Successfully reported this slideshow.
Delivering More Breakthrough Products from R&D in Food & Beverage<br />George Young, Kalypso<br />
Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthr...
www.kalypso.com<br />9/13/2011<br />The Innovation Engine<br />Our services are designed to help companies become more inn...
Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthr...
Breakthrough products in F&B are rare<br />Source:  IRI New Product Profiler<br />
NPD effort in F&B is declining while CPG is increasing<br />Non-food CPG efforts are increasing<br />CPG conglomerates hav...
Top 10 F&B Product Launches (2005–2010)<br />Source:  IRI New Product Profiler<br />
F&B Products over $100M in First Year (2005-2010)<br />Source:  IRI New Product Profiler<br />
Agenda<br />The Innovation Engine<br />The State of Innovation in the Industry <br />How Do You Develop Breakthroughs?<br ...
R&D spending is not the answer<br />
<ul><li>“No correlation” does not necessarily imply cutting innovation spending
The bottom 10% of R&D spenders perform worse than the rest
Optimizing current processes should be the focus</li></ul>Cutting R&D is not the solution<br />
R&D Spend <br /><ul><li>~2% of revenue
Expected to be flat</li></ul>Trade promotion spend vs. R&D spend<br />www.kalypso.com<br />9/13/2011<br />?<br />Trade Pro...
Expected increase of 1-3% each year
Second only to COGS as a P&L item</li></li></ul><li>Breakthrough innovation requires commitment <br />In mid-1990’s, Toyot...
Breakthrough innovation requires commitment<br />Highly caffeinated and disruptive drink<br />“No other new product has ev...
Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthr...
Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthr...
Articulate your innovation strategy simply<br />“We will deliver 25% revenue growth from new products in the next 5 years....
Where will your emphasis be as part of your innovation strategy?<br />Food & Beverage Growth Strategies 2011<br />1<br />2...
Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthr...
Don’t kill all of your good ideas<br />Avoid evaluating projects the way you would with Stage-Gate – keep that at Concept ...
Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthr...
Breakthroughs have come from understanding macrotrends<br /><ul><li>Health and Wellness – Functional foods
Experiential Eating – Extreme flavors
Impulse and Indulgence – Treat/reward
“Free” – Trans fat, caffeine, gluten...
Convenience/Ready-to-eat – On-the-go lifestyle</li></ul>Ex. Pepsico investing $50M in expanding nutrition business to trip...
Do we develop breakthrough products for a market or develop products for a breakthrough market?<br /><ul><li>Big Players i...
Nestle: Sales growth of 12% in Asia in the first half
Unilever: Expects 5 times its current business in China
Upcoming SlideShare
Loading in …5
×

