By Dr. Venkatesh Bala, Chief Economist, The Cambridge Group
We are proud to continue a new interview series titled Lessons in Innovation Leadership. This series showcases experienced business leaders who have led, and learned, from significant innovation initiatives. These innovators from across industries will share the major, and often difficult, strategic choices they faced and discuss the long-lasting consequences that resulted for their organization’s performance. The interviews will feature their experiences as well as summarize key lessons concerning what worked, what didn’t work and why. We hope you will find parallels between the strategic issues and approaches expressed here and within your own organization to reshape your thinking around innovation, making it more effective for growth and organizational success.
We were pleased by the opportunity to interview Bob Gamgort, the CEO of Pinnacle Foods. Pinnacle’s portfolio includes category leading brands such as Birds Eye, Duncan Hines, and Vlasic, and can be found in nearly 85 percent of American homes. Prior to joining Pinnacle in 2009, Mr. Gamgort served as the North American president of Mars, managing an $8 billion portfolio of confectionery, main meal, pet food and retail businesses in North America. Prior to joining Mars, he served as President of Major League Baseball Properties. Mr. Gamgort began his career at Kraft Foods where he served in key marketing, sales, corporate strategy and general management roles.
Q: What is your definition of innovation?
Bob Gamgort (BG): I think innovation is solving a problem or satisfying a need in a way that’s not been done before and then getting it to market in a way that increases brand or company value. Many people think of innovation strictly in product terms, but I believe innovation should be considered in a broader context. There's business model innovation, distribution innovation, marketing innovation, etc. In the consumer products business, innovation is too quickly associated with line extensions – I believe there’s much more opportunity to expand the view of innovation.
Q: What would be an example of one or two successful innovations in your career and what are some of the takeaways that you have from that?
BG: I think our recent launch of Duncan Hines Frosting Creations is a great example. For those who aren’t familiar with it, Frosting Creations is a first of its kind system in which bakers combine a variety of fun, unique flavor mixes into a flavorless frosting base to create a custom baking experience.
The key to its development was an understanding of the needs of both new and experienced Bakers and then translating them into a solution that was consistent with the values of the Duncan Hines brand. We see the Duncan Hines brand as an enabler of Bakers’ desire for self-expression. We’ve captured that sentiment in the brand’s tagline, “Bake On!”
Frosting Creations is a good example of how an innovative mindset can keep an established brand fresh. You have to remember that while your brand may have been around for a long time, your consumer franchise is constantly renewing itself. Every year there is a new group of teenagers that are being exposed to your brand for the first time. The balancing act is: how do you make sure that when they see this product they not only see a brand that their mother or father trusted, but also a brand that’s relevant for them, while at the same time being true to the loyal consumer by keeping the brand’s features and values consistent enough to maintain their loyalty?
We approach the challenge in two ways. We continuously renovate our existing products by delivering more benefits, whether it’s convenience, flavor or health and nutrition, and upgrading product quality and consistency. So that even people who have been with the brand for a long time see it as an improvement, not a change. You win with your current users as well as with your new users when you successfully renovate.
But there are times when we decide that we need an innovation to attract a new consumer base. The key is to stretch enough to attract the new group without drifting so far from your brand character that existing consumers see a disconnect.
I think an innovation like Frosting Creations demonstrates how that balance can be achieved. It's not a replacement for the traditionally flavored frosting that we currently sell -- there are many consumers and occasions for which these are the best solution. However, younger consumers today expect everything to be customized and personalized to their individual tastes. So Frosting Creations uniquely meets that need. Interestingly, we find that our long-term Duncan Hines consumers see Frosting Creations as an opportunity for more variety. They wouldn't necessarily use it all the time but would buy it for special occasions.
Again, as long as you’re consistent with the essence of your brand you can satisfy both the new consumer while staying true to your current consumers.
Q: That is a great example. It’s noteworthy that the team had the conviction to make such a big business leap versus focusing on its core, or a near adjacency. What was the strategy behind that conviction?
