2013 nielsen breakthrough innovation report
TRANSCRIPT
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7/28/2019 2013 Nielsen Breakthrough Innovation Report
1/32THE BREAKTHROUGH INNOVATION REPORT
N I E L S E NB r E a k t h r o u g h
IN N o v a t Io Nr E P o r tJUNE 2013
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B r E a k I N g
t h r o u g hThis report presents the story o this years Breakthrough InnovationWinners. Given the long odds and paramount importance o breakthrough
innovation, our irst purpose is to celebrate the winners and in the
pages that ollow well recognize high achievement. Second, we highlight
some essential themes and takeaways that can help marketers improve
their innovation perormance and win in the marketplace. Finally, we have
interviewed the winners to learn rom their experience enabling us to
share their stories, discoveries, and transerable insights.
Readers o the popular press may be orgiven or thinking that breakthroughinnovations generally have an i at the beginning or a .com at the end.
But, as this years Breakthrough Innovation Winners demonstrate, success
is rooted in the three core disciplines o Demand-Driven Innovation
none o which has much to do with technology.
DemanD-Driven insight
DemanD-Driven Development
pervasive leaDership
This ramework is a distillation o our research on more than 14,000
launches over a our-year period. For this 2013 report, we evaluated over
3,400 consumer products launched in 2011 identiying 14 Breakthrough
Innovation Winners. Each o this years winners illustrates the power o
embracing the demand-driven disciplines, and several o these stories
are shared in greater detail in the Winner Spotlights incorporated in this
report.
There is, o course, no shortage o successul incremental innovations
that generate compelling returns or their managers and owners. They
keep brands resh and relevant. But, however necessary they may be
to the growth and vitality o enduring brands, these closer-to-the-core
eorts are not the ones that create new platorms or growth or unleash
$200-million brands.
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Three core disciplines of demand-driven innovaTion
DemanD-DriveninsightUncovering latent demand lurking
in the unmet needs and poorly
perormed jobs in consumers lives
is at the core o breakthrough
innovation.
pervasiveleaDershipDriving the innovation process
with rigor and passion over the
countless hurdles that must be
cleared rom idea to launch to years
o in-market support requires top-
down, bottom-up, outside-in, and
inside-out leadership throughout a
committed organization.
DemanD-DrivenDevelopmentFrom beginning to end, the innovation
team must pursue the demand-driven
insight aithully and ully. The concept,
product, and go-to-market execution all
must align ree rom the constraints o
established processes, existing resources,
or marketplace assumptions in order to
realize a breakthrough proposition.
Nielsen analyzed 3,439 consumer products that were introduced in the U.S. in 2011 to determine which products yielded
truly breakthrough results. To be a Breakthrough Innovation Winner, a product needed to satisy three requirements:
relevance
Generate a minimum o $50
million in year-one U.S. sales.1
endurance
Achieve at least 90% o year-one sales
in year-two. This measure conirms a
sustained level o consumer demand while
allowing or some drop in revenue during
the transition rom trial to adoption.
disTincTiveness
Deliver a new value proposition to the
market. Ingredient reormulations, re-
packaging, size changes, repositioning,and other minor reinements to existing
brands are excluded.
The maKinG of Winners: nielsen BreaKThrouGh innovaTion criTeria
celeBraTinG The Winners
ColgatEoptiC WhitE
DaNNoNoikos grEEk
YogUrt
MoNstErrEhab
sparkliNgiCE
spECial kCraCkEr Chips
allEgraallErgY
DoWNYUNstopablEs
iN-Wash sCENtboostEr
FibEr oNE90 CaloriEbroWNiEs
MagNUMiCE CrEaM
MioliqUiD WatEr
ENhaNCEr
Milos kitChENhoME-stYlE
Dog trEats
rEEsEsMiNis
skiNNY CoWCaNDY
VElVEEtaChEEsY
skillEts
= See Winner Spotlights
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1 Synthesize and refine megatrends through the lenses of
your brands. Consider how these megatrends might create
new consumer demands and new opportunities or your
brands and organizational capabilities whether its aging
populations, personalization, mobility, changing palates,
health and wellness, and on-the-go eating just to name a
ew. Tapping multiple trends, Fiber One created a brownie
that promised a deliciously indulgent treat while delivering
a large helping o iber and kept the whole thing at 90
calories.
2 Walk in your customers shoes to understand deeply thecircumstances in which they pull your brand into their lives.
Consumers resolve any recurring need in a variety o dierent
and sometimes unexpected ways. These surprises can
challenge accepted category boundaries and presumed
competitors and reveal opportunities. Alternatively, search
or the pain points and nuisances that recur in consumers
lives. These are the pulses o unmet demand. As soon as
researchers at Monster Beverage Company observed
customers pouring energy drinks into their workout bottles
they knew there was an opportunity or a noncarbonated
energy+hydration oering. The insight eventually led to
Monster Rehab.
3 Identify nonconsumers or circumstances of nonconsumption
identiy groups o potential customers who due to lack o
wealth, expertise, or access ind consumption impossible
inconvenient, or unsatisying. These populations can be ripe
or category expansion. Downy Unstopables dramatically
expanded the laundry detergent additives category, o
example, by drawing in a neglected pool o consumersseeking long-lasting ragrance. The journey to launch
Reeses Minis began with research to identiy barriers to
consumption: What did candy eaters consume when the
were not choosing Reeses?
