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The long and winding road of innovation

Panos Dimitropoulos

Human & Cultural Practice Lead, Asia and Developing Markets

Brands 06.07.2018 / 17:08

Innovation cover 2 col

Before brands start to bankroll their next wave of innovation projects, they need first get a systematic understanding of innovation process.

Growth is the lifeline of every business. Innovation can drive growth. Kantar Worldpanel analysed 500 biggest FMCG brands in UK and ranked them by percent of sales accounted for by innovation between 2012 and 2016. Overall business growth rates of top 50 was 7.9% while that of bottom 100 was -5.3%.

Innovation is powerful, but the road to a successful innovation is a long and winding path. Kantar Worldpanel data showed that between 2015 and 2017, only 1% of new product launches globally reached 1% penetration in year one. The data is even lower in China: between 2014 and 2016, only 1.4% new FMCG products reached 0.1% penetration in year one.

The failure rate of innovation is so high that blind innovation projects are more likely to destroy businesses instead of helping them, because it will not only waste money and human resource, but create formidably high opportunity costs as well. Before brands start to pump money to bankroll their next wave of innovation projects, they need to chart the water first to get a systematic understanding of innovation process.

Kantar Consulting understands there are three types of innovation:

1. Grow share. It means renovation, new variants, etc. This type accounts for 70% of all innovations. For example, Coca Cola launches 250 ml smaller bottled cokes, or cherry-flavour cokes.

2. Grow category. It means new formats, new benefits, etc. This type accounts for 20% of all innovations. For example, Tide and Ariel both launched laundry detergent gel balls in addition to their laundry powder and liquid products.

3. Disrupt the market. It means new categories, new culture, new business models, etc. This type accounts for 10% of all innovations. For example, Sony’s invention of Walkman and Discman; Apple’s launching of iPhone and iPad; the establishment of AirBnB and Uber.

Together, the three form a pyramid of innovation.

EN Innovation Pyramid
 

Kantar Consulting’s point of view is that an innovation needs to solve a problem in the lives of real people, but the STARTING POINT for designing an innovation can come from elsewhere in the business context, such as:

• Consumer needs – unmet needs, underserved segments, underserved occasions

• Shopper needs

• Customer or retailer needs – underutilized spaces or real estate, underserved channel types

• Brand development needs

• Technological opportunities

• Sustainability needs

• Cultural shifts (e.g. trends)

• Macro shifts (e.g. longer term futures or scenarios)

Regardless of what types of innovation journey a brand is about to start, there are three simple and business-critical milestones the brand needs to identify.

1. Innovation Ambition – WHAT IS THE OPPORTUNITY FOR INNOVATION?

Why is there a need for innovation?

What business result do we want to achieve?

What seems to be the most promising pathway to that business result?

2. Innovation Solution -- HOW WILL WE CONVERT THE OPPORTUNITY INTO BUSINESS GAINS?

What product or service do we need to launch to capture the value represented by the opportunity?

What does the business need to do – and how does it need to change – to launch this new product or service successfully?

3. Innovation Business Case -- WHY SHOULD THE BUSINESS SUPPORT THIS INNOVATION?

How much does the business stand to gain from launching the innovation?

What evidence is available to convince the business to put its money behind the innovation?

Collectively, the three stages form Kantar Consulting’s “Whole-business innovation” approach.

EN Whole -business Innovation Approach

A key to successful innovation process is not to focus heavily on the ideation stage producing many ideas, but create the right circumstances and identify the correct brief parameters and zoomed in scope that will make so ideation more targeted and specific.

By being heavily involved up front in articulating a well-defined innovation ambition, Kantar Consulting are able to simplify the work that goes into ideation or solution development. Then, once the solution is defined, we work with our clients to ensure all that effort isn’t wasted, by helping to build ideas into business cases that win executive buy-in.

To know more about Kantar Consulting’s innovation solution, please contact us.

Source: Kantar Consulting

Editor's notes

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