Innovation is losing share of the category, but our approach to innovation has not changed. The industry must reinvigorate our innovation pipelines.
The industry wants innovation that creates categories, changes behaviour and unlocks new demand. Yet the environment surrounding innovation rewards the opposite.
Innovation has to work too quickly today
We want innovation teams to find the next category-defining proposition. We then ask for evidence that it will work before it exists. We ask consumers if they would buy something that they have never experienced. We require forecasts for shelf space and behaviours that may not exist yet.
There are a few reasons for this. Once the product launches, we typically monitor its initial rate of sale and hope to deliver an outstanding 12-week retailer review.
This is commercially logical. Manufacturers need confidence in their investment, while retailers need every centimetre of shelf space to work hard.
But it creates a contradiction: we want breakthrough innovation while measuring it through a system built to reward the familiar, the known, the iterative.
What are we really proving within 12 weeks?
A genuinely new proposition may need to explain an unfamiliar idea, establish a new occasion and help consumers develop a different routine. It may even need to show retailers where it belongs and why the category should make room for it.
That’s really different to what I would call a “renovative innovation”; a new flavour, format or pack size that benefits from familiarity. Shoppers understand the core product, retailers know where to merchandise it, and businesses have historical performance against which to forecast demand.
That does not make renovative NPD unimportant. Renovation can refresh the category and engage existing demand.
However, if a product designed to create a new behaviour is measured against a familiar line extension, we’re comparing a sprinter to a long-distance runner.
A 12-week test may not measure an innovation’s potential, but rather its familiarity to the shopper.
How the demand for proof shapes innovation
The 12-week review is only one part of a wider environment built around certainty and immediate success. It’s built into our innovation pipelines. We’re increasingly moving away from research and into validation.
Instead of using research to uncover unresolved tensions, businesses can use it to prove that an idea will work.
We give an idea to consumers and ask them to assess the concept. Which flavour do you prefer? Would you buy a larger pack? What is your favourite pack format?
These are great questions, but they limit the consumer to the answers they know.
I like prawn cocktail, and I like quavers: prawn cocktail quavers!
Commercial cases are more convincing when supported by established benchmarks. Familiar propositions therefore have an advantage because comparable products and recognised behaviours already exist.
The less familiar the idea, the harder it is to produce a confident forecast. How do you prove an NPD that a shopper has no frame of reference for? This means safer ideas perform better in testing, provability and trust.
To summarise, a NPD’s sell-in-ability becomes the first definition of success.
Teams can become focused on securing the listing rather than creating the conditions for long-term category change. The proposition is designed to win internal approval and retailer support, but not always to truly surprise and delight shoppers in the long term.
Early performance becomes destiny
An unfamiliar proposition may need education, repeated exposure and time to become established, but a weak initial performance can quickly be interpreted as evidence that the idea was wrong in the first place.
Each of these behaviours is a rational response to commercial risk. Together, however, they can create an environment in which not failing becomes more important than creating something capable of meaningful growth.
Would your favourite innovation have passed the test?
Imagine that consumers do not yet understand it. Retailers have no established shelf location for it. The commercial team lacks a directly comparable product. Category data cannot demonstrate the demand because that demand does not exist yet.
The innovation launches and has 12 weeks to prove itself.
Would its early rate of sale have revealed its full potential?
Would consumers have adopted the new behaviour quickly enough?
Would the business have continued investing before the evidence became conclusive?
I’m not proposing unlimited patience or protecting weak propositions from commercial reality. Innovation still needs clear milestones, disciplined investment and evidence of progress.
It is an argument for judging innovation according to its ambition.
A familiar extension should demonstrate its commercial role quickly. A proposition intended to create a new behaviour may require different evidence, milestones and timeframes, or we are creating the conditions for more of the same renovative innovation.
The industry does not lack ideas. It lacks an environment in which unfamiliar ideas can survive long enough to become familiar. Hence why so many great volume and category creators have started in DTC.
If innovation must be researched, forecast, validated and commercially proven before the behaviour behind it exists, businesses will continue to favour propositions that resemble previous performance.
That may reduce uncertainty. It may also reduce the possibility of creating new demand and deliver innovation stagnation.
The challenge is not to choose between commercial discipline and ambitious innovation. It is to apply the right discipline to the right opportunity.
Looking for more insight on this topic?
Unlocking category growth via innovation
Read our updated innovation report, to explore how stated and unstated consumer needs shape innovation, why future category growth requires different thinking, and how businesses can create the conditions for genuinely category-defining ideas.