4 Identify over-served consumers and develop a suitable
oering. More oten than you might think, opportunity lies in
neglected pools o demand where simpler, less expensive, o
discipline #1
DEMaND-DrIvENINSIghtiDENtiFYiNg UNMEt DEMaND
This is where the quest begins: the search to identiy the unarticulated
desires, partially expressed needs, and recurring rustrations in
consumers lives. Rarely does latent demand pop neatly rom customer
surveys or ocus groups. As Henry Ford amously observed, i he had
asked people what they wanted, they would have said aster horses. Morerecently, Steve Jobs noted that consumers cant describe what theyve
never experienced.2
six approaches for idenTifyinG unmeT demand
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more convenient oerings can thrive. This does not necessarily
mean low-end. In many cases, this involves tailoring a
proessional grade product to mainstream demand. For
consumers seeking eective teeth whitening without the cost
or inconvenience o strips or proessional services, Colgates
Optic White product line was a game-changer.
5 Find consumer desires for which your distinctive brand equity
would provide value. Are there emerging growth categories
to which certain consumers would be attracted by qualities
powerully associated with your brand? Are there missing
beneits in a category or perhaps in a particular region thatyou can deliver? It would have been all too easy to cede the
Greek yogurt market to Chobani, but Dannon perceived that
a great product with their brand could expand the category
and uel growth. They moved very quickly with a taste-test-
winning product, broad distribution, and their powerul
brand, propelling Dannon Oikos past $275 million in irst-year
sales.4 Dannon also ound that Greek was an attribute that
could proitably expand established brands such as Activia
and Light & Fit. Critically, Dannon did not allow Chobanis
impressive results to deine the category or constrain th
thinking. Certainly, they did not consider ceding the spa
I anything, Chobanis success expanded their horizons a
energized their eorts.
6 Challenge assumptions about what consumers value, grow
drivers or the uture, true competition and alternativ
category boundaries, and the prevailing business model. R
back the accepted barriers limiting what the organization ca
and cannot do. Recognize that product attributes constit
just one dimension o potential value creation. Revisit yo
dead letter oice o innovation. Upon witnessing competisuccess, marketers are heard to exclaim, We thought o th
as requently as, Why didnt we think o that? Be relentles
curious and keep asking why. As the Winner Spotlights reve
Del Monte acknowledged, You cant do transormation h
wayits riskier to go slow or partially commitand everyo
rom marketing to sales to fnance has to ully commit and
all in.
Breakthrough Winners painstakingly sit through extensive research and
complex data to identiy the weak signals and map the hazy contours
o latent demand. Expertise, curiosity, and persistence are required or
this work. In studying this year s winners, as well as those rom the priorthree years, weve learned that there is no simple demand-driven insight
cookbook. However, we have identiied six successul approaches, which
we share below.
Searching or opportunity by exploring the landscape o latent demand is
no simple task. Its a voyage o negative discovery: searching or whats
missing and imperect in consumers lives. Insights that uncover latent
demand require hard work and the courage to challenge convention.
They require looking at the things everyone sees and noticing things
that others do not. The search pays o: as innovation authority Clayton
Christensen observed, Creating new markets is more rewarding and lessrisky than entering established markets against entrenched competitors.3
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discipline #2
DEMaND-DrIvENDEvELoPMENtFroM iNsight to laUNCh
aND bEYoND
Demand-driven insight is a prerequisite or breakthrough success, but
it oten challenges accepted category boundaries. Consumers dont
live their lives within the crisp conines o existing UPC classiications.
Latent demand rarely organizes itsel neatly into demographic buckets or
aligns with other amiliar proxies. When demand challenges companies
traditional ways o thinking, managers oten yield to the powerul process
disciplines, stage gates, timelines, incentives, and cultural orces that
compel conormity.
Breakthrough Innovation Winners achieve uncommon results because they
pursue, shape, develop, and activate insights with aithul adherence to
the speciications o consumer demand. They eschew alse comorts and
advocate or the consumer in the ace o intense organizational pressures
that might compel a more conventional path.
The main and oten only advantage that many successul start-
ups wield against large and entrenched competitors is what they lack:
organizational and operational constraints that mold the uture in the
image o the past.
Del Montes VP o Innovation, Geo Tanner, recalled the challenge the
Milos Kitchen team aced in staying true to their core insight. From the
outset, we were committed to launching a new-to-the-world brand that
would transorm the category and deliver topline growth. This led to our
establishing the Milos team almost as a skunk works, with considerable
autonomy and decision-making authority.
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Breakthrough innovators dont shy away rom opportunity, even when
another brand has historically dominated. Krats Velveeta Cheesy Skillets
did not succeed with a
dinner mix by beating the
category leader. Rather, the
company opted to expand
the category by leveraging
Velveetas strengths,
overturning internally held
truths and addressing
latent consumer demand
or exciting and easy dinner
solutions.
These winners challengedconvention and triumphed by expanding or transorming categories
a Breakthrough Innovation Winner hallmark. Through unencumbered,
demand-driven development, Breakthrough Innovation Winners create
visible separation rom the pack. The Winner Spotlights eatured in this
report showcase successul, transerable approaches, but there is a
common theme: no shortcuts. As Thomas Edison remarked, Opportunity
is missed by most people because it is dressed in overalls and looks like
work.5
Given the high stakes involved and the monumental challenges
that demand-driven development aces, success to and throughimplementation is eectively impossible without the third, essential pillar
o the Demand-Driven Innovation ramework: Pervasive Leadership.
BreaKthroUgh innovators
Dont shy away from
opportUnit y, even when
another BranD has
historiCally D ominateD.
