What kind of innovator is your company?
Good Innovators creates growth, revenue and brand following. Bad innovators deliver marginal products, put pressure on margin, and weaken their market value.
Make innovation a central characteristic of your brand and not only will the bottom line improve, but you will enhance customer loyalty, which arguably is more valuable over the long term than any short-term activity.
Truly loyal customers choose you over the competition, often without any consideration. They’re excited to keep up with your new releases. Consistently meeting their needs with products they want to buy, builds trust and the expectation of great things to come. Just look at some of the brands in technology where loyalty is almost devotional!
Looking at other consumer goods, be it a vegan sausage roll or brand new flavours from an old soft drink, or maybe the influx of peanut butter products we’ve seen over the last year, it’s a strategy that is proven to work among many of our favourite brands.
To become an innovation-led success story, it’s important to understand the essential traits that contribute to great innovation, and crucially, those that hinder it.
How not to innovate
Any pyramid-shaped structure doesn’t lend itself to successful innovation. In a hierarchical system, everything relies on top-down decisions. These are typically represented by long approval processes and essential senior buy-in decision making.
Both are the enemy of real progress at pace. Every decision is deferred to the HIPPO – the highest-paid person’s opinion – who may or may not have the appropriate information to make the call, or perhaps even the skill set!
Approvals go up a chain of command before instructions are filtered back down again. This leads to excessive meetings and discussions with little action. It is, however, the quickest way to kill innovation.
Want to test a new idea? First, you’ll need to ask for permission. But what if the right person isn’t available as they are tied up dealing with similar demands? Well, you’re going to have to wait.
With so much centralisation and responsibility, leading to pressurised decision-making, it’s easy to see why real innovation can look risky. It’s quicker, easier, and cheaper to stick with tried and tested products for existing customers, at known price points, and well-defined channels.
When decisions are made like this, the risks can go either way – a high-risk decision through ignorance and blind faith or, just as bad, a low-risk decision that stifles growth or worse erodes market share in a changing category.
This structure and the centralised approach are simply not conducive to successful innovation. Instead, a doom loop is created with every action making things worse. Poor decisions reduce success, which in turn increases pressure on the next decision.
Without the freedom to make meaningful contributions because they must strictly follow the HIPPO’s lead, employee motivation can suffer. The stagnant and conservative culture means that demotivated employees are less productive and less likely to stick around.
The bottom line
Lower profits, and higher production costs, mean that the company will invest in short-term quick wins to deliver much-needed revenue, including promotions and discounts. In the long run, this only serves to erode brand equity as discount becomes the expected norm.
When a product starts to lose value, external stakeholders such as retailers, distributors and suppliers also lose confidence. They don’t want to take on the risk of uninspiring products, so they demand higher listing fees and guarantees to clear stock.
With all of this negativity, shareholders see their investments decline in value. It isn’t then long before they too lose confidence and start looking for the exit.
While this may seem like an extreme example, it happens every day at failing companies.
Unlike their peers that are good at innovation, these companies are too slow to change and their days in business are numbered.
Getting innovation right
Where the hierarchical company failed, the company with a flat, agile structure comes out on top.
There’s no single decision-maker. Staff are hired because of their expertise, and they are entrusted to get on with it.
The leadership’s role, instead, is to set a clear vision and make sure that every member of the team understands it. They identify the major problems that need addressing before giving teams autonomy and empowerment to get on with solving them.
Removing red tape brings speed and agility to the innovation process. Teams have the freedom to experiment and be creative with ideas. Innovation becomes a collaborative and fluid process where everyone’s voice can be heard. Job satisfaction, as a result, goes up.
Data is King
Should we focus our messaging on our product’s nutritional benefits? Vypr it.
Good innovators use digital tools like Vypr to access real-time predictive customer insights, informing decisions based on what customers tell them they want. This completely removes the gamble of pursuing an idea based on history, assumption, or gut feel.
Vypr’s digital innovation lab provides brands, retailers, and manufacturers a reliable method to test every aspect of product innovation.
The innovation process is no longer about guessing what customers want, but about how to best deliver, refining, and optimising as you go. A new level of agility means teams can easily pivot. Robust data informs them of the ideas to progress and those to quickly abandon.
This approach creates a direct route towards the products that are going to receive acceptance from customers. There’s no need to cheapen the brand with discounts and promotions when you’re hitting your target with highly focused new product development.
Would customers prefer a share pack or separate individual items? Vypr it.
Agile Innovation is within reach
By adopting Agile Consumer Goods Innovation, your company will launch only the products that customers want to buy. Sales revenues will grow, and the costs of development fall. Motivated teams engender stability and predictable growth, which keeps shareholders happy. Innovation is the key driver of success in this rapidly changing retail world.
Get into the rhythm of success like this, and you’ll wonder how you ever accepted anything else.