From The Minds Of Innovators

A roundtable discussion sheds light on new product development today and into the future.

Certainly most retailers hope that sales pick up in 2013, and new products are a lucrative, yet challenging way make that happen. With many companies returning to a focus on innovation, New Products Report sets out to know what some of the top people involved in new product development across the country think about the emphasis companies are placing on innovation. Let's continue to investigate what factors are leading to new product success and the many, many failures. Further, insights from innovation consultants help illuminate critical trends in the marketplace that should be considered. Combined, new product developers and innovation consultants paint a picture of the new products landscape today and into the future. ■ Offering insight for this issue of the New Products Report are Phil Best, chief operating officer of LPK, Cincinnati; Laura King, director of GameChanger Products LLC, Alameda, Calif.; Jonathan Finer, chief innovation officer of Cloverleaf Innovation LLC, Evanston, Ill.; and Joan Schneider, president of Schneider Associates, Boston.

NPR: How would you rate the temperature of new product development in the past year?

Best: Hot, cold and somewhere in between. The general economic conditions over the past few years have made investments in tooling for durable goods pretty cold. We are seeing less in the way of truly innovative new product development and are seeing established brands, particularly fast-moving consumer goods, working commercial innovation to deliver promotion, excitement and revenue.

King: In general, we're seeing a comeback going along with the economy recovering, but we're seeing a lot of variability. There are some companies that are now restructuring. We're seeing a lot of that with companies reorganizing in order to strengthen their innovation teams. Some of those are ahead of the curve and some are a little behind.

Finer: New product development has been somewhat polarized — the temperature running both hot and cold. This protracted period of economical stagnation has fostered an increasingly price-conscious consumers and inelastic pricing power among marketers — raising the threat of commoditization in numerous sectors and categories. Innovation has been an extremely hot strategy for those aggressive brand-driven manufacturers seeking to maintain their leadership position or to leapfrog the competition and to avoid falling into price-driven strategies.

Schneider: In terms of innovation, 2012 has been hotter than ever. In Schneider Associates' Most Memorable New Product Launch Survey, in which we poll consumers across the nation about the most memorable product launches, nearly all of the top 10 products represent a high level of innovation in terms of both product R&D and marketing. What we did see this year is that awareness of new product launches neared an all-time low. So while product innovation was high, consumers may not have recognized these new products and brand messages.

NPR: What are the top three factors in new product success? And will you please pinpoint examples of products/brands that have successfully executed on them?

Best: One is translating consumer wants and needs into products that deliver on promise. L'Oreal/Garnier BB Creams seem to be striking the right balance of product versatility and the challenges of a more traditional beauty regimen. Two is promotional investment that is up to the task of guiding the customer to and through the new offering. Clear haircare products by Unilever stormed into the market with an expansive, focused and well-coordinated launch across traditional and social media. Three is telling a story that invites discovery and then resonates with your target. For example, a mandarin orange was just a mandarin orange until it became a Cutie.

King: You need a deep understanding of consumer attitudes and behaviors as well as the market trends. A product that creates consumer passion certainly inspires people to talk about it, and that's really an indication of success. The third is clearly speed to market and getting ahead of the competition. Whenever you have a good idea, competitors are going to have similar ideas. A lot of times the one that gets to market first is the one that wins with consumers. One of the things that I've seen in the marketplace that is very interesting is squeezable fruit from Gerber. In many instances companies underestimate the power of packaging innovation to deliver new benefits to consumers. We know that there is a big trend around portability and there is a big trend around health. They nailed both of those for moms with toddlers.

Finer: One is cross-functional collaboration and online idea-sharing. As an example in category, Supervalu encourages input on strategic business issues, suggested by executives, employees and vendor partners and has established a team of director-level managers from different business units to collaborate, discuss and iterate the suggestions. The company has also established an online mechanism for scrutinizing and refining relevant ideas from this process. Two is an open innovation model — collecting input and perspective from consumers, experts and suppliers. Google's open innovation approach to developing software for its Android version for smartphones has enlisted the contributions of major OEM and independent software firms. Three is successfully engaging the supply chain for effective sell-in, sell-through.

Schneider: One is product innovation as consumers love to try and buy new products. Two is a crisp understanding of the customer through traditional or social research that reveals a compelling insight, trend or area of need. Three is a well-executed integrated marketing campaign leveraging paid, earned and owned media. Products like Pepsi Next, Duncan Hines Frosting Creations, Samsung Galaxy Note, Tide Pods, and Taco Bell Doritos Locos Taco and Cantina Bowl exhibited these characteristics.

NPR: What are the top three factors that contribute to new product failure?

Best: Products that fail to address consumer wants and needs and capture their imagination must fail. Some of those failures come from desires to expand brand portfolios or address the broadest and lowest common denominator of needs. These efforts are usually off target or dilute, at best, and invariably fail.