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discipline #3
PErvaSIvELEaDErShIPthE DNa oF brEakthroUgh sUCCEss
The annals o Breakthrough Innovation Winners are rich with leadership
qualities o many types o vision, o persistence, o creativity and
at many organizational levels, rom the executive suite to R&D labs,
to retail store loors. The core, transerable leadership lesson rom the
Breakthrough Innovation Winners is that leadership is not merely present,it is pervasive. It is top down and bottom up. There is a perceptible
alignment with the innovation mission independent o any organization
chart or reporting lines.
What we have discovered is a version o Andy Groves maxim that only
the paranoid survive.6Breakthrough Innovation teams exhibit a charged
awareness o the hazards posed by the pressure to conorm to established
processes and entrenched belies. This iconoclastic mindset is highly
unusual. There is an audacity to Breakthrough Innovation as it does not
work without a real disregard or the status quo. Without leadership at
all levels to identiy, shape, and ulill demand-driven insights through totheir ullest, uncompromised realization, breakthroughs will never have a
chance. We identiy three essential dimensions o Pervasive Leadership.
leaDership that BriDges BoUnDaries
Integration and alignment among all unctions touching on the innovation
process is essential. Leadership in this context maniests as ownership o
outcomes and an eagerness to collaborate in the interest o achieving
goals. Were all aware o how important CEO involvement is, but seeing isbelieving. As Krat Foods Group, VP o Innovation Barry Calpino recalled,
when Chie Executive Oicer Tony Vernon made it a regular practice to
participate in quarterly innovation meetings, people noticed. Pervasive
leadership always emanates rom the top, but real alignment and
commitment require more than chie executive exhortations.
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leaDership that Drives foCUs
anD sUstains exeCUtion
Winners apply a process rigor that has much more in common with a
world-class manuacturing operation than with a reewheeling idea actory.
Leadership must actively establish clear priorities, decision-making
criteria, responsibilities, and timelines. There is urgency and constant
communication. Leadership is the heart, pumping the oxygenated bloodo innovation through the operational and executional limbs.
There is little rest. Leaders embrace a three-to-ive year timerame that
encompasses development, launch, support, and extension. Absent
active and persistent leadership, the gravitational orces o established
processes, entrenched belies, and satisicing stage gates will bend
innovation towards conormity rather than transormation.
leaDership that CUltivates
shareD Core Beliefs
Leadership instills the belie that innovation is essential. Breakthrough
Innovation Winners redeine the impossible as possible otherwise they
would not be able to do the impossible. Del Montes journey to launch
Milos Kitchen dog treats began by acknowledging i we were going to
innovate in dog treats, we were not simply going to copy the competition.
We were not going to be a ollower. We wanted to deine the category on
our own terms to expand the category, not just take share. Winners
have attitude and take ownership. I that sounds exaggerated, spend some
time with the Skinny Cow team at Nestl, or the Velveeta or MiO teams atKrat, the Milos team at Del Monte, or the Magnum team at Unilever. It is
impossible not to see that Breakthrough Innovation Winners systematically
stretch the limits o possibility. Winning requires more than believing, but
there is no greatness or breakthrough without belie.
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2013 Winners - sprinTers
ProfILES IN
actIvatIoNthE MarathoNEr aND spriNtEr
approaChEs
Consistent with our indings rom the Breakthrough Innovation Winners
o 2012, this years winners ollowed one o two activation strategies:
Sprinter or Marathoner. One can think o Sprinters as ollowing a strong
push strategy, while Marathoners trust consumers to pull brands into
their lives.
Sprinters accelerate distribution o their new products, rapidly reaching
their maximum penetration. They also spend heavily on advertisingsupport during the irst year. The result is that they achieve very high
levels o trial and sales in year-one. Then Sprinters pull back on advertising
alleGra allerGy
$680$690 million
milos KiTchen
home-sTyle
doG TreaTs
$175$185 million
mio liquid
WaTer
enhancer
$265$275 million
reeses minis
$230$240 million
sKinny coW
candy
$115$125 million
velveeTa cheesy
sKilleTs
$170$180 million
colGaTe
opTic WhiTe
$250$260 million
dannon oiKos
GreeK yoGurT
$735$745 million
doWny
unsTopaBles
in-Wash scenT
BoosTer
$145$155 million
fiBer one
90 calorie
BroWnies
$210$220 million
maGnum
ice cream
$225$235 million
monsTer rehaB
$535$545 million
sparKlinG ice
$215$225 million
special K
cracKer chips
$180$190 million
2013 Winners - maraThoner s
Two-Year Revenue Two-Year Revenue
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support by almost one-hal in the second year and both distribution and
sales levels remain stable through the second and third years in market.
This years Sprinters include Allegra, MiO, Reeses Minis, Milos Kitchen,
Skinny Cow Candy, and Velveeta Cheesy Skillets.
By contrast, Marathoners take a more deliberate approach. They spend
one-third less than Sprinters on advertising in the irst year, and builddistribution more gradually. Consequently, their sales levels in year-one
while impressive are typically only 60% o what Sprinters achieve.
However, they continue to build distribution in years one, two and three,
and maintain relatively consistent levels o advertising support. The result?
Marathoners sales grow at a 46% annual rate, matching Sprinters in
year-two and surpassing them in year-three. And they achieve these sales
levels with less than one-hal the advertising spend than the average
amount allocated by Sprinters.
Marathoners include brands rom smaller companies that lack the
resources to adopt a Sprinter model, such as Monster Rehab and SparklingICE, as well as launches rom larger companies oten when launching
urther-rom-the-core brands (i.e., Optic White, Magnum, Unstopables,
and Oikos).