BG: The question I always ask is, How do you know what is far enough to expand the brand’s reach and how do you know when you’ve gone too far and have compromised the brand’s character? One of the ways to think about it is, Is your innovation idea attracting new users into your consumer franchise or is it expanding your business with current consumers into new usage occasions? I believe that focusing on one or the other at a time allows you to broaden your brand’s footprint while still maintaining a level of consistency. If you’re simultaneously doing both, you’ve probably strayed too far away from your brand. The key to this is having a tight definition of your brand essence. Our understanding of the Duncan Hines brand gave us confidence that the introduction of Frosting Creations was a great fit.
Q: Can you give an example of something where things didn't pan out the way that you fully expected and what kind of lessons you got from that?
BG: Unfortunately, if you’re going to work in innovation you’re also going to have a lot of examples of things that didn't work. That’s the nature of pushing the edge on creating the new.
I'll give you an example on Birds Eye – a brand that we acquired in 2009. Prior to the acquisition, the company had dramatically changed the trajectory of their business, as well as that of the frozen vegetable category, through the introduction of vegetables in Steamfresh packaging. Steamfresh is a self-venting bag that enables consumers to take the product directly from their freezer into the microwave. After cooking the consumer opens the bag and the finished product pours out steaming and colorful. It had some tremendous advantages over previous products. First of all, it improved taste. The consistency of the self-steaming process enhanced the product experience. Secondly, it was incredibly convenient; you didn't mess up a pot or pan that later needed to be cleaned. The third benefit is consumers never saw the vegetables in their frozen, or as some say “dead” state. So when they opened the bag for the first time, they saw steaming, colorful vegetables instead of ice crystals. It was a product innovation that was a hit across multiple fronts – taste, convenience and experience.
Excited by the success of Steamfresh vegetables, the team later introduced Steamfresh Meals by Birds Eye. They were complete meals in a steamable bag where proteins played the primary role and vegetables played a secondary role. When we acquired the company, the innovation was struggling and we made the decision to shut it down and focus our energy on innovations that held more promise. Our learning was first that Birds Eye stands for great vegetables. Therefore the quality of the vegetables has to be the key point of differentiation on any innovation. Second, whereas steaming offers a dramatic improvement in the quality of vegetables, it doesn’t always do the same for proteins. Finally, Steamfresh wasn’t the brand, Birds Eye was. The opportunity is to expand Birds Eye into new occasions, not steaming into new occasions.
We were able to take that valuable learning and apply it to Birds Eye Voila – a line of complete skillet meals with vegetables as the key point of difference, which recently became the number-one brand in the category.
Q. Tell me a little bit about creating a culture of innovation.
BG: An innovation culture comes from putting our consumers and our brands at the center of everything we do.
We work hard to immerse ourselves in the product – both ours and our competitors' -- continuously preparing and eating them, because we’re consumers as well as business people. We’ve designed our headquarters so that our development kitchens are visible and accessible by all employees. We’ve put focus group and sensory capabilities in our office to enable more direct interaction with consumers. We give samples and coupons to friends and family and ask for feedback and we publish the reports from our 800 number, where people call in with complaints and compliments, on our intranet. We may have a number of internal customers and priorities that we face every day, however we always have to remember that it’s our consumers that pay the bills and ultimately employ us.
We’ve also consulted with our key customers earlier in the innovation process. Getting their insight into how a new idea translates to their consumers and understanding how a product would work in their distribution system and retail environment is invaluable.
It’s important to recognize that everyone in the organization is part of the innovation process. There is a great saying that “the marketing and sales organizations make the first sale and the manufacturing and the R&D organizations make every sale after that”. The point is that getting a consumer to try a product once is critical, but it’s the experience that the consumer has after trial that will determine if the innovation is sustainable or not. Everyone in the company has a hand in the success of new product.
To that end we’ve worked hard to make sure all of our working patterns are cross-functional. That way the way we solve problems is not the marketing group does the analysis, the sales group sells to the customer, R&D group does the product development … with a number of handoffs. Rather it’s teamwork and cross-functionally solving an issue that delivers the best results.
To kick-start collaboration we’ve conducted a number of “interventions” that we call “innovation boot camp.” We handpick the cross-functional teams to work on specific challenges. We get them out of the office into a field environment. We have outside people who are academics coach them. They’re expected to come up with a set of hypotheses, prototype solutions, and develop a business model – all in three days. Guess what? In three days, they get it mostly right versus traditional process that could take three years. Plus they do it as a diverse, cross-functional team, having fun while working together.
