Effective New Product Development & Brand Innovation: A 6-Step Process [Effective Innovation & NPD]
Innovation at big FMCG is in a poor state
The state of new product development and the innovation capabilities of big FMCG, to come up with new product ideas that are commercially effective, move the needle of your business and help a brand retain or grow its user base are of shocking quality in many cases.
Copy/Paste is the Game
When an unknown brand launches a herbal soap, none of the big players care. Once that unknown brand however takes 5 or more per cent of the total market, all the mayor players wake up and copy and paste the same concept on auto-pilot. Launching a follower or me-too product where we play with size, price or ingredient stories, positioning it marginally different is the current state of best practice in innovation land.
True Innovation = New Ideas, Not More Choice of the Same
Even though offering more choice by creating me-too options that address a similar need is not really innovation (unless you at least sprinkle a little bit of superior value for consumers into your concept) it is often easier than convincing management of new product ideas that actually make lives better, but for which you’ll need to create a new market.
A sad conclusion of the state of innovation currently that I think many of you will not disagree with?
Over 95% of new product ideas fail
As a result of the above mindset and auto-pilot behavior, it might not come as a surprise that Harvard Business School estimates that only 5% of new product ideas succeed. When the other 95% fails, either as a concept or idea that doesn’t work, or as an actually launched product with perhaps a poor execution behind it, we should spend a bit of time to analyze and understand what the real issues are.
Why are we so Bad at this? Lack of Process and Lack of Budget!
Why is big FMCG failing so often? The answer is usually simple: poor process in combination with non-existent budgets to do innovation right, often decides the outcome of your efforts before you even start.
So, how can we do better? Follow these 6 simple steps to make new product development and innovation efforts more successful
To help you get on track and become awesome at innovation lets shine a light on what makes a good process, assuming that allocating appropriate budgets is only up to you.
Here are 6 steps that should help you develop an effective brand innovation process.
Step 1: Everything Starts with Insights
Real insights in our world of branding exist in the context of 3 dimensions – your brand dimension that decides what resources and capabilities you have and what new things you are able to produce, as well as the landscape of brands you already have that new concepts need to fit. Your competitor dimension that decides the competitive forces within your category and last and perhaps most importantly your consumer dimension which decides on the most relevant battle you’ll need to win: the superior value battle. Delivering superior value is the only objective new product development needs to deliver. It should be used as the most critical KPI and the main objective in your search for new product ideas and it should not just be considered as yet another box to tick along the way. Delivering superior value is the essence of long term brand success and without a crystal clear focus that emphasizes the importance of this, your NPD efforts will likely fail.
Step 2: the Quantity & Quality Stages of Ideation
The ideation process should be broken into 2 stages: the first stage of ideation is where you work with the various insights and aim to create a large quantity of ideas for new products. The familiar 4 rules of brainstorming
apply and it’s important to capture absolutely every idea at this stage. Often this stage is done in workshop format where you have multiple brains in the same room with a moderator running various brainstorm exercises that fit the task and personalities in the room.
A second ideation stage is focused on the first bit of quick and rough optimization and development of ideas where the goal is to bring quantity down to quality. At this stage ideas are combined, enhanced and evolved to make sure the strongest ideas remain. When time permits this is sometimes done on day 2 of a larger innovation workshop or it is done after a workshop by a core project team consisting of specialists within your organization often still working together with the workshop facilitator as well.
Once you’ve managed to turn quantity into quality you now can create an innovation pipeline of new product ideas.
In most cases this is where you’ll also need to give management an update on what you’ve been doing all these weeks. When you proudly present your innovation pipeline filled with wonderful ideas be prepared for another battle! If management is product or brand focused but not yet really value focused, new ideas will be killed that are either difficult to produce or can’t be easily fitted into one of the existing brands you have.
You’ll need to fight for your value message at this stage to ensure you don’t compromise your best idea, keeping in mind that it’s the job of innovation and new product development teams to bring to market new products that actually make people’s lives better, not just offer more choice of the same.
Step 3: Selection, Concept Enhancement & Feasibility Test
Once you’ve come this far, the critical moment of choosing one or a few of your best ideas and make them market-ready now needs to take place. You’ve gotta pick which of the ideas you’ll want to turn into a real product and you may need to decide what brand you’ll fit it under.
This is the step where you select which concepts actually have most potential to deliver real value and which concepts you want to test before bringing a new product idea to market.
Nielsen’s Bases Method
offers some good insights as to what will make or break a good concept, they distinguish 12 factors that fit 5 general areas
- Salience: making sure a new concept has a strong proposition and gets noticed.
- Communication: making sure messages connect and are clear and concise.
- Attraction: making sure new concepts are relevant, better and credible.
- Point of Purchase: making sure new products are findable and priced competitively
- Endurance: making sure products deliver on promises and drive loyalty over time.
With the Bases method the strength of each link decides the strength of the chain. If one element of your concept fails Nielsen believes it’s more likely the whole concept will fail. At this stage it is critically important that you pay attention to a proper execution of your concept in several levels of detail and this often requires a different mindset than the high speed, quick ideation stages that preceded the current stage and another reason many ideas fail.
