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Nielsen - Breakthrough Innovation Report - June 2013
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1THE BREAKTHROUGH INNOVATION REPORT
N I E L S E NB r E a k t h r o u g h
I N N o vat I o Nr E P o r t
JUNE 2013
2 Copyright © 2013 The Nielsen Company
B r E a k I N gt h r o u g hThis report presents the story of this year’s Breakthrough Innovation
Winners. Given the long odds and paramount importance of breakthrough
innovation, our first purpose is to celebrate the winners – and in the
pages that follow we’ll recognize high achievement. Second, we highlight
some essential themes and takeaways that can help marketers improve
their innovation performance and win in the marketplace. Finally, we have
interviewed the winners to learn from their experience – enabling us to
share their stories, discoveries, and transferable insights.
Readers of the popular press may be forgiven for thinking that breakthrough
innovations generally have an “i” at the beginning or a “.com” at the end.
But, as this year’s Breakthrough Innovation Winners demonstrate, success
is rooted in the three core disciplines of Demand-Driven Innovation –
none of which has much to do with technology.
DemanD-Driven insightDemanD-Driven Development
pervasive leaDership
This framework is a distillation of our research on more than 14,000
launches over a four-year period. For this 2013 report, we evaluated over
3,400 consumer products launched in 2011 – identifying 14 Breakthrough
Innovation Winners. Each of this year’s winners illustrates the power of
embracing the demand-driven disciplines, and several of these stories
are shared in greater detail in the Winner Spotlights incorporated in this
report.
There is, of course, no shortage of successful incremental innovations
that generate compelling returns for their managers and owners. They
keep brands fresh and relevant. But, however necessary they may be
to the growth and vitality of enduring brands, these closer-to-the-core
efforts are not the ones that create new platforms for growth or unleash
$200-million brands.
3THE BREAKTHROUGH INNOVATION REPORT
Three core disciplines of demand-driven innovaTion
DemanD-Driven insight Uncovering latent demand – lurking
in the unmet needs and poorly
performed jobs in consumers’ lives
– is at the core of breakthrough
innovation.
pervasive leaDership Driving the innovation process
with rigor and passion over the
countless hurdles that must be
cleared from idea to launch to years
of in-market support requires top-
down, bottom-up, outside-in, and
inside-out leadership throughout a
committed organization.
DemanD-Driven DevelopmentFrom beginning to end, the innovation
team must pursue the demand-driven
insight faithfully and fully. The concept,
product, and go-to-market execution all
must align – free from the constraints of
established processes, existing resources,
or marketplace assumptions – in order to
realize a breakthrough proposition.
Nielsen analyzed 3,439 consumer products that were introduced in the U.S. in 2011 to determine which products yielded
truly breakthrough results. To be a Breakthrough Innovation Winner, a product needed to satisfy three requirements:
relevanceGenerate a minimum of $50
million in year-one U.S. sales.1
enduranceAchieve at least 90% of year-one sales
in year-two. This measure confirms a
sustained level of consumer demand while
allowing for some drop in revenue during
the transition from trial to adoption.
disTincTivenessDeliver a new value proposition to the
market. Ingredient reformulations, re-
packaging, size changes, repositioning,
and other minor refinements to existing
brands are excluded.
The maKinG of Winners: nielsen BreaKThrouGh innovaTion criTeria
celeBraTinG The Winners
ColgatE® optiC WhitE™
DaNNoN oikos® grEEk
YogUrt
MoNstEr rEhab®
sparkliNg iCE®
spECial k® CraCkEr Chips
allEgra allErgY
DoWNY UNstopablEs™ iN-Wash sCENt
boostEr
FibEr oNE® 90 CaloriE broWNiEs
MagNUM® iCE CrEaM
Mio liqUiD WatEr
ENhaNCEr
Milo’s kitChEN® hoME-stYlE Dog trEats
rEEsE’s® MiNis
skiNNY CoW™ CaNDY
VElVEEta ChEEsY
skillEts®
= See Winner Spotlights
4 Copyright © 2013 the nielsen Company
1 Synthesize and refine megatrends through the lenses of
your brands. Consider how these megatrends might create
new consumer demands and new opportunities for your
brands and organizational capabilities – whether it’s aging
populations, personalization, mobility, changing palates,
health and wellness, and on-the-go eating just to name a
few. Tapping multiple trends, Fiber One created a brownie
that promised a deliciously indulgent treat while delivering
a large helping of fiber – and kept the whole thing at 90
calories.
2 Walk in your customers’ shoes to understand deeply the
circumstances in which they pull your brand into their lives.
Consumers resolve any recurring need in a variety of different
– and sometimes unexpected – ways. These surprises can
challenge accepted category boundaries and presumed
competitors – and reveal opportunities. Alternatively, search
for the “pain points” and nuisances that recur in consumers’
lives. These are the pulses of unmet demand. As soon as
researchers at Monster Beverage Company observed
customers pouring energy drinks into their workout bottles,
they knew there was an opportunity for a noncarbonated
energy+hydration offering. The insight eventually led to
Monster Rehab.
3 Identify nonconsumers or circumstances of nonconsumption:
identify groups of potential customers who due to lack of
wealth, expertise, or access find consumption impossible,
inconvenient, or unsatisfying. These populations can be ripe
for category expansion. Downy Unstopables dramatically
expanded the laundry detergent additives category, for
example, by drawing in a neglected pool of consumers
seeking long-lasting fragrance. The journey to launch
Reese’s Minis began with research to identify “barriers to
consumption”: What did candy eaters consume when they
were not choosing Reese’s?