King: The No. 1 factor is bounding ideas to fit a current core competency. It ends up being just like what they did before instead of breakthrough, because people tend to gravitate to what they do well instead of what the consumer needs. The second thing is spending an inordinate amount of time and effort building the perfect product instead of getting it to market and getting it into the hands of consumers. The third thing is many people spend a lot of research and development time in the lab versus getting the product in front of consumers and getting a real reaction from real people.

Finer: The most prevalent product failure is the idea that never gets beyond the concept stage. Most internal new product innovation processes are plagued by stage-gates that do more to thwart creativity and to erect obstacles than to drive ideas toward successful commercialization. While most new product development is based on consumer insights, too often this input is not effectively developed or leveraged. The consumer's voice is an essential foundation for successful innovation, but the consumer can't be expected to identify meaningful new ideas. Lack of internal alignment also is a frequent cause of new product failure. There are so many points in the process when momentum can be lost, and a project simply breaks down. Making sure that all key stakeholders — brand managers, manufacturing, insights, senior management, legal — are all working from the same playbook helps to minimize the misinterpretations and miscommunications that can derail product development.

Schneider: One is the product exists in product limbo. The second is the product defines a new category and requires education but doesn't receive it. The third, and our favorite, the product is revolutionary but there's no market for it. For years, laundry detergent manufacturers have tried to introduce concentrated formulas and differently packaged laundry detergents with very little success. Breaking the consumer habit of how much detergent to use was difficult, and it may be the reason why Tide Pods spent so many years in product development.

NPR: Which trends in the marketplace have been underdeveloped and why?

Best: Consumers today are looking for increased meaning in their lives, and brands that are built on altruistic principles will have significant advantage. This feeds the narrative of people buying products not based on what you do, but why you do it. Crafted locally is another trend brought to prominence in food, but we think it has broader implications for all products. And, the prediction of customization and on-demand production is lagging as techniques and processes play catch up to the concept. Not that it's underdeveloped, but we will continue to see more interest and sophistication from private label and private brand.

King: There are a lot of people who focus on baby boomers obviously because of their sheer size without realizing that if they focus on that target to the exclusion of millennials their brand is going to become entirely irrelevant in 20 years. The time to focus on millennials is now. If you don't, you are going to skip an entire generation of people who don't understand your brand and can't relate to it.

Finer: While it still might be considered an emerging macro trend, the notion of 'niche-ing' has been building incredible momentum of late. The trend is based on consumers creating a new empowered sense of community based on shared goals and purposes. We're seeing technology moving beyond empowering individual experiences to foster increased social connectivity and shared experiences. Ultimately mobile technology will enrich this trend — pushing communities and social networking opportunities that will create real-world interaction.

Schneider: One trend we think is underutilized is micro-marketing to focus product introductions on very small consumer audiences with a certain need or profile. This is getting easier by the day with the proliferation of big data and the targeted nature of social media. Orabrush just launched a very successful tongue scraper for dogs with bad breath. If there's a market for doggy halitosis, there's a market for a lot of things.

NPR: Which trends in the marketplace seem to be fading and why?

Best: Green. It may not be a trend that is so much fading as much as it is in need of an overhaul. Consumers are fed up with 'greenwashing' and while companies want to listen, there is so much noise and complex information and misinformation in the system that it's virtually impossible to make good choices. The trend toward integrated technologies is another area that seems to hold diminished promise in the near future. Integrated home is an expectation that technologies will work together to help us live better lives by more easily managing the machines around us.

King: One that I wouldn't say is fading, but I expect it to fade soon, is around what I call 'fake healthy foods' — products that are positioned as healthy but they are really heavily processed and full of sugar. For a lot of these things, when you turn the package over, there is really no redeeming nutritional value, and consumers are just becoming more nutritionally educated. They are reading labels more often, and they are really looking for more natural, more whole foods, real ingredients, less sugar and less processing.

Finer: 'Rooting' — based on revisiting the familiarity of the past as a way to increase a sense of security and order — was a megatrend that seemed to have greater significance during the height of the recession. Now that the worst of the recession appears to be over, we see fewer instances where marketers and brands are looking to the nostalgia and equities of years past to support innovation. Marketing to women in one dimension and in one color palette is another fading trend. Marketers have not only realized the clear and growing decision-making and purchase power of women consumers, but also that in order to reach this audience in a more relevant way, they can no longer offer them simply male-oriented products that have been only slightly tweaked for female cues.

Schneider: There is no longer just one way to launch a new product successfully. The day of just using television advertising to launch a new product is fading. It's clear that marketers are using all types of paid, earned and owned media to launch new products. No one tactic can make a product successful since consumers are watching so many screens and get their information from so many different sources.