YEAR 3YEAR 2YEAR 1YEAR 0
SPRINTER MARATHONER
0
$50
$100
$150
$200
SALES
LEVEL
AVERAGE SALES LEVELS IN MILLIONS OF DOLLARS
Source: Nielsen ScanTrack, 20082013
2012 Winners
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W I N N E rS P o t L I g h t Sspotlight 1 : rEEsEs MiNis
spotlight 2: MagNUM iCE CrEaM
spotlight 3: allEgra allErgY
spotlight 4: Milos kitChEN hoME-stYlE Dog trEats
spotlight 5: Mio liqUiD WatEr ENhaNCEr
spotlight 6: skiNNY CoW CaNDY
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spotlight #1
rEESES MINISthE pErFECt CoMbiNatioN oF
ChoColatE, pEaNUt bUttEr aND
iNNoVatioN
Mike DePanilis was the VP Shopper Marketing responsible or the Reeses
ranchise in 2011 and, as he assessed the venerable brands situation,
the indings were concerning: growth was lower than the category, and
recent innovations had relied on close-in extensions and short-term
limited editions. DePanilis pulled no punches, We had a leaky bucket
and were ailing badly. Recent launches had been margin-dilutive,
cannibalistic, and o-equity. Our process systematically underperormed
and that poor perormance reinorced a mindset o underachievement.
In short, Reeses recent innovation track record showed no expansion o
the category just a zero-sum game that ailed to deliver excitement or
customers or results or Hersheys.
Like many Breakthrough Winners, Hersheys march to greatness began
with our elements:
A clear-eyed assessment o the current reality
A clear sense o ownership Ours is a what have you done or me
lately culture, so solving our growth problem was on me and my
team. Failure to innovate and ailure to grow were simply unacceptable
outcomes.
A compelling call to action We set clear criteria or innovation
ideas in an eort to break with our past. From here on, innovation
proposals had to deliver on a new usage occasion or bring new users into
the category.
A recommitment to the brands core value We reairmed our core
brand equity as the perect combination o chocolate and peanut
butter, and we required all innovation ideas to reinorce and leverage
that core equity. Again, looking at our recent past, DePanilis
elaborated, there was a pattern o straying rom all that we had built
up, and we had to embrace our strengths.
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DePanilis also challenged his team to think beyond product-centric
innovation. Our solution had always been a new color or lavor or produc
tweak. Speciically, we started thinking about packagingand marketingas
innovation levers to pull.
With a clear diagnosis, urgent sense o purpose, and exacting criteriaDePanilis and his team began the insight process: a search or unme
demand that would address neglected usage occasions or engage new
customers.
We had a hypothesis that we wanted to explore with qualitative research,
DePanilis began. The speciic hypothesis is now unimportant, but we
had committed to 24 ocus groups to lesh out our idea. Well, 10-minutes
into the irst session, a participant speaks up: So heres the way I see it
you want me to buy a solution to a problem that doesnt exist. The room
went silent. The ocus group moderator called a break to huddle with the
Reeses team: Now what? the moderator asked.
We had to think quickly on our eet and develop an alternative plan,
DePanilis recalled. What were we going to do? Scrap the research?
We returned to our core criteria around new usage occasions and new
consumers or a quick brainstorm. We instructed the moderator to explore
what the group members consume when theyre having candy and not
choosing Reeses or simply hold a barriers to usage conversation.
What unolded was electriying to the Reeses team: Basically we
heard people describe all the ways that Reeses provided an inadequate
solution to major usage occasions notably, in the car and at work
Unwrapping was a hassle, eating was messy, and the paper liners created
a guilt-inducing tally o consumption. By identiying all these barriers to
consumption, consumers were revealing latent demand and scripting ou
innovation brie. DePanilis acknowledged, Truth is, we got lucky in wha
we came up with because we were asking the right questions, looking
in the right places based on our criteria around category expansion.
had a talented team o brand marketers and consumer researchers that
knew the consumer inside and out to assist me, said DePanilis. All the
arrows were pointing at a theme wed tried but never ully embraced: wha
the industry reers to as hand-to-mouth consumption.
Hand-to-mouth was a amiliar theme to us. We had this Pieces concept
that wed tried with York, Almond Joy, and Special Dark, but there were
inevitably compromises in delivering the ull taste experience. We knew
rom our research that Reeses delivers a unique emotional experience
not just a physical product. In short, our prior eorts with these othe
items were not totally leveraging the powerul equity o these great
brands. They were compromise solutions that delivered middling results
we haD the
insight,
BUt the
teChnology
to proDUCe
a perfeCt
reeses minis
DiD not exist.
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The opportunity was or a hand-to-mouth oering that delivered an
uncompromised solution to these neglected usage occasions consistent
with the eating experience o the brand.
We had the insight, but the technology to produce a perect Reeses
Minis did not exist. There is a ratio o peanut butter to chocolate, quality
specs or ingredients, viscosity parameters or the peanut butter, and
myriad variables that deine the real Reeses. We pushed on the Product
Development team, and they really rose to the challenge. This was
not a simple manuacturing ix, and solving it required collaboration
across Sourcing, Innovation, Logistics and Sales as well as R&D and
Manuacturing. This was an organization-wide collaboration, a massive
undertaking, and a major team accomplishment.
Product attributes were part o the consumer requirement, but DePanilis
coaxed his team to activate additional innovation levers: We sought
innovation in the packaging and the marketing in addition to product.
Delivering unwrapped Reeses in a resealable bag that stood up at shel
was an essential dimension o ulilling the consumer requirement and
reinorced the hand-to-mouth eating experience. From a marketing
perspective, it was about alignment and execution: getting the creative,
the media weights, the requency, and the seasonality in seamless
alignment with the unctional and emotional experience our customers
desired.