Delivering More Breakthrough Products Final

1,222 views

Published on

How to get more breakthrough products out of your development pipeline

  • Be the first to comment

Delivering More Breakthrough Products Final

  1. 1. Delivering More Breakthrough Products from R&D in Food & Beverage<br />George Young, Kalypso<br />
  2. 2. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />2<br />
  3. 3. www.kalypso.com<br />9/13/2011<br />The Innovation Engine<br />Our services are designed to help companies become more innovative and provide a systemic view of new product & service development.<br />Business & Innovation Strategy<br />Front End<br />Of Innovation<br />Portfolio & Pipeline<br />Management<br />New Product Development Execution<br />Pricing and ValueManagement<br />PLM Technology<br />Leadership & Learning<br />Intellectual Property Management<br />
  4. 4. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />4<br />
  5. 5. Breakthrough products in F&B are rare<br />Source: IRI New Product Profiler<br />
  6. 6. NPD effort in F&B is declining while CPG is increasing<br />Non-food CPG efforts are increasing<br />CPG conglomerates have been divesting F&B units<br />Source: IRI New Product Profiler<br />9/13/2011<br />
  7. 7. Top 10 F&B Product Launches (2005–2010)<br />Source: IRI New Product Profiler<br />
  8. 8. F&B Products over $100M in First Year (2005-2010)<br />Source: IRI New Product Profiler<br />
  9. 9. Agenda<br />The Innovation Engine<br />The State of Innovation in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />9<br />
  10. 10. R&D spending is not the answer<br />
  11. 11. <ul><li>“No correlation” does not necessarily imply cutting innovation spending
  12. 12. The bottom 10% of R&D spenders perform worse than the rest
  13. 13. Optimizing current processes should be the focus</li></ul>Cutting R&D is not the solution<br />
  14. 14. R&D Spend <br /><ul><li>~2% of revenue
  15. 15. Expected to be flat</li></ul>Trade promotion spend vs. R&D spend<br />www.kalypso.com<br />9/13/2011<br />?<br />Trade Promotion Spend<br /><ul><li>~20% of revenue
  16. 16. Expected increase of 1-3% each year
  17. 17. Second only to COGS as a P&L item</li></li></ul><li>Breakthrough innovation requires commitment <br />In mid-1990’s, Toyota saw environmental factors affecting the automobile industry<br />Made a big bet on radical innovation based on environmental factors and market trends<br />Assembled on the same production lines as mainstream models like the Camry<br />Functional deficiency and timing prevented its initial success in 2000<br />In the mid-2000’s, it became “cool” to drive a hybrid<br />Bestselling hybrid car in the US – passed 1 million cars in US sales since launch in 2000<br />
  18. 18. Breakthrough innovation requires commitment<br />Highly caffeinated and disruptive drink<br />“No other new product has ever failed this convincingly!” – Red Bull market research organization<br />Intentionally created a new beverage category and took industry by surprise<br />Commercialization strategy key to success - clever marketing and channel management<br />Holds 70-90% of the energy drink market share in over 100 countries<br />$5+ Billion in revenues annually<br />
  19. 19. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />15<br />
  20. 20. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />16<br />
  21. 21. Articulate your innovation strategy simply<br />“We will deliver 25% revenue growth from new products in the next 5 years. Half of that growth is expected to come from breakthroughs.”<br />$1,000<br />Breakthrough<br />Would you rather be the 1982 St. Louis Cardinals or the 1975 Baltimore Orioles?<br />
  22. 22. Where will your emphasis be as part of your innovation strategy?<br />Food & Beverage Growth Strategies 2011<br />1<br />2<br />3<br />Fast Facts on Food Processing: Growing the business. Grant Thornton and Food Processing magazine, 2011.<br />
  23. 23. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />19<br />
  24. 24. Don’t kill all of your good ideas<br />Avoid evaluating projects the way you would with Stage-Gate – keep that at Concept and after<br />Develop scoring models and evaluation methods that favor the qualitative over the quantitative<br />Ex. Wagering: Allocate $ or units and ask people to bet on projects<br />Ex. Tournament theory: Set up an NCAA bracket for projects<br />
  25. 25. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />21<br />
  26. 26. Breakthroughs have come from understanding macrotrends<br /><ul><li>Health and Wellness – Functional foods
  27. 27. Experiential Eating – Extreme flavors
  28. 28. Impulse and Indulgence – Treat/reward
  29. 29. “Free” – Trans fat, caffeine, gluten...
  30. 30. Convenience/Ready-to-eat – On-the-go lifestyle</li></ul>Ex. Pepsico investing $50M in expanding nutrition business to triple revenues from $10B in 2010 to $30B by 2020.<br />
  31. 31. Do we develop breakthrough products for a market or develop products for a breakthrough market?<br /><ul><li>Big Players in Asia
  32. 32. Nestle: Sales growth of 12% in Asia in the first half
  33. 33. Unilever: Expects 5 times its current business in China
  34. 34. Kraft Foods: Double-digit growth in Asia in 2010
  35. 35. PepsiCo: 17% volume growth in India from April-June
  36. 36. Coca-Cola: Profits jump 18% in Asia and Latin America
  37. 37. Products imported from Asia into western markets
  38. 38. Beer: Sapporo, Kirin, Asahi, Hite, Cass
  39. 39. Ramen: Ichiban Ramen, Shin
  40. 40. Tea: Lupicia Fresh Tea
  41. 41. Prepared: Wanchai Frozen Chinese Food</li></li></ul><li>Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />24<br />
  42. 42. Breakthrough products may require a fundamental change in culture<br />Does the structure permit the right people to work together?<br />Do we have the right people in critical roles? Do we have enough people?<br />Are people rewarded for results and do we learn from failure?<br />Are timely, informed decisions made?<br />Is relevant data readily available to make decisions?<br />Are the work processes efficient and clearly defined?<br />People<br />Structure<br />Decision Making<br />WorkProcesses<br />Rewards<br />Decision <br />Making<br />Adapted from David Hanna, Operational Performance Model 1988 <br />
  43. 43. Agenda<br />The Innovation Engine<br />A Survey of Breakthrough Products in the Industry <br />How Do You Develop Breakthroughs?<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />26<br />
  44. 44. P&G Innovation Initiative: GYM<br />What<br />An offsite innovation center and collaboration space built to immerse P&G team members in the innovation process <br />Goals<br />Strengthen innovation and initiative work where teams develop just-in-time expert solutions to their challenges<br />What Worked<br />Active working session to address specific issues and challenges<br />Operating GYM as a business<br />Client-centric focus<br />An environment conducive to innovation<br />Successes<br />Crest Vivid White Night<br />Olay Ribbons Body Wash<br />P&G also created an alternative innovation structure called <br />The Garage which was “sanctioned skunk works”<br />
  45. 45. Agenda<br />The Innovation Engine<br />The State of Innovation in the Industry <br />How Do You Develop Breakthroughs?<br />Look for Historic Metrics/Trends<br />Look for Practices that Led to Breakthroughs<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />28<br />
  46. 46. Manage portfolio and investment allocation for breakthrough products<br />www.kalypso.com<br />9/13/2011<br />Breakthroughs<br />Breakthroughs<br />
  47. 47. Agenda<br />The Innovation Engine<br />The State of Innovation in the Industry <br />How Do You Develop Breakthroughs?<br />Look for Historic Metrics/Trends<br />Look for Practices that Led to Breakthroughs<br />7 Practices for Cultivating Breakthroughs<br />Articulate an Innovation Strategy <br />Keep the Front End Fuzzy<br />Understand Macrotrends<br />Create the Right Innovation Culture/Climate<br />Create Unique Environments for Innovation<br />Manage Portfolio and Investment Allocation for Breakthrough Products<br />Process and IT Are a Must But Won’t Make You More Innovative<br />9/13/2011<br />30<br />
  48. 48. Innovation Capability Framework<br />Business Strategy<br />In-market Portfolio Management<br />Idea Concept Portfolio Management<br />Innovation Strategy<br />NPD Portfolio Management<br />Technology<br />Launch Management<br />Results Analysis<br />New Product Development & Commercialization <br />Consumer& CustomerInsights<br />Fuzzy Front End<br />Brand <br />Product Lifecycle Management<br />Innovation Leadership<br />
  49. 49. Closing Thoughts<br />Breakthrough innovation requires commitment, strategy, investment, resources <br />Evaluate trade spend vs. R&D spend<br />Look to macrotrends and new markets<br />Conduct strategic experiments<br />Fail fast, often and well<br />
  50. 50. george.young@kalypso.com<br />linkedin.com/company/kalypso<br />twitter.com/KalypsoLP<br />facebook.com/KalypsoLP<br />

×