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Pioneer Innovation in Action - Consumer Products Case Study

  
  
  
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Global Consumer Products Companies are faced with three choices on how to compete in the new products and services arena.  They can be a Pioneer, Fast Follower or Imitative.

The Consumer Products industry is the fastest of all industries. Unlike Financial Services or BioPharma, the industry must innovate new products and services every six months. At the same time, it must respond to new business models driven by automation and globalization at the speed of light.  The primary way to grow is through building Innovation Engine capabilities across the value chain. 

Let's take a look at how an $18 Billion company with 18,000 employees, mostly in the US, evolved their Innovation Strategy. 

 

Client Situation:

A global multi-billion dollar fast moving consumer goods (FMCG) company, had successfully instituted a "fast-follower" strategy. Growth had come through organic operations and few small acquisitions in existing categories in adjacent FMCG fields. 

The leaders in the industry had refocused their efforts on competing through innovation, speeding up the rate of new product introductions.  Retailers had emerged as the leaders of "fast following" strategy.  The client wanted to transform into an innovation leader or Pioneer.

Four Phase Innovation Approach: 

Innovation Diagnostics: The innovation assessment highlighted critical issues within the organization that needed to be addressed immediately. 

Program Pilot: In Phase II, the capability building tools were created, tested and tailored to the company. 

Full Implementation: In Phase III, the capability building was started in three different strategic business units, concurrent with creation of the wider implementation plan. 

Enterprise Rollout: In Phase-IV, the Innovation Approach was embedded across all enterprise systems and expanded across supply chain and open innovation platforms. 

Innovation Teams Receive Venture Board Approval

Business Strategy must inform Innovation Strategy.  The Consumer Products Company established a Venture Board to vet the ideas and seed them with $10 million in capital. 

The goal was to find breakthrough ideas throughout the enterprise.  The Innovation Funnel was opened wide.  Innovation Teams worked the ideas into business concepts. 25% of the business concepts were initially funded.  The balance of the business concepts was placed in an Innovation Database for future company use.

Results Are The Measure of Innovation Success

How did applying the DeSai Body of Knowledge impact the company?

  • DeSai helped the client develop a range of new high value ideas with historically high concept testing results.
  • 5-7 year innovation roadmaps and pipelines in three strategic business units were created.
  • To achieve the desired growth path, the client initiated relationships with potential innovation partners and gained new insights from external partners.
  • Several innovation processes were instituted: idea generation and management, innovation teams and charters, and a high-level blueprint for building an innovation organization.
  • The client witnessed a cultural change within the organization.  Six highly motivated innovation teams were formed creating a range of success stories, and spontaneous adoption of the approach within the organization.
  • The client has attributed a revenue increase of 12.5% directly from the new innovation venturing process.
  • The pipeline of ideas being tested are expected to begin, at least, three new business ventures every year with a potential of $500 million in revenue within the first three years after launch.

The Takeaway

Fast moving industries need a developed Innovation Process that can continue to deliver new products, services and growth to the company. 

Your Turn. Please comment below.

  1. Does your company employ a Pioneer, Fast Follower or Imitative strategy?
  2. How does your company vet and seed promising business concepts with funds?
  3. How full is your Innovation Funnel?

 

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Should Higher Education Be Free? - An Extreme Innovation Challenge

  
  
  
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Govindarajan-JatindesaiOn September 5, 2013, Professor Vijay Govindarajan and I co-authored a blog about Higher Education for Harvard Business Review Blog website. To our surprise, it became one of the most popular blog ever. It reached over 225 comments in matter of few days. 

Obviously we struck a nerve. Why? 

In the article, we suggested that the time has come for new business innovation models to fix the higher education system here in the US and across the globe. Here is the beginning of it:

-----------------------------

In the United States, our higher education system is broken.  since 1980, we've seen a 400% increase in the cost of higher education, after adjustment for inflation -- a higher cost escalation than any other industry, even health care.  We have recently passed the trillion dollar mark in student loan debt in the United States.  