Breakthrough success didnt come easily to the
Reeses team. Their clear initial criteria, their
willingness to adapt to new inormation, their
relentless adherence to demand-driven insight,
their organizational alignment, and their sustained
in-market execution all proved essential to a brand
launch that generated over $100 million in year-
one sales.
Furthermore, Reeses Minis success provided an
operational blueprint and innovation platorm
that Hersheys successully leveraged to launch
Minis versions o other brands with conidence
and impact. The success o this initiative was made
possible by a broad cross-unctional team consisting o Operations,
Packaging, Engineering, Research, Sales and Marketing, which worked
together collaboratively supporting one another. It wouldnt have occurred
without the support o everyone.
Sometimes you can make it big by going small. Reeses Minis: a huge win
or Hersheys and a bigtime Breakthrough Winner.
this was an
organization-wiDe
CollaBoration, a
massive UnDertaKing,
anD a major team
aCComplishment.
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MagNuM
IcE crEaMpUttiNg soME stYlE iNto iCE CrEaM
Unilevers Magnum brand generated year-one sales o $95 million and
year-two sales o $136 million. While success may look straightorward
in hindsight bringing a stylish, high-end oering into a relatively
quiescent category thats not the real story. For starters, and despite
Magnums success in other markets, U.S. entry plans met signiicant
internal skepticism. Responsible or the Magnum launch, Alie Vivian,VP Rereshments U.S., Unilever, recalls the initial reception to the idea,
summarizing, Let me get this right, you want to come to the largest
ice cream market in the world and introduce chocolate-covered vanilla as
new?
As Vivian noted, the irst major challenge was to break Unilevers internal
paradigm o the ice cream category. That paradigm was rooted in
product-centric notions o innovation. From inexpensive amily gallons
to ultra-premium varieties, the historic category ocus was primarily on
the physical product and packaging. What the Unilever insights team
uncovered were three core indings:
The category had lost excitement in the U.S. grocery business
Glamour, decadence, and sexiness were powerul, relevant
emotional dimensions o indulgence qualities more ully explored
in the super-premium chocolate business, but largely absent rom
the ice cream category
Unilevers global insights team urther identiied a compelling pool
o consumers who seek style, indulgence, sexiness, and decadence
in their lives
The Magnum team concluded that nothing in the U.S. market wasdelivering sophisticated elegance and high style. While Magnum was
bringing product innovation and a super-premium product to market,
the success ormula was not only rooted in the unctional characteristics
o the physical product. From the beginning, Magnum was about
transorming a category by creating a liestyle brand that would employ
luscious and decadent ice cream as its vehicle or satisying pleasure-
seeking consumers.
spotlight #2
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We wanted to take satisying indulgence not only to a new level, Vivian
gushed, but to a whole new space. This was never just about ice cream.
Magnum was never a market-share play. From the beginning we wanted
to transorm, energize, and expand the category. The Magnum team was
convinced that the emotional and social elements o a true liestyle brand
were not just absent in the category but were powerully relevant to a rich
pool o latent consumer demand. Extensive research and global experience
supported their conidence.
Notably, and as with many other Breakthrough Winners, the Magnum mindset
was, How big can we make this? Not an idle question or aspiration, it was
a motivational orce that lowed rom the top o Unilever and throughout
the entire organization: Magnum would be big, it would delight American
consumers, and it would transorm the category.
Magnums launch strategy relected the objective o transorming theice cream aisle with an entirely new brand energy. Creative direction was
entrusted to ashion icon Karl Lagereld in the context o a high-visibility
engagement with the ashion industry. Since when do you see ice cream on
red carpets and runways? Magnum was clearly no ordinary ice cream or
run-o-the-mill brand.
But image isnt everything. Retailers were essential collaborators, and Magnum
engaged them with a three-pronged promise that the product would:
Energize the reezer aisle
Expand the ice cream category Increase margins
Aligning Magnums strategy with the economic incentives o retailers was
a critical success actor. And this is just the beginning.
Platorm extensions and new launches are already in the market or 2013
and in the works or 2014 and 2015. Again illustrating a Breakthrough
Innovation Winnerhallmark, the Magnum launch is a sustained, multiyear
commitment.
As sweet as the Magnum success is, and as we know rom BreakthroughInnovation Winnerindings as well as rom years o client work, the popular
press oten gets it wrong when the high-gloss story o innovation is told
rom 30,000 eet. Innovation is hard, hard work and success is a unction
o breaking through walls and overcoming setbacks. As Vivian remarked,
I can give a long list o all the things we struggled with: rom scaling
the supply chain to getting the pricing right to agreeing on the branding
strategy to balancing the demands o dierent channel partners...it would
be a long list.
But, or Breakthrough Winners, the only impossible is ailure.
we wanteD
to taKe
satisfying
inDUlgenCe
not only to
a new level,
BUt to a
whole new
spaCe. this
was never
jUst aBoUt
iCe Cream.
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aLLEgra aLLErgYNothiNg to sNEEzE at
When youre a prescription brand moving to a crowded over-the-counter
(OTC) marketplace, success is ar rom certain. That was the case when
Sanoi/Chattem introduced Allegra to consumers in 2011. Entrenched
brands such as Claritin
, Zyrtec
, and low-cost Benadryl
were alreadycrowding the allergy relie aisle. That didnt stop Richard Spangler, Senior
Director o Marketing, Chattem, and his team rom boldly betting big that
Allegra would be a success.
