Nielsen: Keep the Boss Out of Product Development

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Nielsen: Keep the Boss Out of Product Development

A first-of-its-kind study unveiled by The Nielsen Company says the secret to a successful product launch appears to lie in the degree of senior management involvement in the creative process.

Unveiled at its recent Consumer 360 Conference, Nielsen’s research of the innovation processes at 30 large CPG companies operating in the United States reveals that companies with less senior management involvement in the new product development process generate 80 percent more new product revenue than those with heavy senior management involvement. Companies that employ this and other best innovation practices derive on average 650 percent more revenue from new products compared with companies that don’t.

“New product innovation is a top priority of every major company CEO, yet success varies so widely that it’s absolutely critical to understand what drives successful innovation and what undermines it,” said Tom Agan, SVP and managing director at Schaumburg, Ill.-based Nielsen. “Once you understand it, then you need to ask yourselves, are we living it?”

Nielsen’s research shows that simply being physically near corporate headquarters can stifle new idea generation. According to Nielsen, companies with an off-site Blue Sky innovation team report 5.7 percent of revenues coming from new products, compared with 4.8 percent from companies with no Blue Sky team at all. Companies with Blue Sky teams on site report just 2.7 percent of revenues coming from new products.

“One of the keys to successful new product innovation is to manage new ideas lightly,” said Agan. “While we don’t dispute senior management’s strengths and good intentions, they are often too quick to get involved in the creative process, especially when things are not going well, and their mere presence can stifle free thinking.”

Nielsen’s research indicates senior management should precisely manage the new product development process, not the ideas themselves. CPG companies with rigid stage gates average 130 percent more new product revenue than companies with loose processes.

Nielsen’s research documents more than 50 dimensions of new product development. Objective survey results were compared to actual in-market success and the percent of revenue from new UPCs in the fourth quarter of 2009.