Innovation in an uncertain world

The world outlook has seismically shifted since 2008, with the state of economies being a constant topic of scrutiny. Even in the past year, the impact is still strong, now made more complex by other socio-economic factors: The Arab Spring, fluctuating oil prices leading to higher production and distribution costs; poor harvests of many staple crops such as corn, wheat and potatoes that have led to higher ingredients costs; farmers reducing the amount of livestock they hold affecting meat prices; and ultimately consumers who are under pressure to make their incomes go further.

The global financial crisis, coupled with a technology shift, is creating new pressures on brands and impacting consumer trends which in turn are changing the ways companies drive their innovation programmes and use research to develop and launch new products. This has led to client insight teams needing to prove value to the business, and a far greater commercial focus than ever before. We see a shift to ‘weeding and feeding’: dismissing weaker ideas earlier in the innovation process and investing in fewer – but stronger – ideas for development.

Get to the winner quicker

With the additional pressure to avoid wasting time and money on unsuitable insights and ideas, more emphasis is now placed on the ‘fuzzy front end’. This is a strategic process to feed the innovation funnel with powerful product ideas based on deep consumer insights. Simply put, great consumer insights inspire powerful product ideas that can then be transformed into strong concepts – thus avoiding the trap of having to write and test an endless array of concepts in the hope that one or two might resonate with consumers.

The fuzzy front end starts with the consumer, understanding his or her behaviours, motivations, attitudes, and desires. It is also important to examine the brand, the category and the competition as critical inputs into articulating an innovation strategy. The innovation strategy then focuses the playing field for in-depth insight generation, which, if done correctly, will lead to ideas and ultimately concepts that will yield incremental brand growth.

Insights are at the heart of the fuzzy front end. An insight can be described as the revelation of a significant gap between consumers’ aspirations and what they perceive as available, which can be turned into a business opportunity. Aspirations can be both conscious and hidden, so recognising that consumers can have two faces requires deeper observation through ethnography. While a consumer may state that they lead a healthy lifestyle (the face that they show) their cupboards may well be full of junk food or they may only eat fruit if it is drowned in chocolate sauce (the face that is hidden).

Consumers do not shop in a vacuum and even more so now with the digital age providing immediate access to reviews, pricing comparison and choice. Likewise, innovation requires a clear appreciation of direct competitors, as well as a macro view where indirect competition may also be valid.

Lost in translation

Insights are just one component of the broader innovation process. When the concept performs below expectations, does this mean that the insight is at fault, or is it the other elements within the concept, or perhaps the concept is just written badly? This is a two-way street, and it’s the reason why poorly written concepts perform weakly despite originating from strong insights.

There is no one size fits all solution to this. Only by following a framework to generate insights, using this during the innovation process, and understanding their performance can you make corrections to ensure strong insights lead to strong concepts.

Archetypes activate actions

By evaluating performance against relevant competitors on the key metrics that drive trial purchase, marketers can better gauge the potential of their concepts: meeting a need (relevance), perception of price within a competitive context (expensiveness) and the ability to deliver unique benefits (differentiation) are proven measures of success based on Ipsos’ research and development. With competition fierce in all categories and shelf space at a premium, it is now more important than ever to move beyond the traditional thinking of purchase intent as the sole marker for success. The reality is that purchase intent has several drawbacks, including its tendency to favour ‘me too’ concepts and overlook breakthrough innovations.

To ensure that no worthy innovation opportunity goes unnoticed, a strategic understanding of concept archetypes provides a deeper understanding of potential. Ipsos has identified 12 archetypes for consumer packaged goods concepts that go beyond a simple ‘go’ / ‘no go’ decision. Instead, these archetypes are aimed at helping marketers to gain a deeper understanding of their innovation and decide on specific courses of action. For example, a concept identified as a ‘niche/targeted’ archetype will require the marketer to decide if the concept should be targeted, reworked to appeal to a broader audience, or stopped. On the other hand, a concept identified as a ‘premium’ archetype will require the marketer to decide whether or not to maintain the premium – based on the brand strategy.

Finding that sweet spot for ‘breakthrough’ would be lost without the archetype approach, but its discovery can be invigorating for a brand. Breakthrough concepts account for only 5% of concepts tested and typically have a mixed performance, which would lead to their dismissal. While very differentiated, they have issues around their believability, may be seen as expensive, deliver a weak purchase intent score and require a change in consumers’ behaviour. Purchase intent is misleading for breakthrough as it is too early for consumers to evaluate, contrasted with ‘me too’ concepts which typically generate high purchase intent scores because consumers are familiar with them.

While we may seek the holy grail of breakthrough innovation, not every initiative will meet the criteria. With archetypes (together with an early estimation of the sales potential), new product development can take on a new dimension. Knowing where you are heading at a much earlier stage creates benefits where a brand can ensure synchronicity, innovation platforms become defining pillars to build strong brands upon and a new product has a clear consumer-centric vision.

Henry Ford said: “Coming together is a beginning; keeping together is progress; working together is success.”

To be more successful and deliver greater success for your brand, the innovation journey must start earlier. Don’t start with concepts, as this will lead to mediocrity. Use the brand’s long-term plan as a call to action and initiate innovation platforms that can feed the growth of the brand for the next few years. To make better decisions for the future, measuring performance is critical to learn how insights work within your category, and translate into successful concepts. Use archetypes as the means to provide the actions to take next.

The high street is an unforgiving environment and many well-known brands have disappeared, or been taken over by those that have been able to adapt more readily. In an uncertain world, even innovation must evolve.