Despite the myriad products available, many allergy suerers still ound
themselves making an undesirable trade-o one that Chattems insight
team had identiied. Either their medicine was too slow-acting when they
irst took it or it caused drowsiness. No matter what choice suerers
made, they elt that they were sacriicing, and it was that word rom the
consumer that energized and ocused the Allegra team. The problem in
context: allergy symptoms peak in the spring seasons when people areactive and outdoors. Existing solutions that addressed their symptoms
made them eel drowsy and listless, so consumers had to choose between
living in the moment and suering, or taking a medication and eeling
drowsy. In addition to providing complete relie without drowsiness,
living in the moment meant that solutions needed to work ast when
symptoms irst appeared, so this was another essential element o the
ideal solution that Chattem knew they had to deliver.
Despite a crowded market, Chattem saw a huge opportunity i they could
introduce a brand that resolved the persistent consumer trade-o.
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While Chattem R&D was conident they had the beneit bundle nailed, the
consumer engagement plan was no less critical. The allergy relie category
was not only crowded with brands, it was also crowded with claims, so
simply making a promise through advertising was not enough. The Allegra
team worked with research, creative, and media partners to develop a
well-tested campaign that connected with allergy symptom suerers with
empathy and relevance. The creative ully captured the circumstances o
the suerer and the tension o the trade-o.
Like all Breakthrough Winners, Allegra took root in a poorly addressed
consumer demand. The team developed a message that incorporatedall the essential beneits desired by allergy suerers. Brand imagery and
advertising messaging spoke to the emotional and social dimensions o
consumers needs how they wanted to eel and how they wanted to be
with those around them.
As Allegra illustrates, being a late entrant to a crowded market can
nonetheless prove highly lucrative if established players are ailing to
address essential dimensions o consumer demand, and if the late
entrant addresses the unctional, emotional, and social dimensions o
the consumer need, and if the late entrant activates in market with an
engaging, eective communication and channel strategy to bring thebrand to lie or consumers on a grand scale.
Chattem saw a hUge
opportUnity if they CoUlD
resolve the persistent
ConsUmer traDe-off.
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MILoS kItchENhoME-St YLE Dog
trEatStraNsForMiNg a CatEgorY
In recent years, Del Monte has been ocused on building its innovation
DNA, said Geo Tanner, Del Montes Vice President o Innovation.
Weve been looking at how we can better support it organizationally,structurally, and philosophically really wire it into our culture.
Back in 2010 a small group o us started working on a big idea. Not
exactly a skunk works, but pretty close, Tanner described. We put a ew
stakes in the ground rom the outset, Tanner recalled. We decided that
i we were going to innovate in dog treats, we were not simply going to
copy the competition. We were not going to be a ollower. We wanted to
deine the category on our own terms to expand the category, not just
take share.
The small team o highly talented, entrepreneurial cross-unctionalleaders on the Milos Kitchen team had a total belie and commitment to
the opportunity and vision. According to Tanner, This was probably the
single most important actor in the success o the launch.
The insights team went to work, and one inding was that while the
pet ood category had seen a steady increase in premium brands and,
speciically, human-quality ood, the pet treats category lagged. In act,
pet accessories and services such as insurance and grooming had all seen
successul, premium oerings in step with a well-understood trend o
pet as amily member. This was one o the early signs that the latent
demand pool could oer a signiicant opportunity.
Tanners colleague and Vice President o Insights, Courtney Moore, led
the research to get to the truth. Arguably the breakthrough insight came
rom a unique research methodology in which the company observed the
behaviors and underlying thought processes o consumers when they
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were told they could no longer use their avorite treats. What they learned
in the research, in combination with numerous supporting studies, led to
Milos Kitchens successul brand position o wholesome like human.
The deining characteristic o the consumer-demand pool was that pets
held equal or near-equal status with other amily members.
Armed with a disruptive insight, the team then worked to bring it to lie
across every touch point. The brand name was careully chosen, with
Kitchen connoting not just careul preparation and high quality ood,
but increasingly the place where amily members both two-legged and
our-legged spend time together. Activating the insight also led to a
window on the packaging that visibly showcased the product, the use o a
real person with her dog on the ront panel (a irst or the category), anda TV spot that deliberately showed the dog and her person at an equal
level, with the snack proudly displayed in serving bowls.
The team had their insight and proposition, but as is the case with most
disruptive ideas, they aced many signiicant challenges and obstacles on
the road to making their vision a reality. The teams dogged persistence
and grit paid o, and Milos Kitchen went rom concept to shel.
Tanner and Moore were conident enough in their research indings and
their executional capabilities that they convinced management to bet big
believing that the opportunity should be executed with huge supportor not done at all. As Tanner recalled, You cant do transormation hal
way. We were convinced that it was riskier to go slow or partially commit.
We really elt that we had the chance to transorm a category and build a
powerul new brand. This meant doing the media campaign, putting the
team on a plane to meet with our channel partners, executing in-store,
and engaging the sales orce. It was all part o a single strategy. There was
nothing to hedge, no optional elements.
At a breakneck pace 14-months rom idea to launch a Breakthrough
Winner was in the market. Year-one sales exceeded $75 million and
year-two sales grew past $100 million. Today, with new ownershipcommitted to consumer understanding and investment in growth, there
is now an internal expectation and strong support or transormational
innovation. I believe that the success o Milos Kitchen has played a part
in building a more robust innovation runway at Del Monte, said Tanner.
we wereConvinCeD
that it was
risKier to
go slow or
partiallyCommit.
we really
felt that
we haD the
ChanCe to
transform
a Category
anD BUilD a
powerfUl
new BranD.
