Characteristics of innovative consumer products companies
- Global commitment to a long-term strategy
- Good balance between global and local activity
- Focus on tailoring innovation to maximize the opportunities in individual markets
- Clear understanding of, and ability to quantify, innovation benefits
- Ability to focus resources on innovation to drive competitive advantage
Without belief in the long-term pipeline of ideas, senior executives become nervous and higher-risk projects get cut in the development process.
Businesses need to renew their offerings and business models constantly—and get innovations to people quickly—to protect existing markets and develop into new ones.
Should innovation focus on global priorities or local needs? Businesses struggle with this question.
Headquarters answer this question one way. Companies are looking for the right organizational structure to leverage global scale, manage innovation resources effectively across geographies and ensure speed to market.
The innovation perspective has a different answer. Teams need to understand the value of being global, but remain hard-wired to their local markets.
When companies aim to balance global and local priorities, it's challenging to make roles, responsibilities, governance and decision-making clear.
So what's a possible solution?
Try embedding an internal culture that enables the organization to manage innovation and maximizes its impact.
Managing and reporting on innovation
You can't fully understand innovation performance and effectiveness
without tracking it.
What should you track? All activity, resources and benefits.
When should you track it? At the beginning when initial ideas are in the pipeline to launch, in the middle of the process through sales and ongoing when refreshing and renewing product lines.
Find the balance between measuring without constraining business.
Measuring innovation can present challenges because:
- Scope of innovation activities change over time
- Responsibilities pass to several different teams
- Final accountability and deliverables is unclear
Finding the right strategic balance
Out of every 100 new consumer products that come to market, the failure rate is typically between 80% and 90%.1
This well-known high failure rate means businesses sometime fear taking risks with their innovation plans. In our experience, companies can struggle to design long-term innovation strategy, adapt their strategy to changing circumstances and maintain belief in the strategy over time.
Without commitment to big innovation launches, the launch profile often resembles a fireworks display — heavy investment for 12–18 months to create a "big bang" launch. But if there is a sudden change of financial circumstances, too often companies lose their nerve at this point and the investment is cut.
Often the leading innovation needs to be given time to reach its full market potential.
Taking a joined-up approach
Speed in developing and commercializing ideas has always been critical. Now, companies must use speed to reach many markets at once.
This is especially important as businesses grow into diverse, emerging markets.
1Defined as: failure to realize the anticipated benefits agreed before launch.
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