InnovationDriving Sustainable Growth with Innovation

CONTENTS

1. Is innovation working?

2. Evolving key steps in the Innovation Journey can help drive growth

3. How to find out more

CONTENTS

1. Is innovation working?

2. Evolving key steps in the Innovation Journey can help drive growth

3. How to find out more

Innovation is an essential growth driver for FMCG companies, but…is it working?

Increasingly businesses have issues effectively ideating & executing NPD, find it harder to get new products listed by Customers, and see NPD fail in the first year…why is this?

We think companies need to evolve innovation across four key areas to reignite NPD-led growth:

We think companies need to improve the innovation journey across four key areas to re-ignite NPD-led growth

?

TARGETED EXECUTION

OUTSIDE-IN COMMERCIALISATION

GETTING IT RIGHT UP

FRONT

SUSTAINED

EVALUATION

SUSTAINED EVALUATIO

N

PRODUCTLAUNCH

PRODUCTLAUNCH

Create pragmatic plans to drive execution, engage the wider business & excite

customers

Use bespoke research to frame NPD objectives

aligned to the organisation’s strategic

objectives

Increase the rigour, depth & engagement of

commercialisation to fully evaluate NPD before sign-

off

Design bespoke KPIs to enable accountable, incentivised teams to

effectively & regularly evaluate NPD

1 2 3 4

A combination of macro factors have put innovation & NPD at the forefront of the corporate agenda…

Sales DeclineSales growth for the world’s top

50 FMCG firms halved from 2012 to 2013…

?

R&D EfficiencyR&D spending is declining globally - having to innovate better with less capital is becoming the new norm…

Margin SqueezeFMCG margin growth is lagging behind other sectors, with companies too dependent on fading revenue streams…

Shelf-ScarcityRetailers are eschewing big store formats, with the average store

stocking just 1300 lines, many of which are successful and increasingly

popular own-labels…

Consumer Desire70% of consumers have bought

new products in the last year, but are demanding more personalised and

bespoke offerings…

GETTING THE INNOVATION JOURNEY RIGHT HAS NEVER BEEN MORE CRITICAL FOR BUSINESSES…

…but shining a light on the numbers* suggests that at the moment, innovation simply isn’t working

Only 5% consumers feel FMCG brands are delivering for them on innovation

76% FMCG product launches fail in their first 12 months

19.2 months is the

typical time it takes UK companies to get NPD to market

50% FMCG leaders claim

their firm’s structure hinders their ability to innovate

?…IS INNOVATION

WORKING?

WE DON’T THINK SO…

Only 3% of NPDs

make more than £5m in their first year

3 in 4 product launches fail to retain a retailer listing beyond their first year

*Source: Nielsen, ?What-If

CONTENTS

1. Is innovation working?

2. Evolving key steps in the Innovation Journey can help drive growth

3. How to find out more

The purpose & objectives for NPD are business-centric,

unaligned to the organisations’ strategic objectives, and not

fully understood by the wider organisation

We think the lack of sustained NPD success is explained by four key issues across the innovation journey

1

The commercialisation process lacks clearly defined hand-offs

and cross-functional decision making, resulting in superficial

results and un-compelling Category stories

2

NPD is developed in a black-box, failing to engage or enthuse

the wider organisation, who in return are unable to excite

Customers in the run-up to launch

3

KPIs rarely evaluate progress against NPD’s actual objectives,

whilst responsible individuals are often ineffectively

incentivised to sustain long-term NPD success

4

Innovation leaders need to take four decisive actions to revive NPD as a source of sustainable revenue growth

Use bespoke research to frame NPD objectives aligned to

the organisation’s strategic objectives

Increase the rigour, depth and engagement of

commercialisation to fully evaluate NPD before sign-off

Create pragmatic plans to drive execution, engage the

wider business and excite customers

Design bespoke KPIs to enable accountable and

incentivised teams to effectively & regularly evaluate

NPD

1

2

3

4

…GOVERNED BY AN ACCOUNTABLE TEAM WITH EXEC SPONSORSHIPForm a cross-functional team to oversee NPD development & execution, alongside an accountable Exec sponsor to drive engagement, buy-in & accountability at all levels

CLEARLY ARTICULATE THE PURPOSE FOR NPD…Clearly articulate the objectives, scope & rationale of the NPD, as well as the specific KPIs with which to measure their progress

…ALIGNED TO THE EXISTING ORGANISATIONAL STRATEGY…Ensure NPD is clearly aligned to existing brand, portfolio, category & organisational objectives

1

2

3

4

…BASED ON GENUINE CONSUMER & CUSTOMER INSIGHTS…Base NPD rationale, objectives & development on genuine customer consumer insights identified through targeted & bespoke research