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MIo LIquID
WatEr ENhaNcErkraFts iNNoVatioN rEVolUtioN
aND hoW to bUilD a platForM For
sUstaiNED groWth
Its amazing whats not possible i you believe its impossible. I an
organization believes that it is incapable o breakthrough innovation, the
prophesy will be ulilled. I the lore o innovation within an organization
is the memory o epic ailure, dollars wasted and careers shortened, whos
likely to aspire to lead that utile charge?
This pessimistic mindset about innovation can take hold even in a
company as successul as Krat Foods, with some o the best-known ood
brands on the planet. Where one might expect to ind swagger, there was
atalism: it was a cant do innovation culture stuck in a cycle o ailure,
small ideas with even smaller levels o support behind them. Whats even
more surprising? This is not ancient history, this was 2010.
So how do you, in the words o VP o Innovation at Krat Foods Group,
Barry Calpino, go rom worst to irst? How do you move rom launching
130 tactical, uninspired, hal-eorts to bankrolling 12 big initiatives with
conidence and unprecedented success?
step 1:
faCe realityI your company is underperorming in innovation, acknowledge it openly
and bluntly. In Krats case this required the courage to declare, Right
now we are at the bottom o the pack at innovation.
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step 2:taKe an honest looK in the mirror
Identiy the enemy. It might be a resource issue. Sometimes a process law
is to blame. Occasionally metrics and analytic tools need to be changed.
For Krat, the honest look revealed the biggest detriment was a mental
model grounded in ailure: thinking small, not investing, and a resultingculture o we cant and subsequently that innovation doesnt matter
here. Sel-created and sel-ulilling. Belie is essential, and belie in ailure
is devastating. One quick check is to collect the innovation mythology and
lore o an organization: are tales told o crowning achievement or o serial
deeat? Belie is destiny, and innovation success cannot take root in a
culture convinced or in a rut o ailure.
step 3:start the revolUtion
We will transorm our innovation capabilities, our success rates, and
our mental models. It is simply unacceptable and unsustainable to ail at
launching successul growth products. Having a CEO leaning in helps,
as CEO Tony Vernons involvement illustrates.
step 4:thinK Big
When the goal is breakthrough innovation, ask, How big can this be?
and What type o support do we need to put behind ideas to make them
truly big? not What is the minimum threshold o acceptability or
spending?
step 5:taKe a long-term view of sUCCess
This doesnt mean being too patient or impact. It means committing
to supporting successes or two-plus years. Launch and leave is not a
winning strategy or breakthrough innovations.
step 6:reCognize yoUr organizations strength
Embrace and energize them! In Krats case this meant:
Great brands
Powerul R&D organization
Extensive, skilled sales orce
Retail partners clamoring or innovation
Unexplored insights
Krat had some pretty powerul innovation assets or an organization
convinced o the improbability o innovation success.
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step 7:Design anD implement an
enD-to-enD innovation proCess
The innovation process needs to be as rigorous and data-driven as other
operational processes. This does not imply that the uzzy ront end oinnovation is no longer uzzy or that strategic pivots based on marketplace
eedback disappear. To the contrary, these essential process steps are
deined with appropriate tolerances or variation.
Consistent with the operating process paradigm, it is not permissible to
skip steps in a well-designed innovation process. Too many organizations
approach innovation with a scorecard, presuming that i they hit most o
the elements on the checklist, a concept is market ready. Thats not how
processes work, and organizations employing a scorecard approach to
innovation are unlikely to ind themselves in this report.
Finally on process: extend it. Reach upstream to generate insights about
emerging and latent consumer demand. Look or struggles, nuisances,
compromises, work-arounds and nonconsumption in consumers lives.
At the other end o the process, We used to launch em and leave em,
Calpino observed. Now we know that that is unacceptable. We try to take
a multiyear perspective to supporting all big-bet launches.
step 8:insist that every innovation
iDea inClUDe a Category storyThe path that led to Krat pushing 130 middling launches into market was
acceptance o almost mindless tweaks and changes to existing product
eatures and attributes. Categories exist in the lives o consumers and are
deined by the jobs they need to perorm in their daily lives. By insisting that
all innovation ideas present a category story ramed by the circumstances
o the consumer rather than by the attributes o the product Krat
made a clean break with historic incrementalism and embraced a more
expansive and ambitious mission or innovation.
step 9:emBraCe retailers as partners, notDistriBUtion pipes to pUsh proDUCt throUgh
By bringing retailers into the innovation process, a consistently successul
shopper experience is ar more likely.
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step 10:set goals anD Define sUCCess
Krat decided that they wanted ewer, bigger, better launches that received
the best talent and ample resources. Success was deined as year-one
sales o $30 million and margin-accretive. As Calpino said, Youll neverdo anything big i you dont think big and act big by the investment you
put behind the ideas you believe in the most. You need a culture o How
big can we make this? and a culture o truly investing big behind our
best ideas rather than what we historically had, which was This will
never work, or Can we launch ideas with little to no investment?
In the case o MiO, the idea o a liquid-concentrate lavor pack or
water had been around or years, but it was a small idea without a
bigger story or ambition. Fueled by insights into generational trends
towards customization, the concept evolved into a your drink, your
way positioning that had managers saying, Lets create an entirely newbrand and new category. In other words, the how big can we make this
mindset was as essential as the insight into latent consumer demand.
By pushing the idea as ar as possible and investing very heavily in
supporting the launch in years one, two, and now three MiO generated
cumulative irst- and second-year sales o $268 million. Moreover, more
than 30% o buyers were totally new to the category.
* * * *
Unsurprisingly, Edison was right. Opportunity not only looks like work,
it is work. The good news is that it isnt magic or blind luck. As Krats
innovation transormation shows, putting on the overalls and rolling up
sleeves can make the grunt work glorious.
yoUll never Do anything
Big if yoU Dont thinK Big
anD aCt Big.