A good example is that of a herbal tea product concept Coke wanted to launch in the Vietnam market. All the insights were spot on, but the ying yang design used in the final concept test (done by a remote global design firm that didn’t understand that such stereotypical cliche executions are not a great fit for real Asian consumers) was not surprisingly heavily rejected in research. The concept was shelved and deemed not a good fit until a local competitor launched a herbal drink a few months later under the name Dr. Thanh with a quirky concept of a herbal doctor that resonated with local consumers it now is a market leading brand in the Vietnam tea market. A typical baby / bathwater case unfortunately for Coke.
Another thing many get wrong at this stage is ‘brand fitting’. Creating a new brand is expensive, so under which existing brand do we (force) fit this concept? This is often the stage where good concepts are morphed into concepts that fit a brand, requiring it to inherit some mandatory boxes it has to tick, which in some cases will not help success, but rather become a barrier for success.
Since this stage is often the stage where great concepts die because of poor executions, an inability to switch between high pace creative mode and slow speed detail mode or because inherited baggage of a forced brand fit starts to replace superior value of an original concept it is important to remember that superior value for consumers only and always should be your measure as well as your goal when evaluating, fine-tuning or brand-fitting concepts at this stage.
Step 4: a good Branding Layer Accelerates the success of NPD
With branding layer in this context I refer to adding the story of ‘why’ to your new idea. Why does your new product idea matter? Why did you create it? And why does it make lives better? Having a well focused story that articulates that message simply, clearly and consistently can greatly help you accelerate the success of your new product idea. If executed well, a good ‘why’ story that underlines the superior value of your new product idea might even help evolve the brand your concept is fitted under by injecting fresh, new and positive associations that help further the main brand.
Strategy comes into play at this stage as does budget, forcing you to pick the right channels and touch points to create maximum impact with your message.
This article i wrote earlier might help decide what branding activities, touch points and channels should be selected for best return on investment. The core argument in it is that with limited budgets (and every budget is limited) you want to own the moment of love first to help secure loyalty and repeat purchase, then focus on the moment of usage (where you create superior user value) before addressing the moment of purchase (which will come anyway if you get the first 2 critical branding moments right) and only last think and spend remaining budgets to get attention as it is a function that often can completely drain your budget before you even reach the higher more important levels.
Step 5: Distribution & Sales are part of the innovation game.
The concept of the last mile, getting new products into the hands of shoppers is actually still part of a successful innovation process, after all innovations that don’t sell are still considered failures. Think of your brand as having a child, giving birth is perhaps the easy part, ensuring the little new concept can walk, talk and become a successful individual is where a parent actually wins the battle.
Route to market, Speed to Market, Trade Availability and Trade Visibility are key to success here. Don’t underestimate the power of the competitive forces that will fight your new product trying to ensure it dies an early death. Also don’t under estimate, the time, effort and budgets needed to win this part of the game.
Step 6: Consistency and Continuous Optimization
Once you have succeeded in getting your product into the market successfully, addressing all earlier mentioned challenges above, the last part of the exercise is to make sure you deliver consistency in quality, but also pay attention to what happens next in your market.
Competitive forces will react to winning ideas that move markets and you’ll need to anticipate reactions, defend your position and continuously track, optimize and improve your ability to deliver superior value. If better products appear you’ll need to react or risk seeing your brand getting phased out of the market as a result of becoming obsolete. Again it’s survival of the fittest and Darwin’s evolution theory applies to the ever-changing world of brands as well.
Keep in mind that 85% of fortune 500 brands that existed 60 years ago no longer exist today and you’ll understand why winning the long term war of delivering real user value instead of the many short term battles is the ultimate decider for success. Taking a look at how Nokia crumbled is a good reminder that innovation and the need to deliver superior value is a constant variable that you’ll have to keep hitting!
So, in summary.. what do you need? Superior Value Focus + Process + Budget = Better Innovation
So, in summary the key success ingredients are (1) a superior value focus at every stage (even long-term) of (2) a solid step-based innovation process and (3) proper budgets so you can execute each step of the process in a better way than your competitors.
This Process not Only works on FMCG brands!
Although my focus in this article lies on new product development for FMCG brands you can apply this process to the creation of pretty much any new brand. Whether you are launching a new FMCG product, a new business start-up, a new service concept or even when you’re trying to invent your own personal brand concept – the above stages will apply.
Need Help with your New Product Development Efforts?
Do you need help developing a new product development process? Need a moderator that can run an innovation or ideation workshop to help create a pipeline with new product ideas or do you need help developing concepts and get them market ready? Feel free to get in touch here
Do you want this to become a Series of Articles?
If the response to this article is good, I’ll turn this post into a series of articles, where I’ll dig a bit deeper into the individual stages.
Please share this if you like this or if you think better innovation is important in your organization and please feel free to leave your thoughts and comments below! Critical thinking and good feedback helps make processes better and sharper so any comment is welcome!