Cracking the DNA of ‘breakthrough innovation’ success
Thousands of new product launches fail in their first year, costing businesses millions of pounds, yet manufacturers can reverse these outcomes by changing their approach to innovation – according to the Nielsen Breakthrough Innovation Report for Europe, 2014.
The report – based on an analysis of 12,000 FMCG product launches across western Europe since 2011 – shows that two-thirds of new products never even achieve a mere 10,000 unit sales, and three-in-four fail to retain a retailer listing beyond their first year. But marketers can predictably and consistently overturn historical high failure rates to achieve 85% success, by changing their approach to innovation and building a passionate culture around innovation.
Through the study process, we found proof that innovation success is never just a remarkable coincidence. It’s about deliberate attempts to disrupt all aspects of the innovation process and challenge everyday norms, such as consumer attitudes, long-standing beliefs, launch mechanics, organisational behaviour and disciplines.
Our study identifies four principles that are common to every breakthrough innovation success:
1. Choice: get the right innovation – make the right choice of innovation to pursue, by walking in the shoes of the consumer to uncover key demand-driven insights. Ask questions like, why don’t people use a category? What causes them stress, confusion, inconvenience or compromise?
2. Process: get the innovation right – have the right organisational framework and processes to shape the chosen innovation into a market-ready offer that has relevance, differentiation and superiority; organisational culture must also allow weak innovation ideas to be filtered out before launch
3. Marketing: get the activation strategy right – creative marketing has to be original and has to tell the story of the innovation
4. Togetherness: get everyone right behind you – breakthrough success is the product of organisational togetherness, from top to bottom.
The absence of any one of these four components – no matter how good the other three – severely limits the possibility of breakthrough success.
In the report, we also spotlight real-life examples which have recently achieved breakthrough innovation success. Setting the bar high, for a product launch to earn the title of Breakthrough Innovation Winner, three criteria had to be met: distinctiveness (delivering a new proposition, not just a refinement); relevance (generating a minimum of £10million in year-one sales); and endurance (maintaining at least 85% of year-one sales in year two).
From the 12,000 product launches analysed, just seven met these testing criteria and are declared European Breakthrough Innovation Winners for 2014 by Nielsen:
- Foster’s Gold
- Magnum Infinity
- Milka Choco Supreme
- Mullerlight Greek-style Yogurt
- Lucozade Energy Pink Lemonade
- Oral-B Pro-Expert All-Around Protection
- Sodebo Salade et Compagnie
In addition, three further launches are well on the way to becoming Breakthrough Innovation Winners next year:
- Lay’s Xtra
- Cadbury Dairy Milk Marvellous Creations
- Ariel 3-in-1 Pods
While breakthrough innovation is not the product of luck, nothing in our analysis suggests innovation success is out of the reach of any marketer – regardless of whether the brand is large or small, local or multi-national, or even if the category is in decline.