4 Identify over-served consumers and develop a suitable
offering. More often than you might think, opportunity lies in
neglected pools of demand where simpler, less expensive, or
discipline #1
DEMaND-DrIvEN INSIghtiDENtiFYiNg UNMEt DEMaND
This is where the quest begins: the search to identify the unarticulated
desires, partially expressed needs, and recurring frustrations in
consumers’ lives. Rarely does latent demand pop neatly from customer
surveys or focus groups. As Henry Ford famously observed, if he had
asked people what they wanted, they would have said faster horses. More
recently, Steve Jobs noted that consumers can’t describe what they’ve
never experienced.2
six approaches for idenTifyinG unmeT demand
5the BreaKthroUgh innovation report
more convenient offerings can thrive. This does not necessarily
mean low-end. In many cases, this involves tailoring a
“professional grade” product to mainstream demand. For
consumers seeking effective teeth whitening without the cost
or inconvenience of strips or professional services, Colgate’s
Optic White product line was a game-changer.
5 Find consumer desires for which your distinctive brand equity
would provide value. Are there emerging growth categories
to which certain consumers would be attracted by qualities
powerfully associated with your brand? Are there “missing
benefits” in a category – or perhaps in a particular region – that
you can deliver? It would have been all too easy to cede the
Greek yogurt market to Chobani, but Dannon perceived that
a great product with their brand could expand the category
and fuel growth. They moved very quickly with a taste-test-
winning product, broad distribution, and their powerful
brand, propelling Dannon Oikos past $275 million in first-year
sales.4 Dannon also found that Greek was an attribute that
could profitably expand established brands such as Activia®
and Light & Fit®. Critically, Dannon did not allow Chobani’s
impressive results to define the category or constrain their
thinking. Certainly, they did not consider ceding the space.
If anything, Chobani’s success expanded their horizons and
energized their efforts.
6 Challenge assumptions about what consumers value, growth
drivers for the future, true competition and alternatives,
category boundaries, and the prevailing business model. Roll
back the accepted barriers limiting what the organization “can”
and “cannot” do. Recognize that product attributes constitute
just one dimension of potential value creation. Revisit your
“dead letter office” of innovation. Upon witnessing competitor
success, marketers are heard to exclaim, “We thought of that”
as frequently as, “Why didn’t we think of that?” Be relentlessly
curious and keep asking why. As the Winner Spotlights reveal,
Del Monte acknowledged, “You can’t do transformation half
way…it’s riskier to go slow or partially commit…and everyone
from marketing to sales to finance has to fully commit and go
all in.”
Breakthrough Winners painstakingly sift through extensive research and
complex data to identify the weak signals and map the hazy contours
of latent demand. Expertise, curiosity, and persistence are required for
this work. In studying this year’s winners, as well as those from the prior
three years, we’ve learned that there is no simple demand-driven insight
cookbook. However, we have identified six successful approaches, which
we share below.
Searching for opportunity by exploring the landscape of latent demand is
no simple task. It’s a voyage of negative discovery: searching for what’s
missing and imperfect in consumers’ lives. Insights that uncover latent
demand require hard work and the courage to challenge convention.
They require looking at the things everyone sees – and noticing things
that others do not. The search pays off: as innovation authority Clayton
Christensen observed, “Creating new markets is more rewarding and less
risky than entering established markets against entrenched competitors.”3
6 Copyright © 2013 The Nielsen Company
discipline #2
DEMaND-DrIvEN DEvELoPMENtFroM iNsight to laUNCh aND bEYoND
Demand-driven insight is a prerequisite for breakthrough success, but
it often challenges accepted category boundaries. Consumers don’t
live their lives within the crisp confines of existing UPC classifications.
Latent demand rarely organizes itself neatly into demographic buckets or
aligns with other familiar proxies. When demand challenges companies’
traditional ways of thinking, managers often yield to the powerful process
disciplines, stage gates, timelines, incentives, and cultural forces that
compel conformity.
Breakthrough Innovation Winners achieve uncommon results because they
pursue, shape, develop, and activate insights with faithful adherence to
the specifications of consumer demand. They eschew false comforts and
advocate for the consumer in the face of intense organizational pressures
that might compel a more conventional path.
The main – and often only – advantage that many successful start-
ups wield against large and entrenched competitors is what they lack:
organizational and operational constraints that mold the future in the
image of the past.
Del Monte’s VP of Innovation, Geoff Tanner, recalled the challenge the
Milo’s Kitchen team faced in staying true to their core insight. “From the
outset, we were committed to launching a new-to-the-world brand that
would transform the category and deliver topline growth. This led to our
establishing the Milo’s team almost as a skunk works, with considerable
autonomy and decision-making authority.”
7THE BREAKTHROUGH INNOVATION REPORT
Breakthrough innovators don’t shy away from opportunity, even when
another brand has historically dominated. Kraft’s Velveeta Cheesy Skillets
did not succeed with a
dinner mix by “beating” the
category leader. Rather, the
company opted to expand
the category by leveraging
Velveeta’s strengths,
overturning internally held
truths and addressing
latent consumer demand
for exciting and easy dinner
solutions.
These winners challenged
convention and triumphed by expanding or transforming categories –
a Breakthrough Innovation Winner hallmark. Through unencumbered,
demand-driven development, Breakthrough Innovation Winners create
visible separation from the pack. The Winner Spotlights featured in this
report showcase successful, transferable approaches, but there is a
common theme: no shortcuts. As Thomas Edison remarked, “Opportunity
is missed by most people because it is dressed in overalls and looks like
work.”5
Given the high stakes involved and the monumental challenges
that demand-driven development faces, success to and through
implementation is effectively impossible without the third, essential pillar
of the Demand-Driven Innovation framework: Pervasive Leadership.
BreaKthroUgh innovators Don’t shy away from opportUnity, even when another BranD has historiCally DominateD.
