One week plan: kickstart a profit driven innovation pipeline
Most people describe innovators as being big idea people who are inventive and able to find new solutions to consumer and customer pain points. In the food business, great ideas and empathy with the consumer are important. Even so, successful innovation leaders know that creating profitable food products is the true talent required to build a resilient business. It’s a good practice to assess ideas from a finance, operations and supply chain perspective to ensure that the innovation pipeline meet three key criteria:
- Consumers want to buy these products.
- Retailers recognize that by carrying these products they could sell more to their existing customers as well as attract new customers to their stores.
- You can make money selling them.
To succeed in business, innovators must put their emotional attachments aside, be disciplined and work as part of a team.
Disappointment is built into this system as many (so many!) of one’s favourite product ideas will fail to meet all three of these criteria. To succeed in business, innovators must put their emotional attachments aside, be disciplined and work as part of a team.
Regardless of how many decision makers are involved in your food business, you can also apply these lessons. Time and again, new product launches succeed or fail based on how well the innovation lead integrated insights from operations, finance, marketing and procurement. Whether just one person wears all the hats, or if there is a vice president in charge of each individual function, in well-run companies all departments play a role in the innovation process.
In today’s uncertain business environment these lessons are more important than ever. Savvy food business leaders are re-evaluating their innovation pipelines and creating strategies that will safeguard profitability. If your organization hasn’t already taken this step, this one-week plan will help you to kickstart the process of creating a profit driven innovation pipeline. Devote two to three hours each day to dig into each idea from a new perspective to identify where it may fall short. By the end of the week, you should have an action plan.
- Call a team huddle. Communicate your goal to streamline the innovation pipeline based on projected profitability and instruct this team to show an aligned and focused front. This meeting should take about a half hour, leaving you 90 minutes to focus on R&D.
- Begin by sorting the projects in the innovation pipeline based on the commercialization barriers they will face to manufacture each product. Categorize the projects based on their common challenges. For instance, if significant capital must be spent to bring a product to market, make a note of that fact and move on to the next item. Don’t get waylaid by discussion about the quality of the ideas. The task today is to identify hurdles.
- Last spring taught us that supply chains can be disrupted very quickly and take months to recover from sudden shocks. Review with a procurement lens to identify which of the new product ideas in the innovation pipeline can be made with local ingredients that won’t face border or transportation issues if a COVID-19 lockdown occurs. Likewise, it’s prudent to take time now to diversify your ingredient suppliers and start to carry buffer stock of the ingredients that are essential to fulfilling orders for your highest value customers.
- Explore less expensive ingredient substitutes. Request samples the product developers can test to determine whether the benefit of the more expensive ingredient is significant enough to continue using it.
- Evaluate all new product development projects against the current supply chain and identify which new concepts will use ingredients you already buy to identify any volume discount options that might make these items more profitable.
- Some of my most successful collaborations have been with partners in operations because they can identify new ways to use the equipment in the plant and point out what production lines or assets are not being used to full capacity. Go over the projects that were identified as requiring the purchase of new equipment with your operations team and ask them to brainstorm the feasibility of making these items using machinery you already own or can modify inexpensively.
- Greenlight only the new product development projects that use existing machinery and systems. If these new products don’t match your current brand positioning, consider finding a company that can use that kind of product and see if they’d like you to make it for them.
- In the same vein, if your business model doesn’t already include co-packing, consider adding this service. Running extra manufacturing shifts will bring in revenue that can finance your branded business.
- Ask the marketing team to throw away all their assumptions and reinvent how they approach product packaging and launches. Given the requirements of wearing masks and physical distancing in grocery stores, in-person food shopping is no longer a leisurely and fun experience. As a result, marketing teams have their work cut out for them. For instance, if a new product will require sampling, in-store demos, or other experiences to drive trial, this may not be the right time to launch it.
- Social media revealed that Canadians spent last spring baking bread and making mac and cheese proving that when the going gets tough, we embrace our favourite foods. So, put marketing’s adventurous and aspirational product ideas on hold for now and stick with basic flavours and time-tested favourites. Remember, we are focused on quick wins that have high profitability.
- If E-commerce works for your business, marketing will need to reconsider their packaging approach to find ways to feature decision driving messages on the front of packages in ways that are easy to grasp on a smart phone. Offering online shoppers ‘unboxing’ style videos and recipe demos are better product launch investments in 2021 than elaborate instore merchandising.
- It’s time for another team meeting. Get the entire crew together including administrators, warehouse staff and sanitation. You want everyone to feel included. Thank them for their hard work this week and then unveil the new profit driven innovation pipeline. Invite questions and ideas others may have to optimize the plan.
- Now take the weekend off. You deserve it!
Article by: Dana McCauley