££££££

Use bespoke research to frame NPD objectives aligned to the organisation’s strategic objectives

1

Increase the rigour, depth & engagement of commercialisation to fully evaluate NPD before sign-off

SHOPPER-LENS

• Put the shopper at the heart of the process, driving analysis from

bespoke shopper insights & testing

CUSTOMER-LENS

• Critique and refine NPD’s commercial attractiveness

through a deep-dive analysis of Customer strategies & objectives

with customer-facing teams

COMPETITOR-LENS

• Evaluate competitive dynamics through war-gaming to stress-test, forecast performance & enhance NPD sustainability

ORGANISATION-LENS

• Assess the organisational culture and its capability to execute and

sustain NPD in the long term, factoring important supply-side

costs

£ £ £

ROBUST BUSINESS CASE

• Synthesise outputs to develop a comprehensive business case

based on a compelling category stories able to enthuse & excite

Customers & Consumers

COMPILE ROBUST BUSINESS CASE FOR

SIGN-OFF

EVALUATE NPD THROUGH 4 DISTINCT LENSES TO CRITIQUE AND

REFINE

ACCOUNTABLE CROSS-FUNCTIONAL

INVOLVEMENT

CLEARLY DEFINED HANDOFFS

INCREASE PROCESS CLARITY & FUNCTIONS INVOLVED

2

Create pragmatic plans to drive execution, engage the wider business and excite customers

Engage leadership to approve plans and ensure commitment &

support

Design pragmatic tools & frameworks to plan & guide

execution

1 - EXECUTION PLANNING

Engage responsible functional leads to translate execution-

requirements across functions & ensure readiness

2 - INTERNAL ENGAGEMENT 3 - EXTERNAL EXCITEMENT

Launch internal branding & comms plans via workshops, events & roadshows to create internal

excitement and momentum

Engage & enthuse Customers to develop bespoke commercial strategies, JBPs, and jointly-

designed activation & soft-launches to generate in-market excitement to prime NPD for launch

1

3

Design bespoke KPIs to enable accountable, incentivised teams to effectively & regularly evaluate NPD

SPECIFIC & PRECISE EVALUATION

INDIVIDUAL INCENTIVISATION

SUSTAINED GOVERNANCE

CLEAR TIME-LINE & CHECKPOINTS

SUSTAINED EVALUATION

Design a comprehensive range of clearly defined KPIs linked to the

NPD’s original objectives & purpose to monitor actual progress

Integrate NPD performance measures into relevant stakeholder objectives &

remuneration to sustain NPD efforts in the long-term

Sustain NPD governance structure & responsibilities, maintaining

responsible, cross-functional team & accountable Exec sponsor

Plan regular checkpoints to take stock, evaluate & course-correct,

with sufficient fluidity & bravery to refine in-market and/or re-launch

4

Combining these four solutions into a cohesive innovation journey that reignites NPD-led growth

1 2 4

TARGETED EXECUTIO

N

OUTSIDE-IN COMMERCIALISATI

ON

GETTING IT RIGHT UP

FRONT

3

SUSTAINED

EVALUATIONSUSTAINE

D EVALUATI

ON

PRODUCTLAUNCH

PRODUCTLAUNCH

Create pragmatic plans to drive

execution, engage the wider

business & excite customers

Use bespoke research frame NPD objectives aligned to the organisation’s

strategic objectives

Increase the rigour, depth &

engagement of commercialisation to fully evaluate NPD

before sign-off

Design bespoke KPIs to enable

accountable, incentivised teams

to effectively & regularly evaluate

NPD

CONTENTS

1. Is innovation working?

2. Evolving key steps in the Innovation Journey can help drive growth

3. How to find out more

About FIFTH P: We are GROWTH strategists

CORPORATE STRATEGY

COMMERCIAL STRATEGY

CAPABILITYBRAND STRATEGY

New Market EntryCorporate Agility &

AdaptationBusiness Model

Optimisation

Price, Pack & Promo Strategy

Retailer Strategy & Relations

Channel Strategy & Innovation

Strategic Portfolio Management

Brand & Range Architecture

Brand Longevity

Skills & Capabilities Transfer

Key Business Structures Design

Team Development

We are an agile and commercially savvy team of growth strategists, with deep practical experience acquired whilst working inside major consumer brands.

Our blend of creative flair and ingenuity fuses a pragmatic approach with the endless curiosity required to explore new growth opportunities.

Our team is bound by a relentless drive for results and a shared passion for delivering a lasting impact of capability

ABOUT FIFTH P

Interested? How to find out more…

Simon Launay,Managing DirectorSimon.launay@fifth-p.com07521 012923