8 Copyright © 2013 The Nielsen Company
discipline #3
PErvaSIvE LEaDErShIPthE DNa oF brEakthroUgh sUCCEss
The annals of Breakthrough Innovation Winners are rich with leadership
qualities of many types – of vision, of persistence, of creativity – and
at many organizational levels, from the executive suite to R&D labs,
to retail store floors. The core, transferable leadership lesson from the
Breakthrough Innovation Winners is that leadership is not merely present,
it is pervasive. It is top down and bottom up. There is a perceptible
alignment with the innovation mission independent of any organization
chart or reporting lines.
What we have discovered is a version of Andy Grove’s maxim that “only
the paranoid survive.”6 Breakthrough Innovation teams exhibit a charged
awareness of the hazards posed by the pressure to conform to established
processes and entrenched beliefs. This iconoclastic mindset is highly
unusual. There is an audacity to Breakthrough Innovation as it does not
work without a real disregard for the status quo. Without leadership at
all levels to identify, shape, and fulfill demand-driven insights through to
their fullest, uncompromised realization, breakthroughs will never have a
chance. We identify three essential dimensions of Pervasive Leadership.
leaDership that BriDges BoUnDaries
Integration and alignment among all functions touching on the innovation
process is essential. Leadership in this context manifests as ownership of
outcomes and an eagerness to collaborate in the interest of achieving
goals. We’re all aware of how important CEO involvement is, but seeing is
believing. As Kraft Foods Group, VP of Innovation Barry Calpino recalled,
when Chief Executive Officer Tony Vernon made it a regular practice to
participate in quarterly innovation meetings, people noticed. Pervasive
leadership always emanates from the top, but real alignment and
commitment require more than chief executive exhortations.
9THE BREAKTHROUGH INNOVATION REPORT
leaDership that Drives foCUs anD sUstains exeCUtion
Winners apply a process rigor that has much more in common with a
world-class manufacturing operation than with a freewheeling idea factory.
Leadership must actively establish clear priorities, decision-making
criteria, responsibilities, and timelines. There is urgency and constant
communication. Leadership is the heart, pumping the oxygenated blood
of innovation through the operational and executional limbs.
There is little rest. Leaders embrace a three-to-five year timeframe that
encompasses development, launch, support, and extension. Absent
active and persistent leadership, the gravitational forces of established
processes, entrenched beliefs, and “satisficing” stage gates will bend
innovation towards conformity rather than transformation.
leaDership that CUltivates shareD Core Beliefs
Leadership instills the belief that innovation is essential. Breakthrough
Innovation Winners redefine the impossible as possible – otherwise they
would not be able to “do the impossible.” Del Monte’s journey to launch
Milo’s Kitchen dog treats began by acknowledging “if we were going to
innovate in dog treats, we were not simply going to copy the competition.
We were not going to be a follower. We wanted to define the category on
our own terms – to expand the category, not just take share.” Winners
have attitude and take ownership. If that sounds exaggerated, spend some
time with the Skinny Cow team at Nestlé, or the Velveeta or MiO teams at
Kraft, the Milo’s team at Del Monte, or the Magnum team at Unilever. It is
impossible not to see that Breakthrough Innovation Winners systematically
stretch the limits of possibility. Winning requires more than believing, but
there is no greatness – or breakthrough – without belief.
10 Copyright © 2013 The Nielsen Company
2013 Winners - sprinTers
ProfILES IN actIvatIoNthE MarathoNEr aND spriNtEr approaChEs
Consistent with our findings from the Breakthrough Innovation Winners
of 2012, this year’s winners followed one of two activation strategies:
Sprinter or Marathoner. One can think of Sprinters as following a strong
“push” strategy, while Marathoners trust consumers to “pull” brands into
their lives.
Sprinters accelerate distribution of their new products, rapidly reaching
their maximum penetration. They also spend heavily on advertising
support during the first year. The result is that they achieve very high
levels of trial and sales in year-one. Then Sprinters pull back on advertising
alleGra allerGy$680–$690 million
milo’s KiTchen® home-sTyle doG TreaTs $175–$185 million
mio liquid WaTer enhancer $265–$275 million
reese’s® minis $230–$240 million
sKinny coW™ candy $115–$125 million
velveeTa cheesy sKilleTs®
$170–$180 million
colGaTe® opTic WhiTe™$250–$260 million
dannon oiKos® GreeK yoGurT$735–$745 million
doWny unsTopaBles™ in-Wash scenT BoosTer $145–$155 million
fiBer one® 90 calorie BroWnies $210–$220 million
maGnum® ice cream $225–$235 million
monsTer rehaB® $535–$545 million
sparKlinG ice® $215–$225 million
special K® cracKer chips $180–$190 million
2013 Winners - maraThoners
Two-Year Revenue Two-Year Revenue
11THE BREAKTHROUGH INNOVATION REPORT
support by almost one-half in the second year – and both distribution and
sales levels remain stable through the second and third years in market.
This year’s Sprinters include Allegra, MiO, Reese’s Minis, Milo’s Kitchen,
Skinny Cow Candy, and Velveeta Cheesy Skillets.
By contrast, Marathoners take a more deliberate approach. They spend
one-third less than Sprinters on advertising in the first year, and build
distribution more gradually. Consequently, their sales levels in year-one
– while impressive – are typically only 60% of what Sprinters achieve.
However, they continue to build distribution in years one, two and three,
and maintain relatively consistent levels of advertising support. The result?
Marathoners’ sales grow at a 46% annual rate, matching Sprinters in
year-two and surpassing them in year-three. And they achieve these sales
levels with less than one-half the advertising spend than the average
amount allocated by Sprinters.
Marathoners include brands from smaller companies that lack the
resources to adopt a Sprinter model, such as Monster Rehab and Sparkling
ICE, as well as launches from larger companies – often when launching
further-from-the-core brands (i.e., Optic White, Magnum, Unstopables,
and Oikos).