Read the entire article at Harvard Business Review >>>

 

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U.S. Innovation Leaders need IQ, EQ & CQ (Part Two of "Judas Goats")

  
  
  
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With the U.S. appearing to suck at globalization and largely indifferent but dependent on the domestic market, we need leadership willing to step up and innovate with a capital "I" if we intend to remain in the top 3. It can be done. We are still viewed as the country of freedom and ingenuity around the world, but more and more we are being viewed as resting on our past accomplishments and steering rudderless, albeit arrogantly, through cultural impacts we don't quite understand and don't appear to appreciate.

We Are All Connected - Domestically and Globally

If we figure the world will just accept us the way we are because we are America, we need to examine that attitude and quickly. How much time do you think the Chinese spend learning about America? Cultural impact in the U.S. from voting to job creation and economic recovery, affects us all within and without our borders, and domestic and international markets. We need capital "I" Leaders in the U.S. to embrace not only IQ and EQ, but also CQ (cultural quotient). Consider India; America by no means has an exclusive on innovation.

While JC Penney apparently embraced the risk side of innovation hiring Ron Johnson, at least they tried.  Demographic differences between the loyal Apple consumers vs. loyal Penney consumers relied on an Apple innovation methodology that couldn't make the leap. Yet, JC Penney may still pull a "Coke" - to - "Coca Cola Classic" and now build on the needs and desires of their demographic strengths to bring back a new and improved "classic" approach. Finding the "classic" in emerging markets as well could be a significant and even sustainable coup. But to target effectively they need to know the markets and the cultures, and be set up to strike when the timing is right.

Leaders must move faster regardless of sector. Crowd sourcing like Twitter, makes the whims of the consumer more volatile than ever before, whether it's basics of life like food, or the latest smart phone. Share one weight loss recipe featuring a specific ingredient or nutraceutical; demand changes instantly and involves multiple markets and cultures.

As a leader, if you are acting as the "judas goat" still herding your company to a rigid, specific destination bogged down in status quo, it will be as sheep to slaughter.

What factors are the most critical for emerging achievers and leaders of today when they predict a future for themselves?

"Self-awareness, high intelligence, high emotional quotient, extremely high integrity, multiple discipline knowledge, voracious appetite for new knowledge."  ~ Jatin Desai

Leaders need to loosen up and embrace the reality that "90% of what we call 'management' consists of making it difficult for people to get things done." ~ Peter Drucker 

Need help developing a clear innovation strategy, penetrating emerging markets, leadership development? Visit The DeSai Group. Follow Jatin Desai on LinkedIn and Twitter for juicy innovation ideas and tidbits.

Jatin Desai CEO, and author of Innovation Engine (May 2013 release by Wiley International), addresses C-Suite groups, delivers keynotes, leads workshops and joins with corporations and organizations to design and implement innovation programs and optimize existing programs, in the USA and internationally. Innovation Engine is now available in digital and hardcover versions at your favorite retail online or brick and mortar outlet.

  describe the image

                                 Innovation Engine

"Innovation Engine will help you build a climate and culture of innovation. A must-read for every serious executive desiring innovation as a daily habit in his or her organization and to drive innovation execution."

-Vijay Govindarajan, coauthor of the New York Times and
Wall Street Journal bestseller Reverse Innovation
.

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Innovation USA - Leaders or "Judas Goats?" U.S. Leadership Please Step Forward

  
  
  
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Innovation USA - Leaders or "Judas Goats?" U.S. Leadership Please Step Forward

Here in the USA the one question begging to be asked and answered is, "Are we simply sitting too comfortably where we are?" The up and coming countries and markets are busy manufacturing most of what we consume. While they are motivated, innovating and expanding, we are well - sitting.

Not only are many organizations still stuck in their chairs instead of examining the effectiveness and long term feasibility of status quo, but even worse, it appears that while a lot of lip service has been given to the term "innovation" action has been blatantly MIA.

