Innovation, Consumer Centricity Central to Industry Success

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Innovation, Consumer Centricity Central to Industry Success

By Michelle Moran - 05/13/2009
The vendor and retail communities require clarity to see beyond the economic climate of today and embrace the silver lining of the changing behaviors of consumers. That was the key takeaway after 24 hours of in-depth sessions at The Nielsen Company’s Consumer 360 Conference in Orlando, Fla. Attendees were handed the tools to succeed. They’ve discovered those tools will be used to reconstruct their relationships with their customers.

“If we just listen to these consumer, they will tell you where you need to go,” said Nick Sorvillo, Kraft SVP Consumer Insight & Strategy.

Kraft’s driving mission is to reconnect -- emotionally and functionally -- with consumers. Sorvillo stressed the path to that connection includes building an image of trust, dependability and value solutions.

“Those of you who understand the value equation for the category you are in will succeed,” he explained. “And value is not all about price.”

Kraft’s Consumer Channel research spotlights the shopping psychology of today’s consumer. The economy has changed the attitudes of consumers -- 61 percent of Kraft’s consumers surveyed said their attitudes have been permanently changed. These consumers are cooking more at home, entertaining at home -- with a mantra of “back to basics” and family. They are practicing what Sorvillo termed “brightsiding” -- looking at the brighter side of a situation.

Seventy-two percent of those same consumers will continue to use the same shopping strategies they’ve begun to practice under the present economic crunch. In order to continue to service these consumers, the industry will have to change its own focus and provide solutions.

The emotional relationship with consumers translates into proving that the industry is partnering with them through not only this recession, but also throughout their lifetime. Retail speakers and attendees echoed the task of breaking down barriers to the customer. Customer-centricity is the hub of category management.

Food Lion demonstrated the power of the customer with presentations discussing its own shifts from a decades-long, low price-oriented inventory management to customer-oriented inventory management and store design. In a partnership with Kimberly-Clark, Food Lion SVP Merchandising & Distribution Derrick Penick said the chain revamped the baby care aisle to a focus on the primary consumer -- Mom -- with input from shopping mothers, so that the aisle was designed to better suit her shopping needs. The convenience of shopping the store now becomes a part of the value proposition of Food Lion’s baby care category.

“Innovation is so much more than new products. Innovation is part of the whole business -- that’s the way we fight our way out of this,” Nielsen’s President & CEO, North America, John Lewis explained.

So what is the true root of innovation?

Yesterday, I quoted David Bowie in my post [[]]
about changes the industry faces. Today, author Malcom Gladwell [Tipping Point, Blink and Outliers: Why Some People Succeed and Others Don’t] stepped onto the stage and began talking about Fleetwood Mac.

Fleetwood Mac is often referred to as a band that became an overnight success. Instead theirs is a story of a band that went from failure to success. It’s their effort that brought them success, not mere chance. Rumors was their 15th album.

“I had assumed this was an overnight success. But it took 10 years for them to get to the top,” Gladwell said, adding that to achieve mastery, you have this long period of gestation -- the 10,000-hour rule.

“It is impossible to master any cognitively complex activity without spending 10,000 hours of practice on that activity,” he explained.

That’s 10 years of practice.

“I wonder, while we were in the last 10 years of this bubble where things seemed to be happening magically, whether we have fallen into the trap that effort isn’t in the center of mastery,” Gladwell questioned. “When you ask American kids what it takes to be good at math, they’ll tell you it is something you are born with, it’s innate, not learned….Is this a problem confined to mathematics? I don’t think so.”

Gladwell illustrated his point with American Idol, which fosters the idea of the overnight sensation, supposedly enabling contestants to become stars in the next 10 minutes.

“It is so profoundly false and so profoundly toxic. And I cannot help but thing that this is a behavior that is seeping into our business culture,” he exclaimed.

There are two very different learning strategies. The first is Capitalization, where you build on your strengths and grow toward success. The second is the Compensation strategy, where you compensate for your weaknesses.

“You are given a series of disadvantages and overcome them to build on your value,” Gladwell explained. “This is the more valuable strategy. You see a very different quality coming from people or businesses that follow the compensation strategy.”

People who are willing to work harder to overcome their limitations succeed. In illustrating his point, Gladwell noted that one-third of the most successful entrepreneurs have been diagnosed with a learning disability. They have acquired, while overcoming their disability, a set of skills critical to the business world -- leadership, problem solving, oral communication and delegation.

“The Compensation strategy is a better route to greatness than the Capitalization strategy….We are at a moment when compensatory strategies are all we are left with. They are not obstacles to creativity, they are highways to creativity,” Gladwell concluded. “I worry we have lost sight of the notion that the root to achieving something of value requires failure along the way. There is no way that Fleetwood Mac could have made it today. We would never wait 15 albums for success. We would not even wait one album to see promise. And I cannot help but wonder….Is that kind of attitude costing us all sorts of genius and innovation?”

As this industry faces a new set of challenges -- of disadvantages -- those ready to harness their energy and their teams, and work harder to meet the demands of consumers and the new social structure of the shopping environment are on track for success.