YEAR 3YEAR 2YEAR 1YEAR 0
SPRINTER MARATHONER
0
$50
$100
$150
$200
SALE
S L
EVEL
AVERAGE SALES LEVELS IN MILLIONS OF DOLLARS
2013 Winners - maraThoners
Source: Nielsen ScanTrack, 2008–2013
2012 Winners
Two-Year Revenue
13THE BREAKTHROUGH INNOVATION REPORT
W I N N E r S P ot L I g h t Sspotlight 1 : rEEsE’s® MiNis
spotlight 2: MagNUM® iCE CrEaM
spotlight 3: allEgra allErgY
spotlight 4: Milo’s kitChEN® hoME-stYlE Dog trEats
spotlight 5: Mio liqUiD WatEr ENhaNCEr
spotlight 6: skiNNY CoW™ CaNDY
15THE BREAKTHROUGH INNOVATION REPORT
spotlight #1
rEESE’S MINISthE pErFECt CoMbiNatioN oF ChoColatE, pEaNUt bUttEr aND iNNoVatioN
Mike DePanfilis was the VP Shopper Marketing responsible for the Reese’s
franchise in 2011 and, as he assessed the venerable brand’s situation,
the findings were concerning: growth was lower than the category, and
recent innovations had relied on close-in extensions and short-term
“limited editions.” DePanfilis pulled no punches, “We had a leaky bucket
and were failing badly. Recent launches had been margin-dilutive,
cannibalistic, and off-equity. Our process systematically underperformed
and that poor performance reinforced a mindset of underachievement.”
In short, Reese’s recent innovation track record showed no expansion of
the category – just a zero-sum game that failed to deliver excitement for
customers or results for Hershey’s.
Like many Breakthrough Winners, Hershey’s march to greatness began
with four elements:
• A clear-eyed assessment of the current reality
• A clear sense of ownership – “Ours is a ‘what have you done for me
lately’ culture, so solving our growth problem was on me and my
team. Failure to innovate and failure to grow were simply unacceptable
outcomes.”
• A compelling call to action – “We set clear criteria for innovation
ideas in an effort to break with our past. From here on, innovation
proposals had to deliver on a new usage occasion or bring new users into
the category.”
• A recommitment to the brand’s core value – “We reaffirmed our core
brand equity as ‘the perfect combination of chocolate and peanut
butter,’ and we required all innovation ideas to reinforce and leverage
that core equity. Again, looking at our recent past,” DePanfilis
elaborated, “there was a pattern of straying from all that we had built
up, and we had to embrace our strengths.”
16 Copyright © 2013 The Nielsen Company
DePanfilis also challenged his team to think beyond product-centric
innovation. “Our solution had always been a new color or flavor or product
tweak. Specifically, we started thinking about packaging and marketing as
innovation levers to pull.”
With a clear diagnosis, urgent sense of purpose, and exacting criteria,
DePanfilis and his team began the insight process: a search for unmet
demand that would address neglected usage occasions or engage new
customers.
“We had a hypothesis that we wanted to explore with qualitative research,”
DePanfilis began. “The specific hypothesis is now unimportant, but we
had committed to 24 focus groups to flesh out our idea. Well, 10-minutes
into the first session, a participant speaks up: ‘So here’s the way I see it:
you want me to buy a solution to a problem that doesn’t exist.’” The room
went silent. The focus group moderator called a break to huddle with the
Reese’s team: “Now what?” the moderator asked.
“We had to think quickly on our feet and develop an alternative plan,”
DePanfilis recalled. “What were we going to do? Scrap the research?
We returned to our core criteria around new usage occasions and new
consumers for a quick brainstorm. We instructed the moderator to explore
what the group members consume when they’re having candy and not
choosing Reese’s or simply hold a ‘barriers to usage’ conversation.”
What unfolded was electrifying to the Reese’s team: “Basically we
heard people describe all the ways that Reese’s provided an inadequate
solution to major usage occasions – notably, in the car and at work.
Unwrapping was a hassle, eating was messy, and the paper liners created
a guilt-inducing tally of consumption. By identifying all these barriers to
consumption, consumers were revealing latent demand and scripting our
innovation brief.” DePanfilis acknowledged, “Truth is, we got lucky in what
we came up with because we were asking the right questions, looking
in the right places based on our criteria around category expansion. I
had a talented team of brand marketers and consumer researchers that
knew the consumer inside and out to assist me,” said DePanfilis. “All the
arrows were pointing at a theme we’d tried but never fully embraced: what
the industry refers to as ‘hand-to-mouth’ consumption.”
“Hand-to-mouth was a familiar theme to us. We had this ‘Pieces’ concept
that we’d tried with York, Almond Joy®, and Special Dark, but there were
inevitably compromises in delivering the full taste experience. We knew
from our research that Reese’s delivers a unique emotional experience,
not just a physical product. In short, our prior efforts with these other
items were not totally leveraging the powerful equity of these great
brands. They were compromise solutions that delivered middling results.
we haD the insight, BUt the teChnology to proDUCe a perfeCt reese’s minis DiD not exist.
17THE BREAKTHROUGH INNOVATION REPORT
The opportunity was for a hand-to-mouth offering that delivered an
uncompromised solution to these neglected usage occasions consistent
with the eating experience of the brand.”
“We had the insight, but the technology to produce a perfect Reese’s
Minis did not exist. There is a ratio of peanut butter to chocolate, quality
specs for ingredients, viscosity parameters for the peanut butter, and
myriad variables that define the real Reese’s. We pushed on the Product
Development team, and they really rose to the challenge. This was
not a simple manufacturing fix, and solving it required collaboration
across Sourcing, Innovation, Logistics and Sales as well as R&D and
Manufacturing. This was an organization-wide collaboration, a massive
undertaking, and a major team accomplishment.”
Product attributes were part of the consumer requirement, but DePanfilis
coaxed his team to activate additional innovation levers: “We sought
innovation in the packaging and the marketing in addition to product.
