A while back, we looked at the state of innovation in FMCG categories, lamenting the fact that most new product developments end up contributing little more than clutter to their categories. Bacon was a typical example, where 14 of the 174 product SKUs now available contributed 47 percent of all sales, and 90 contributed less than five percent.
The clear upshot of the analysis was that most of what innovation has built is probably acting more as a barrier than as a lever to consumer growth, hindering decision making and hiding best-fit products from their potential buyers.
And it’s not just bacon as a category that is behaving in this ever-expanding way. Most grocery aisles and a huge amount of services categories show a similar pattern. Years of line extensions, packaging developments and new brand launches have created amazingly complicated environments for the average consumer, most of which they simply don’t understand or disregard out of hand.
As proponents of consumer-led growth, this situation is fascinating to us.
Many of these new products are probably meeting their internal business objectives of securing ranging or adding one to two percent growth to revenue per annum, so they are unlikely to be seen as innovation ‘failures’. But the big question for us is what are they stopping us achieving on a grander scale? And why is this type of development the most prolific outcome of innovation processes?
To get the answer, it’s helpful to step back and have a look at how businesses approach the task of finding new concepts to take to market. More often than not, the seeds of inspiration are not consumer-led. Instead we look at what can be done with existing technologies in-house, we copy competitors and, most prolifically, we brainstorm.
Brainstorming in particular is big business, partly because it can feel so personally productive. We emerge packed with ideas that we had a hand in forming and this feels great. On top of this, it is (quite rightly) argued that there’s no point asking consumers what they think, because they can’t make the big leaps required to inform new products directly.
But while it feels productive, the truth is that brainstorming rarely works as a technique. And it’s difficult to identify a single significant new product that owes its origins to a brainstorming workshop.
In a recent Fast Company article, innovation specialist Debra Kaye noted that the brain actually works to build connections around ideas in a way totally at odds with the rigid atmosphere and social pressure of the group session. Fresh ideas tend to come when you brain is relaxed and engaged in something other than the particular problem you are trying to solve—which is why big breakthrough innovations tend to come more through individuals spotting opportunity than via established innovation processes. This is what entrepreneurs are traditionally great at: being in the right place at the right time, looking at the world with a different perspective, seeing something that others have missed.
So rather than rely on group-based ideation that we know doesn’t work, is there a way we can replicate the entrepreneurial process in how we look to innovate within a business?
There are two key elements to the entrepreneurial process that need to be present for breakthough insight to emerge. First, you need to be immersed in the market, seeing the world through the eyes of the consumer; and second, you need to be looking at the market in the right way.
The first is easy. Get out and talk to people, understand how they are living their lives and what drives them. Don’t abstract too greatly, stay grounded in their world and insight will follow. Interestingly, this almost never happens in marketing. Ask yourself when you last got outside your own personal socio-demographic to look at how someone different might live?
The second, and much harder idea in the entrepreneurial process, is how we look at the market in the right way to see an opportunity. How do we get outside of our own perspective to view the same behaviour in a different way?
The good news is that there are plenty of tools and techniques out there to help us find different viewpoints. A recent study of how 200 groundbreaking innovations came about showed that most could have been spotted through one of a handful of consumer-based techniques, using data already available.
A great example of this is the idea of the ‘slanted profile’. Back in the ‘80s, Smith & Wesson found that handgun penetration was three times higher among men than women. Which raised the question, ‘do women not need handguns?’ The answer was that women wanted protection more than men, but guns were too big and bulky. The result was to develop a small, lightweight and decorative weapon specifically aimed at the female market. Sales among women tripled.
The big challenge in activating truly effective innovation is getting the consumer back into the start of the process and creating an understanding around which we can ideate. So next time we need to look for bacon-based innovations, why not give staff the day to go and cook bacon with people. It might be the start of something beautiful.
- Andrew Lewis is managing director of The Research Agency.
- This story originally appeared in the September/October edition of NZ Marketing.