NPR: Does new product development at major CPGs need to happen faster? How can it be expedited?

Best: Indeed, first to market is still a strong advantage in longer-term success provided the right product and brand support is in place. But the first-to-market advantage is shrinking, as lead-time for copies and competitive propositions is shorter than ever. In order to compete more successfully, companies will need to adopt smart entrepreneurial practices like smaller, more agile teams; fewer testing gates; single-point accountability and approval; and look to fail forward, fast and cheap.

King: It's very difficult to get innovation through the pipeline quickly and cost effectively. Part of it is the current paradigm that a lot these large CPG companies are in that there are traditional testing methodologies. They are very expensive, and there is an inherent need to optimize the idea before it's hatched. Then when you get the results, it's either a 'yes' or a 'no,' and if it's 'no' then the idea dies. It ends up entailing a lot of discussion and debate inside the company before you get it to the test. What improves the results more is getting your minimum, buyable product into the hands of consumers as quickly as you can. They can tell you what's working and what's not working.

Finer: The typical new product development cycle is a critical challenge for CPG manufacturers — and as the marketplace dynamic changes at an increasing rapid pace, effective and efficient commercialization is essential. How can it be expedited? We'd point to three key areas: perfection, fragmentation and no one 'owning' the innovation process. In too many companies, innovation is poorly defined and rarely a true core asset, one acknowledged and mandated by the CEO and the senior management team. Consequently, multiple stakeholders embark on often-disconnected innovation initiatives, susceptible to road blocks where critical alignment is absent, and move on to new positions within a company within a short 18 months. The answer: own it, define it and commit to it.

Schneider: New product development has come a long way from taking a year to 18 months to create a new product. Today, companies are fast tracking new product development in months. We believe the R&D cycle can be shortened even more by involving consumers in the feedback loop earlier in the new product development process by using new technologies and social research and engagement methodologies. By listening to consumer feedback to iteratively guide product development, before the product is fully baked, we believe manufacturers will launch more successful products. As a bolt-on to traditional market research, this provides a way to fast track the stage-gate process so that companies don't get bogged down creating products that don't meet consumer needs.

NPR: What would your mantra be for anyone directly involved with new product development?

Best: I'll put a little spin on the old adage, 'no guts, no glory' and say 'no guts, no fortune and glory.' Oftentimes product developers and business leaders are looking for data proofs to ensure their success in the marketplace. In the real world, the ironclad promise of success does not exist. Metrics are great, but you need to have faith and believe in what you are bringing forward.

King: I say recognize your paradigms, because product development too often focuses on one piece of the consumer puzzle without taking into account the shifting context into which that piece of the puzzle fits. Where a lot of people get stuck is in the silo of their business units. They see the world only from that perspective, and they lose the perspective of how the consumer sees their world.

Finer: Exceed consumers' expectations by aiming beyond their current experiences. Work smart, work fast, fail early and make it happen. Challenge your assumptions regarding the need for new products. Reconsider the problem and look for comprehensive solutions to innovation challenges. You can't necessarily 'productize' your way to success. Consider the entire context and look for cohesive solutions to marketplace challenges. Don't fall into the trap of only selling what you can make today.

Schneider: Talk to the customer — and your employees and retailers — at all stages of the new product development process. Talk to your stakeholders when you are thinking about creating a new product. Then talk again as you coalesce the idea and then before, during and after launch to be sure you are tapping into what consumers and retailers want and need. Learn from your mistakes and successes. Understand the best timing for your launch so that you can capitalize on when consumers purchase the product and media covers the space. Think like a consumer. Would you buy this product? Think like the media. Would you cover this product? Ask lots of questions and don't be satisfied until you get good answers.

With insights from those entrenched in new product development, take a moment to rethink and retread processes. Take risks, act fast and regain momentum as the economy does, and thus the marketplace and today's consumers. Those are words and guidance from the wise — from the minds of innovators.

'In order to compete more successfully, companies will need to adopt smart entrepreneurial practices like smaller, more agile teams; fewer testing gates; single-point accountability and approval; and look to fail forward, fast and cheap.'

— PHIL BEST, LPK

'The time to focus on millennials is now. If you don't, you are going to skip an entire generation of people who don't understand your brand and can't relate to it.'

— LAURA KING, GAMECHANGER PRODUCTS LLC

'The most prevalent product failure is the idea that never gets beyond the concept stage. Most internal new product innovation processes are plagued by stage-gates that do more to thwart creativity and to erect obstacles than to drive ideas toward successful commercialization.'

— JONATHAN FINER, CLOVERLEAF INNOVATION

'Ask lots of questions and don't be satisfied until you get good answers. It's better to ask the questions before you create and launch the product rather than afterward. Then it's too late.'

— JOAN SCHNEIDER, SCHNEIDER ASSOCIATES