Delivering unwrapped Reese’s in a resealable bag that stood up at shelf
was an essential dimension of fulfilling the consumer requirement and
reinforced the hand-to-mouth eating experience. From a marketing
perspective, it was about alignment and execution: getting the creative,
the media weights, the frequency, and the seasonality in seamless
alignment with the functional and emotional experience our customers
desired.”
Breakthrough success didn’t come easily to the
Reese’s team. Their clear initial criteria, their
willingness to adapt to new information, their
relentless adherence to demand-driven insight,
their organizational alignment, and their sustained
in-market execution all proved essential to a brand
launch that generated over $100 million in year-
one sales.
Furthermore, Reese’s Minis success provided an
operational blueprint and innovation platform
that Hershey’s successfully leveraged to launch
“Minis” versions of other brands with confidence
and impact. The success of this initiative was made
possible by a broad cross-functional team consisting of Operations,
Packaging, Engineering, Research, Sales and Marketing, which worked
together collaboratively supporting one another. It wouldn’t have occurred
without the support of everyone.
Sometimes you can make it big by going small. Reese’s Minis: a huge win
for Hershey’s and a bigtime Breakthrough Winner.
“this was an organization-wiDe CollaBoration, a massive UnDertaKing, anD a major team aCComplishment.”
18 Copyright © 2013 The Nielsen Company
MagNuM IcE crEaMpUttiNg soME stYlE iNto iCE CrEaM
Unilever’s Magnum brand generated year-one sales of $95 million and
year-two sales of $136 million. While success may look straightforward
in hindsight – bringing a stylish, high-end offering into a relatively
quiescent category – that’s not the real story. For starters, and despite
Magnum’s success in other markets, U.S. entry plans met significant
internal skepticism. Responsible for the Magnum launch, Alfie Vivian,
VP Refreshments U.S., Unilever, recalls the initial reception to the idea,
summarizing, “Let me get this right, you want to come to the largest
ice cream market in the world and introduce chocolate-covered vanilla as
‘new’?”
As Vivian noted, the first major challenge was to break Unilever’s “internal
paradigm” of the ice cream category. That paradigm was rooted in
product-centric notions of innovation. From inexpensive family gallons
to ultra-premium varieties, the historic category focus was primarily on
the physical product and packaging. What the Unilever insights team
uncovered were three core findings:
• The category had lost excitement in the U.S. grocery business
• Glamour, decadence, and sexiness were powerful, relevant
emotional dimensions of indulgence – qualities more fully explored
in the super-premium chocolate business, but largely absent from
the ice cream category
• Unilever’s global insights team further identified a compelling pool
of consumers who seek style, indulgence, sexiness, and decadence
in their lives
The Magnum team concluded that nothing in the U.S. market was
delivering sophisticated elegance and high style. While Magnum was
bringing product innovation and a super-premium product to market,
the success formula was not only rooted in the functional characteristics
of the physical product. From the beginning, Magnum was about
transforming a category by creating a lifestyle brand that would employ
luscious and decadent ice cream as its vehicle for satisfying pleasure-
seeking consumers.
spotlight #2
19THE BREAKTHROUGH INNOVATION REPORT
“We wanted to take satisfying indulgence not only to a new level,” Vivian
gushed, “but to a whole new space. This was never just about ice cream.
Magnum was never a market-share play. From the beginning we wanted
to transform, energize, and expand the category.” The Magnum team was
convinced that the emotional and social elements of a true lifestyle brand
were not just absent in the category but were powerfully relevant to a rich
pool of latent consumer demand. Extensive research and global experience
supported their confidence.
Notably, and as with many other Breakthrough Winners, the Magnum mindset
was, “How big can we make this?” Not an idle question or aspiration, it was
a motivational force that flowed from the top of Unilever and throughout
the entire organization: Magnum would be big, it would delight American
consumers, and it would transform the category.
Magnum’s launch strategy reflected the objective of transforming the
ice cream aisle with an entirely new brand energy. Creative direction was
entrusted to fashion icon Karl Lagerfeld in the context of a high-visibility
engagement with the fashion industry. Since when do you see ice cream on
red carpets and runways? Magnum was clearly no ordinary ice cream – or
run-of-the-mill brand.
But image isn’t everything. Retailers were essential collaborators, and Magnum
engaged them with a three-pronged promise that the product would:
• Energize the freezer aisle
• Expand the ice cream category
• Increase margins
Aligning Magnum’s strategy with the economic incentives of retailers was
a critical success factor. And this is just the beginning.
Platform extensions and new launches are already in the market for 2013
and in the works for 2014 and 2015. Again illustrating a Breakthrough
Innovation Winner hallmark, the Magnum launch is a sustained, multiyear
commitment.
As sweet as the Magnum success is, and as we know from Breakthrough
Innovation Winner findings as well as from years of client work, the popular
press often gets it wrong when the high-gloss story of innovation is told
from 30,000 feet. Innovation is hard, hard work and success is a function
of breaking through walls and overcoming setbacks. As Vivian remarked,
“I can give a long list of all the things we struggled with: from scaling
the supply chain to getting the pricing right to agreeing on the branding
strategy to balancing the demands of different channel partners...it would
be a long list.”
But, for Breakthrough Winners, the only “impossible” is failure.
we wanteD to taKe satisfying inDUlgenCe not only to a new level, BUt to a whole new spaCe. this was never jUst aBoUt iCe Cream.
20 Copyright © 2013 The Nielsen Company
aLLEgra aLLErgYNothiNg to sNEEzE at
When you’re a prescription brand moving to a crowded over-the-counter
(OTC) marketplace, success is far from certain. That was the case when
Sanofi/Chattem introduced Allegra to consumers in 2011. Entrenched
brands such as Claritin®, Zyrtec®, and low-cost Benadryl® were already
crowding the allergy relief aisle. That didn’t stop Richard Spangler, Senior
Director of Marketing, Chattem, and his team from boldly betting big that
Allegra would be a success.
