology to cut through a sometimes opaque category defined by history, age and provenance to confidently match consumers with a whiskey that they will love.
- Another of my personal favourites is our Orphan Barrel brand in the US. In one of our Kentucky rickhouses, we had small quantities of rare, aged bourbons. With highly varied ages, taste character and distilling heritage, there was no easy way to package this up for consumer sale.
A top flight team saw this as an amazing, creative opportunity. A few short months later, the Orphan Barrel idea was born and we began to release distinctive, rare bourbons in small quantities. Drawing on unique names and “spirit animals”, Orphan Barrel quickly became scarce and could be easily found for 2-3x price on ebay and other secondary sites. My personal favourite in this group is Rhetoric – where we release 2000 (?) cases a year of the same liquid so consumers can taste the annual aging effects on the liquid. And the “wood label” gets a little darker with each release to highlight the slow aging process of the wood barrels.
- Let me stop here. Tho’ as you can tell I could go on like this for far too long!
- Strategies and priorities will always change. Sometimes they work, and sometimes they don’t.
- But I believe deeply in the power of an enduring and dynamic culture of Innovation.
- I hope my experiences can be of benefit to you and your organizations. Cornerstones of Teamwork & Partnerhsip, Consumer Centricity, Learning Mindset and Intrepreneurialism.
- We’re always learning – and that’s why I love coming to events like this and hearing from others experiences….
- Open up the floor…..