Touting innovation officers, teams, strategy and even innovation "days," doesn't mean companies are actually engaging in innovation. Setting aside the publication of numerous books on innovation and the mention of the "I" word over 33,000 times in annual reports filed with the SEC, it appears likely that using the "I" word is mainly a ploy to convince investors that "change" is taking place, even though by self-admittance most executives concede their companies still haven't developed clear innovation strategies.

What does it take to initiate real change? What kind of intervention is necessary? Look at the complaining and excuses presented by US companies when challenged, such as:

  • Our business is more complicated…
  • We need less regulation…
  • That's not how we do things…
  • We can't afford to re-tool, invest in new tech…
  • Our customers are happy the way things are… 

We need to ask: "Really? No need to innovate?"

What about new markets, evolving customer needs and wants, trade deficit with China, run-away growth in world markets, stagnant growth in U.S. markets, and limited U.S. penetration of world markets? What about VISION for the future?

There is plenty of evidence portraying a very different picture and begging for leaders to step up to the task of implementing real innovation in U.S. companies, instead of just lip service.

Domestically, it's been said that while around 30% of companies think they have introduced a major innovation within the past 6-12 months, only 5% of consumers agree. Presently, for instance, the perception is Google is beating the pants off Apple with innovations and methodology - brilliant new stuff, like "Glass." Consumers want to be seen, heard, listened to, responded to and enticed with "new" - note the T-Mobile inspired discussion on contracts - finally.

While we sit in our big chairs at home focusing mainly on domestic markets in largely an unresponsive way, we are losing big in global markets. Director of Tuft University's Institute  for Business in the Global Context, Baskar Chakravorti, recently released a paper detailing statistics and an argument as to why U.S. companies lag far behind in penetrating emerging markets. 

Although American brands are ubiquitous abroad, U.S. companies actually realize only around 7% - 10% of their overall revenues from emerging markets. In 2010 those markets represented 36% of global GDP - why is U.S. share so small while our "global peer average [is] 17%" according to HSBC estimated revenues.

Perception is Everything . Real leadership is multi-faceted, and above all based on communication, concern and relationship with real people - domestically and globally, and within and without an organization.

The great "growth" chasm between West and East cannot be filled by just moving our manufacturing east, negatively impacting even more jobs in America. That only makes Americans in this already high unemployment climate, well, angry. Emerging economies are still the ever-growing elephant in the room. Could it be that many U.S. corporations don't really care about the needs of Americans as workers or consumers in spite of bail-outs?

The combination of continued job decline stateside, along with demand for low priced goods by consumers hit with shrinking wages, plus U.S. companies' addiction to cost cutting to raise the bottom line, may ultimately be our undoing. Additionally, complications like China's government control of their currency, seemingly gives the U.S. a lose/lose situation, while the 3rd largest economy in the world, China - has the largest population and largest potential market, in the world. The Chinese people won't indefinitely accept a lower standard of living. When do we get to sell to them?

What do U.S. Leaders need for success in domestic and world markets?

We are still viewed as the country of freedom and ingenuity around the world, but more and more we are being viewed as … 

See Part Two of "Judas Goats": U.S. Innovation Leaders Need IQ, EQ and CQ

Need help developing a clear innovation strategy, penetrating emerging markets, leadership development? Visit The DeSai Group. Follow Jatin Desai on LinkedIn and Twitter for juicy innovation ideas and tidbits.

Jatin Desai CEO, and author of Innovation Engine (May 2013 release by Wiley International), addresses C-Suite groups, delivers keynotes, leads workshops and joins with corporations and organizations to design and implement innovation programs and optimize existing programs, in the USA and internationally. Innovation Engine is now available in digital and hardcover versions at your favorite retail online or brick and mortar outlet.

  describe the image

                                 Innovation Engine

  "Innovation Engine will help you build a climate and culture of innovation. A must-read for every serious executive desiring innovation as a daily habit in his or her organization and to drive innovation execution."

-Vijay Govindarajan, coauthor of the New York Times and
Wall Street Journal bestseller Reverse Innovation

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