Despite the myriad products available, many allergy sufferers still found
themselves making an undesirable trade-off – one that Chattem’s insight
team had identified. Either their medicine was too slow-acting when they
first took it or it caused drowsiness. No matter what choice sufferers
made, they felt that they were “sacrificing,” and it was that word from the
consumer that energized and focused the Allegra team. The problem in
context: allergy symptoms peak in the spring seasons when people are
active and outdoors. Existing solutions that addressed their symptoms
made them feel drowsy and listless, so consumers had to choose between
“living in the moment” and suffering, or taking a medication and feeling
drowsy. In addition to providing complete relief without drowsiness,
“living in the moment” meant that solutions needed to work fast when
symptoms first appeared, so this was another essential element of the
ideal solution that Chattem knew they had to deliver.
Despite a crowded market, Chattem saw a huge opportunity if they could
introduce a brand that resolved the persistent consumer trade-off.
spotlight #3
21THE BREAKTHROUGH INNOVATION REPORT
While Chattem R&D was confident they had the benefit bundle nailed, the
consumer engagement plan was no less critical. The allergy relief category
was not only crowded with brands, it was also crowded with claims, so
simply making a promise through advertising was not enough. The Allegra
team worked with research, creative, and media partners to develop a
well-tested campaign that connected with allergy symptom sufferers with
empathy and relevance. The creative fully captured the circumstances of
the sufferer and the tension of the trade-off.
Like all Breakthrough Winners, Allegra took root in a poorly addressed
consumer demand. The team developed a message that incorporated
all the essential benefits desired by allergy sufferers. Brand imagery and
advertising messaging spoke to the emotional and social dimensions of
consumers’ needs – how they wanted to feel and how they wanted to be
with those around them.
As Allegra illustrates, being a late entrant to a crowded market can
nonetheless prove highly lucrative if established players are failing to
address essential dimensions of consumer demand, and if the late
entrant addresses the functional, emotional, and social dimensions of
the consumer need, and if the late entrant activates in market with an
engaging, effective communication and channel strategy to bring the
brand to life for consumers on a grand scale.
Chattem saw a hUge opportUnity if they CoUlD resolve the persistent ConsUmer traDe-off.
22 Copyright © 2013 The Nielsen Company
MILo’S kItchEN hoME-StYLE Dog trEatStraNsForMiNg a CatEgorY
“In recent years, Del Monte has been focused on building its innovation
DNA,” said Geoff Tanner, Del Monte’s Vice President of Innovation.
“We’ve been looking at how we can better support it organizationally,
structurally, and philosophically – really wire it into our culture.”
“Back in 2010 a small group of us started working on a big idea. Not
exactly a skunk works, but pretty close,” Tanner described. “We put a few
stakes in the ground from the outset,” Tanner recalled. “We decided that
if we were going to innovate in dog treats, we were not simply going to
copy the competition. We were not going to be a follower. We wanted to
define the category on our own terms – to expand the category, not just
take share.”
The small team of highly talented, entrepreneurial cross-functional
leaders on the Milo’s Kitchen team had a total belief and commitment to
the opportunity and vision. According to Tanner, “This was probably the
single most important factor in the success of the launch.”
The insights team went to work, and one finding was that while the
pet food category had seen a steady increase in premium brands and,
specifically, “human-quality food,” the pet treats category lagged. In fact,
pet accessories and services such as insurance and grooming had all seen
successful, premium offerings – in step with a well-understood trend of
“pet as family member.” This was one of the early signs that the latent
demand pool could offer a significant opportunity.
Tanner’s colleague and Vice President of Insights, Courtney Moore, led
the research to get to the truth. Arguably the breakthrough insight came
from a unique research methodology in which the company observed the
behaviors and underlying thought processes of consumers when they
spotlight #4
23THE BREAKTHROUGH INNOVATION REPORT
were told they could no longer use their favorite treats. What they learned
in the research, in combination with numerous supporting studies, led to
Milo’s Kitchen’s successful brand position of “wholesome like human.”
The defining characteristic of the consumer-demand pool was that pets
held equal or near-equal status with other family members.
Armed with a disruptive insight, the team then worked to bring it to life
across every touch point. The brand name was carefully chosen, with
“Kitchen” connoting not just careful preparation and high quality food,
but increasingly the place where family members – both two-legged and
four-legged – spend time together. Activating the insight also led to a
window on the packaging that visibly showcased the product, the use of a
real person with her dog on the front panel (a first for the category), and
a TV spot that deliberately showed the dog and her “person” at an equal
level, with the snack proudly displayed in serving bowls.
The team had their insight and proposition, but as is the case with most
disruptive ideas, they faced many significant challenges and obstacles on
the road to making their vision a reality. The team’s dogged persistence
and grit paid off, and Milo’s Kitchen went from concept to shelf.
Tanner and Moore were confident enough in their research findings and
their executional capabilities that they convinced management to bet big
– believing that the opportunity should be executed with huge support
or not done at all. As Tanner recalled, “You can’t do transformation half
way. We were convinced that it was riskier to go slow or partially commit.
We really felt that we had the chance to transform a category and build a
powerful new brand. This meant doing the media campaign, putting the
team on a plane to meet with our channel partners, executing in-store,
and engaging the sales force. It was all part of a single strategy. There was
nothing to hedge, no optional elements.”
At a breakneck pace – 14-months from idea to launch – a Breakthrough
Winner was in the market. Year-one sales exceeded $75 million and
year-two sales grew past $100 million. Today, with new ownership
committed to consumer understanding and investment in growth, there
is now an internal expectation and strong support for transformational
innovation. “I believe that the success of Milo’s Kitchen has played a part
in building a more robust innovation runway at Del Monte,” said Tanner.
we were ConvinCeD that it was risKier to go slow or partially Commit. we really felt that we haD the ChanCe to transform a Category anD BUilD a powerfUl new BranD.
