Agile Innovation You Can Trust
The Role of Predictive Research as an Agility Enabler
“OMG! How did this happen?,” screams an inbound email from your brand manager. As you zoom in on the attached picture, the problem quickly comes into focus: A competitor has beaten you to market with a new product that’s a mirror image of one you’ve been developing for the past year—and theirs is already on the shelves of a big retailer.
This scenario isn’t unique. It plays out on a daily basis for many manufacturers, all of whom are feeling increasing pressure to develop more quickly at the expense of developing better. To many, this embodies what it means to be agile. If you ask manufacturers to define agile, they often respond by saying it means to develop faster and cheaper. But we know that’s not accurate, and we know the effect of thinking this way.
AGILE. THE WORD IS HAVING A BIT OF A MOMENT BEYOND TECH COMPANIES
In terms of buzz, the word “agile” has quickly climbed into the popular vernacular. But why is it being used as a surrogate for speed?
As explored in some of our most recent publications, two main forces are at play here:
- Speed-to-market has never been more important. And as a result, the majority of innovation professionals respond to time pressure by skipping important steps in the process, which impedes the quality of the innovation.
- Many companies get tunnel vision when they hear about the success of select startups. A breakout success in the startup realm doesn’t illuminate the countless failures that complement few successes. This can falsely suggest that thinking like a startup will generate success.
But amid all the buzz over a term, it’s important to understand the true principles of agile development that date back to 2001 so we can later understand how to better apply them in the FMCG world. Agile principles were born as tech companies grappled with the reality that current development practices—basically a series of handoffs from one department to another (the “waterfall method”)—was failing to produce working software. So a group of developers buckled down and established what became known as the “Manifesto for Agile Development.” It had one primary goal: develop software products focused on consumer needs that will succeed in an ever-changing market.
How did they plan to achieve their goal? By establishing collaborative, connected teams that would work in sprints, or cycles of iterative development and user feedback. Through these cycles, the teams would create minimum viable products as soon as possible for users to test. From there, they would collect data and determine which products worked best. Then they made updates and moved on to the next feature. Lather, rinse, repeat.
THREE MISINTERPRETATIONS ABOUT AGILE
As a business concept, agile has migrated well outside of the tech world, touting the benefits and buzz once grounded in the software space to an array of new industries and sectors. In the process, however, the meaning behind the term has frequently been misinterpreted.
In our work across the innovation landscape, we’ve identified three primary misinterpretations among the processes used by our innovation clients:
- In-market “beta” testing
- Think like a startup
- Start small
Aside from the fact that these approaches differ from true agile development, they rarely generate the desired business objective. Here’s why:
- Launching a product and attempting to adjust once it’s in market can be tempting, but it’s risky. For example, in a world where a few bad months in market will get you delisted, there isn’t time to build, measure, learn and iterate in a live consumer environment. Only 5% of poor-performing products survive in the market, and it takes six months to identify if a new product is a grower or a decliner if you have the right benchmarks.
- Successful startups typically don’t get to market quickly by skipping research and relying on gut instincts. Gut feeling decisions can be very expensive. The gap between the sales of an innovation in year one vs. what companies typically expect ranges from -35% in the U.S. to -45% in other markets. Small companies with small budgets can’t afford to fail, so they choose their battles wisely and focus on when to use which research technique.
- Opting to start in a test market or online first comes with a risk that you’ll struggle to scale and will likely stay small. Growers and decliners tend to reach maximum velocity fairly quickly and in about the same amount of time—so if you start small, you’ll likely stay small. Moreover, if your product appears in the second page of search results or later on the e-tailer, it is essentially the online equivalent of being delisted as sales can go down by 50%.
HOW CAN PREDICTIVE RESEARCH PLAY A ROLE IN THE AGILE FMCG WORLD?
In software development, agile means pushing a minimum viable product to a device upfront, and then sending updates as they’re developed in subsequent sprints. In tech software, the cost of initial failure is close to nothing, making agile an ideal approach to development. But is it a viable option for companies that develop physical products that sit on store shelves, both on and offline?
Yes…but there’s a smart way to go about it, and that means ensuring you have the right data and true consumer input before hitting the stores.
Agile market research helps you prototype your ideas in a safe environment and enables you to identify the best possible version of each prototype before you invest in more expensive execution steps. Here’s a few examples of how you can apply agile market research in the real world:
- Instead of iterating in the stores with a minimum viable product, you can use predictive technology to launch a minimum sustainable product, which can increase your chances of success by 3x.
- Instead of following your instincts, you can forecast and quickly simulate them in several market support scenarios to reduce your planned and execution gap to 5%.
- Instead of starting small and failing fast, you can safely win big by iterating on your product idea and sales expectations ahead of launch and use the insights to set the right expectations and ensure alignment in your supply chain.
The pace of change in the world is continually increasing, and that means manufacturers need to be more agile to grow—and survive. But being agile requires speed and smarts. That’s where agile research comes in. It can help manufacturers maximize learning and minimize risk and time to market. By continuously gathering reliable consumer insight in a safe environment, manufacturers can make quicker, more efficient decisions, which will improve the prospects for a successful launch.