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SkINNY coW
caNDYthiNkiNg oUtsiDE thE aislE
For Nestls Skinny Cow, what started in the ice cream aisle ound a
ast ollowing in the candy section. It was a big, bold leap enabled
by compelling demand-driven insight and realized by relentless pursuit
o consumer requirements through a comprehensive and insight-driven
go-to-market plan.
For the Skinny Cow team, the good news is that they had identiied
a compelling pool o unmet demand. The challenge remained: could
they ill it? The marketing team gave the R&D powerhouse the demand-driven product speciication and they delivered with excellent products
validated by consumer research.
Even with a clear brie or the beneit bundle, huge marketing challenges
remained. Notably, how to succeed in a low-traic aisle? No easy task.
The Skinny Cow plan: We gotta make sure that shoppers literally
all over our product. We need to get the product to other areas o
store. This was a big move and a gutsy investment: custom displays
were built to merchandise Skinny Cow chocolates in other parts o the
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store notably, in ront o the Lean Cuisine section o the reezer bank.
Sounds crazy, but what the insights team uncovered was that, though the
products were wildly dierent in terms o their speciic attributes, they
were closely aligned in the core beneits they delivered and in the vital job
they perormed in consumers lives. Speciically, or consumers looking
or assistance in living healthier lives without undesirable sacriices,
inconvenience, or cost, Skinny Cow and Lean
Cuisine brands presented compelling solutions.
In short, they go together.
Demand-driven innovation process continued
through launch. From the success o Skinny Cow
ice cream, the marketing team had curated an
active group o loyal consumers on a variety o
social platorms. The consumers were energized,
engaged online inluencers and anatics o
the Skinny Cow brand. At launch, the Skinny
Cow team gave these consumers the two things
that research shows inluencers value most:
recognition rom brands they love and status
amongst their peers.
The marketing team executed a comprehensive social engagement
strategy that enlisted the consumers in the launch: providing advanced
scoops o the coming release, coupons or ree trial boxes, and e-coupons
or sharing with riends. By energizing and activating their an base,
Skinny Cow created buzz and demand or the product beore it even hit
the stores.
In the end, Skinny Cow went outside the candy aisle to bring new users
and, ultimately, making it sae or shoppers to walk down the aisle
without ear o temptation. Skinny Cow changed the game and racked upa big-time Breakthrough Winner. Sweet.
By energizing anDaCtivating their
fan Base, sKinny Cow
CreateD BUzz
anD DemanD for the
proDUCt Before it even
hit the stores.
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aNENcouragINg
WorDYoU WaNt to Do this
On average, Breakthrough Innovation Winners generate over $100 million
in irst-year sales and sustain annual growth o 23% through year
three in-market. Nothing breeds success like success: the majority o
Breakthrough Winners go on to launch extensions that uel additional
growth at comparatively low risk. Growth also has a way o attracting
top talent and boosting stock prices. To put a new spin on a Hollywood
classic, Growth is good.
Breakthrough Innovation Winners oer a wealth o guidance, but the map
is, amously, not the territory. Every brand and each team must ind its
own way. Demand-Driven Innovation provides a valuable approach or
planning your breakthrough journey. The accompanying Winner Spotlights
showcase the ramework and the winners in action.
Most importantly, Congratulations to this years winners! We reiterate
our sincere thanks to those who participated in this report, as well as
embracing our belie that an idea shared is an idea improved. While the
odds o innovation success remain daunting, we can make the risks more
manageable and the path to success less hazardous by accelerating the
cycle o sharing, learning, and improving.
Nielsen Breakthrough Innovation Report is the annual synthesis o our
daily, global commitment to marketers helping them thrill consumers
and create vibrant, valuable growth businesses. We look orward to a year
o innovation successes and to working with leaders to advance the state
o innovation knowledge.
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aUthors
TADDY HALL
Senior Vice President, Nielsen Innovation Practice North America
CHRIS CASEY
President, Nielsen Innovation Practice
ROB WENGEL
Senior Vice President, Nielsen Innovation Practice North America
footnotes
1 Nielsen ScanTrack (Food, Drug, Convenience, Dollar, Club and Mass Merchandise)
2 Walter Isaacson, Steve Jobs, 2011
3 Clayton M. Christensen, The Innovators Dilemma: When New Technologies Cause
Great Firms to Fail, 1997
4 Nielsen ScanTrack, 20112013
5 Thomas Edison, Wikipedia, http://en.wikiquote.org/wiki/Thomas_Edison
6 Andrew S. Grove, The Paranoid Survive: How to Exploit the Crisis Points that
Challenge Every Company, 1996
DisClaimer
The inormation contained in this report is based on compilations and/or estimates representing
Nielsens opinion based on its analysis o data and other inormation, including data rom
sample households and/or other sources that may not be under Nielsens control. Nielsen shall
not be liable or any use o or reliance on the inormation contained in this report.
aBoUt nielsen
Nielsen Holdings N.V. (NYSE: NLSN) is a global inormation and measurement company
with leading market positions in marketing and consumer inormation, television and
other media measurement, online intelligence, mobile measurement, trade shows
and related properties. Nielsen has a presence in approximately 100 countries, with
headquarters in New York, USA and Diemen, the Netherlands.
For more inormation, visit www.nielsen.com.
Copyright 2013 The Nielsen Company. All rights reserved. Nielsen and the Nielsen logo
are trademarks or registered trademarks o CZT/ACN Trademarks, L.L.C. Other product
and service names are trademarks or registered trademarks o their respective companies.
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