24 Copyright © 2013 The Nielsen Company
MIo LIquID WatEr ENhaNcEr kraFt’s iNNoVatioN rEVolUtioN aND hoW to bUilD a platForM For sUstaiNED groWth
It’s amazing what’s not possible if you believe it’s impossible. If an
organization “believes” that it is incapable of breakthrough innovation, the
prophesy will be fulfilled. If the lore of innovation within an organization
is the memory of epic failure, dollars wasted and careers shortened, who’s
likely to aspire to lead that futile charge?
This pessimistic mindset about innovation can take hold even in a
company as successful as Kraft Foods, with some of the best-known food
brands on the planet. Where one might expect to find swagger, there was
fatalism: it was a “can’t do” innovation culture stuck in a cycle of failure,
small ideas with even smaller levels of support behind them. What’s even
more surprising? This is not ancient history, this was 2010.
So how do you, in the words of VP of Innovation at Kraft Foods Group,
Barry Calpino, go from “worst to first”? How do you move from launching
130 tactical, uninspired, half-efforts to bankrolling 12 big initiatives with
confidence – and unprecedented success?
step 1: faCe reality
If your company is underperforming in innovation, acknowledge it openly
and bluntly. In Kraft’s case this required the courage to declare, “Right
now we are at the bottom of the pack at innovation.”
“ spotlight #5
25THE BREAKTHROUGH INNOVATION REPORT
step 2: taKe an “honest looK in the mirror”
Identify the enemy. It might be a resource issue. Sometimes a process flaw
is to blame. Occasionally metrics and analytic tools need to be changed.
For Kraft, the honest look revealed the biggest detriment was a mental
model grounded in failure: thinking small, not investing, and a resulting
culture of “we can’t” – and subsequently that “innovation doesn’t matter
here.” Self-created and self-fulfilling. Belief is essential, and belief in failure
is devastating. One quick check is to collect the innovation mythology and
lore of an organization: are tales told of crowning achievement or of serial
defeat? Belief is destiny, and innovation success cannot take root in a
culture convinced or in a rut of failure.
step 3: start the revolUtion
“We will transform our innovation capabilities, our success rates, and
our mental models. It is simply unacceptable and unsustainable to fail at
launching successful growth products.” Having a CEO leaning in helps,
as CEO Tony Vernon’s involvement illustrates.
step 4: thinK Big
When the goal is breakthrough innovation, ask, “How big can this be?”
and “What type of support do we need to put behind ideas to make them
truly big?” – not “What is the minimum threshold of acceptability or
spending?”
step 5: taKe a long-term view of sUCCess
This doesn’t mean being too patient for impact. It means committing
to supporting successes for two-plus years. “Launch and leave” is not a
winning strategy for breakthrough innovations.
step 6: reCognize yoUr organization’s strength
Embrace and energize them! In Kraft’s case this meant:
• Great brands
• Powerful R&D organization
• Extensive, skilled sales force
• Retail partners clamoring for innovation
• Unexplored insights
Kraft had some pretty powerful innovation assets for an organization
convinced of the improbability of innovation success.
26 Copyright © 2013 The Nielsen Company
step 7: Design anD implement an
enD-to-enD innovation proCess The innovation process needs to be as rigorous and data-driven as other
operational processes. This does not imply that the fuzzy front end of
innovation is no longer fuzzy or that strategic pivots based on marketplace
feedback disappear. To the contrary, these essential process steps are
defined with appropriate tolerances for variation.
Consistent with the operating process paradigm, it is not permissible to
skip steps in a well-designed innovation process. Too many organizations
approach innovation with a scorecard, presuming that if they hit most of
the elements on the checklist, a concept is market ready. That’s not how
processes work, and organizations employing a scorecard approach to
innovation are unlikely to find themselves in this report.
Finally on process: extend it. Reach upstream to generate insights about
emerging and latent consumer demand. Look for struggles, nuisances,
compromises, work-arounds and nonconsumption in consumers’ lives.
At the other end of the process, “We used to launch ’em and leave ’em,”
Calpino observed. “Now we know that that is unacceptable. We try to take
a multiyear perspective to supporting all big-bet launches.”
step 8: insist that every innovation
iDea inClUDe a “Category story” The path that led to Kraft pushing 130 middling launches into market was
acceptance of almost mindless tweaks and changes to existing product
features and attributes. Categories exist in the lives of consumers and are
defined by the jobs they need to perform in their daily lives. By insisting that
all innovation ideas present a category story framed by the circumstances
of the consumer – rather than by the attributes of the product – Kraft
made a clean break with historic incrementalism and embraced a more
expansive and ambitious mission for innovation.
step 9: emBraCe retailers as partners, not
DistriBUtion pipes to pUsh proDUCt throUgh By bringing retailers into the innovation process, a consistently successful
shopper experience is far more likely.
27THE BREAKTHROUGH INNOVATION REPORT
step 10: set goals anD Define sUCCess
Kraft decided that they wanted fewer, bigger, better launches that received
the best talent and ample resources. Success was defined as year-one
sales of $30 million and margin-accretive. As Calpino said, “You’ll never
do anything big if you don’t think big – and act big by the investment you
put behind the ideas you believe in the most. You need a culture of ‘How
big can we make this?’ – and a culture of truly investing big behind our
best ideas – rather than what we historically had, which was ‘This will
never work,’ or ‘Can we launch ideas with little to no investment?’ ”
In the case of MiO, the idea of a liquid-concentrate flavor pack for
water had been around for years, but it was a small idea without a
bigger story or ambition. Fueled by insights into generational trends
towards customization, the concept evolved into a “your drink, your
way” positioning that had managers saying, “Let’s create an entirely new
brand and new category.” In other words, the “how big can we make this”
mindset was as essential as the insight into latent consumer demand.