While cross-functional teamwork is critical, so is the need for a champion. Every great innovation project I've ever seen also had a passionate champion behind it. They organized the team. They got people with different mindsets to work together. They kept the consumer in front at all times.
Finally, when I talk about leadership, I also need to mention the critical role of the senior team in creating an innovation culture. They have to set the mandate for innovation by linking it to the delivery of company success. At the same time they have to acknowledge that innovation requires time, you have to be patient for it to work, you have to acknowledge that the hit rate is sometimes going to be low, and you have to celebrate it when you have a good hypothesis and it didn’t work, not just celebrate those projects that succeed in the marketplace.
Q: Let’s talk a bit more about the innovation boot camp you referenced. Can you provide an example of a success that rose from that kind of effort?
BG: Vlasic Farmer’s Garden pickles would be a great example. In the context of the innovation boot camp, we said to the team, here is a category in which we are the leader. We understand the full supply chain from the agricultural side to the consumer experience. Historically, innovation hasn't been very successful in the category and we find ourselves in a position where everybody looks similar to each other and the only differentiation is price.
In the “Boot camp” environment, we connected the team with different consumers, different retail channels, and different markets, one of which was a traditional farmer’s market. They started looking at the handmade pickles available there -- they were in Mason jars and they had this homemade organic look to them. But when they tasted the product, they found that taste experience didn’t live up to the visual promise. Our current product actually tasted better. So they came back with the idea of: what if we made a handcrafted, high-quality pickle that didn't have any artificial anything in it? It would come from Vlasic, the authority on pickles. The flavors will be bolder. It’ll have extra vegetables in it, not just cucumbers, and will be visually different than anything on the shelf today. The team understood what the price points needed to be and what a pro-forma business model could look like. All of this was accomplished in three days. As soon as we saw the prototypes, which they handmade at the Boot camp, we wanted to launch it.
Now here’s where innovation needs to be flexible. The initial belief was it couldn't be shelf-stable, it needed to be refrigerated. So the first time we launched it, we put it in the fresh produce section. As a result we only achieved limited distribution because produce is a very complex distribution channel. But where it was available, it sold remarkably well and the feedback that we got from the consumers, food critics and the retailers was that they loved the product.
So we knew we had the right product idea but the wrong distribution. So we needed to be able to modify the product and make it shelf-stable. It took us a year to do it, but we launched this past summer and it’s on track to achieve 95 percent retail distribution.
It’s a good example of learning from an early challenge and sticking with a promising concept until you get it right.
Q: How do you reward innovation, whether it succeeds or fails, when you are creating the culture?
BG: Of course when innovation succeeds it's really easy to reward people. Success is transparent to all involved and while formal recognition is important, the primary reward is seeing their product on the shelf. So to me, the tougher question is how to reward and recognize really good innovation attempts that didn't make it? That requires a deliberate effort because the natural tendency of people is to bury the ideas that didn’t work. I think that's where the senior management really has to step-up and lead by example.
First by admitting that they were involved in the innovation process by saying, “We collectively thought this was a good idea. What did we learn from the experience? Where was our hypothesis right and where did we miss? Was it an issue with the strategy or the execution?” And then recognize and celebrate the quality of the learning. I believe that as long as you reward people for bringing the lessons learned forward and making the ideas better the next time around, you’ve made meaningful progress. It’s hard, it requires a real conscious effort, but it's really important.
Q: What kind of advice would you have for a young person starting out in innovation?
BG: They need to understand that successful innovation requires a mix of creative and consumer empathy skills, matched up with analytical skills and a business model mindset. It's at the intersection between all of those where innovation happens.
I think that many younger people who are thinking about moving into an innovation role believe that all of the action is at the white board. There is a part of that that's true, but I believe it's not innovation unless it actually makes it to the marketplace.
Therefore you have to be able to translate the big idea into a concept and a prototype and ultimately into a profitable business.
People who are great at innovation are comfortable dealing with ambiguity. They can live in a space where things are unfinished, wide-open, no answers, lack of clarity, in the early stages, then shift gears to be disciplined, structured and organized when the project moves toward commercialization.
It’s certainly a unique combination of skills. If they were plentiful, there would be a lot more innovation happening!