By pushing the idea as far as possible and investing very heavily in
supporting the launch – in years one, two, and now three – MiO generated
cumulative first- and second-year sales of $268 million. Moreover, more
than 30% of buyers were totally new to the category.
* * * *
Unsurprisingly, Edison was right. Opportunity not only “looks like work,”
it is work. The good news is that it isn’t magic or blind luck. As Kraft’s
innovation transformation shows, putting on the overalls and rolling up
sleeves can make the grunt work glorious.
yoU’ll never Do anything Big if yoU Don’t thinK Big – anD aCt Big.
28 Copyright © 2013 The Nielsen Company
SkINNY coW caNDY thiNkiNg oUtsiDE thE aislE
For Nestlé’s Skinny Cow, what started in the ice cream aisle found a
fast following in the candy section. It was a big, bold leap – enabled
by compelling demand-driven insight and realized by relentless pursuit
of consumer requirements through a comprehensive and insight-driven
go-to-market plan.
For the Skinny Cow team, the good news is that they had identified
a compelling pool of unmet demand. The challenge remained: could
they fill it? The marketing team gave the R&D powerhouse the demand-
driven product specification and they delivered with excellent products
validated by consumer research.
Even with a clear brief for the benefit bundle, huge marketing challenges
remained. Notably, how to succeed in a low-traffic aisle? No easy task.
The Skinny Cow plan: “We gotta make sure that shoppers literally
fall over our product. We need to get the product to other areas of
store.” This was a big move and a gutsy investment: custom displays
were built to merchandise Skinny Cow chocolates in other parts of the
spotlight #6
29THE BREAKTHROUGH INNOVATION REPORT
store – notably, in front of the Lean Cuisine section of the freezer bank.
Sounds crazy, but what the insights team uncovered was that, though the
products were wildly different in terms of their specific attributes, they
were closely aligned in the core benefits they delivered and in the vital job
they performed in consumers’ lives. Specifically, for consumers looking
for assistance in living healthier lives without undesirable sacrifices,
inconvenience, or cost, Skinny Cow and Lean
Cuisine brands presented compelling solutions.
In short, they go together.
Demand-driven innovation process continued
through launch. From the success of Skinny Cow
ice cream, the marketing team had curated an
active group of loyal consumers on a variety of
social platforms. The consumers were energized,
engaged online influencers – and fanatics of
the Skinny Cow brand. At launch, the Skinny
Cow team gave these consumers the two things
that research shows influencers value most:
recognition from brands they love and status
amongst their peers.
The marketing team executed a comprehensive social engagement
strategy that enlisted the consumers in the launch: providing advanced
scoops of the coming release, coupons for free trial boxes, and e-coupons
for sharing with friends. By energizing and activating their fan base,
Skinny Cow created buzz and demand for the product before it even hit
the stores.
In the end, Skinny Cow went outside the candy aisle to bring new users
and, ultimately, “making it safe” for shoppers to walk down the aisle
without fear of temptation. Skinny Cow changed the game and racked up
a big-time Breakthrough Winner. Sweet.
By energizing anD aCtivating their fan Base, sKinny Cow CreateD BUzz anD DemanD for the proDUCt Before it even hit the stores.
30 Copyright © 2013 the nielsen Company
aN ENcouragINg WorDYoU WaNt to Do this
On average, Breakthrough Innovation Winners generate over $100 million
in first-year sales and sustain annual growth of 23% through year
three in-market. Nothing breeds success like success: the majority of
Breakthrough Winners go on to launch extensions that fuel additional
growth at comparatively low risk. Growth also has a way of attracting
top talent and boosting stock prices. To put a new spin on a Hollywood
classic, “Growth is good.”
Breakthrough Innovation Winners offer a wealth of guidance, but the map
is, famously, not the territory. Every brand and each team must find its
own way. Demand-Driven Innovation provides a valuable approach for
planning your breakthrough journey. The accompanying Winner Spotlights
showcase the framework – and the winners – in action.
Most importantly, “Congratulations” to this year’s winners! We reiterate
our sincere thanks to those who participated in this report, as well as
embracing our belief that an idea shared is an idea improved. While the
odds of innovation success remain daunting, we can make the risks more
manageable and the path to success less hazardous by accelerating the
cycle of sharing, learning, and improving.
Nielsen Breakthrough Innovation Report is the annual synthesis of our
daily, global commitment to marketers – helping them thrill consumers
and create vibrant, valuable growth businesses. We look forward to a year
of innovation successes and to working with leaders to advance the state
of innovation knowledge.
31the BreaKthroUgh innovation report
aUthorsTADDY HALL
Senior Vice President, Nielsen Innovation Practice – North America
CHRIS CASEY
President, Nielsen Innovation Practice
ROB WENGEL
Senior Vice President, Nielsen Innovation Practice – North America
footnotes1 Nielsen ScanTrack (Food, Drug, Convenience, Dollar, Club and Mass Merchandise)
2 Walter Isaacson, Steve Jobs, 2011
3 Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause
Great Firms to Fail, 1997
4 Nielsen ScanTrack, 2011–2013
5 Thomas Edison, Wikipedia, http://en.wikiquote.org/wiki/Thomas_Edison
6 Andrew S. Grove, The Paranoid Survive: How to Exploit the Crisis Points that
Challenge Every Company, 1996
DisClaimerThe information contained in this report is based on compilations and/or estimates representing
Nielsen’s opinion based on its analysis of data and other information, including data from
sample households and/or other sources that may not be under Nielsen’s control. Nielsen shall
not be liable for any use of or reliance on the information contained in this report.
aBoUt nielsenNielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands.
For more information, visit www.nielsen.com.
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