Innovation Envy - What established innovators can learn from successful disruptors. by InSites Consulting

t all started with a random conversation at a party one night in

2012, when two guys (Michael Dubin and Mark Levine) discussed the discomfort of buying razor blades. How razors were not only extremely expensive (considering their simple concept of a handle carrying a metal blade), but also a very frustrating experience to buy: you must drive to the store, locate the grooming section to then discover a shelf with razors in all shapes and colors, often under lock and key. After a massive mental choice exercise where you trade off brands, number of blades, all sorts of add-on razor features and price, you need to locate a staff member to open the â&#x20AC;&#x2DC;razor fortressâ&#x20AC;&#x2122;. Their conversation grew into the idea to start a direct-to-consumer razor subscription service: Dollar Shave Club. The domain dollarshaveclub.com was registered within a week, with Michael Dubin resigning from his job a few months later to launch the concept. On March 6, 2012, a slapstick video introduced Dollar Shave Club to the world. The video turned into an instant success with the website crashing after two hours and the company registering 12,000 orders the very same day.

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ÂŠ Dollar Shave Club

This is one of those famous success stories where newcomers disrupt the market (almost literally) overnight. Dollar Shave Club became one of the fastest growing e-commerce start-ups ever, reaching a 16% unit share of the U.S. razor cartridge market. And there are many similar stories out there, ranging from the well-known case of Airbnb (where two room-mates living in San Francisco couldnâ&#x20AC;&#x2122;t afford to pay the rent and decided to turn their apartment into a place for young designers to crash overnight during the yearly design conference held in their city), to the 24-year-old German vlogger Bianca Bibi Heinicke launching her own foamy shower gel Bilou, snatching away 15% of the market share from established brands in the German market.

“So, she (Bianca Bibi Heinicke) came with a new application format at a premium price in very different fragrances. She was really building this hype on her website: I have developed shower mousse and they will come in two weeks. So, what happened: the 3.3 million followers, they ran to the store and started collecting these items. This way she went from 0 to 15% market share, never seen in the industry in the last 20 years.” Ingo Tanger, Beiersdorf

According to a report by Boston Consulting Group, in North America alone, about $22 billion in industry sales shifted from large to smaller companies between 2011 and 2016. While in 2017 the revenues of large Consumer Packaged Goods (CPG) companies remained roughly flat (only 0.2% year-over-year growth), small companies grew 2.3% on average. And this goes beyond the CPG environment; this David-and-Goliath scenario is visible across sectors, with small entrepreneurs with bold ideas outpacing renowned fully-armed giant warriors. I N S I T E S C O N S U LT I N G

â&#x20AC;&#x153;The start-ups are the David to our Goliath. How can we learn from them and become more agile, how can we be more David?â&#x20AC;? Elaine Rodrigo, Danone

These market shifts can mainly be attributed to the fact that entry barriers are lowering; production outsourcing opportunities and new distribution channels allow a market entrance at small volumes, while a smart use of social media allows to build a brand at low(er) cost. These 06

low entry barriers create an environment where newcomers launch innovations at a rapid pace which established players and their more process-driven innovation flows have a hard time keeping up with. Just consider one of the most iconic innovations of the past decennia in the household sector, the Swiffer. P&G revolutionized cleaning with the Swiffer. Many households have a weekly cleaning moment, either done by themselves or by an external cleaning service. We all know the drill: vacuuming, dusting and mopping the house. Yet in between those (bi-)weekly cleaning sessions, a house collects its living marks: dust piles up, floors get dirtierâ&#x20AC;Ś That is where the Swiffer comes in: a smart, non-time-consuming sweep ritual to bypass the fixed cleaning moments. Eureka! Yet, it took the company 1.5 years to go from insight to idea and four more years to develop the actual product.

Not surprisingly, many established organizations experience a sort of innovation envy towards these successful newcomers. For many big organizations, the question lies in how they can keep up. How can they leap in and take their stake in innovation?

“The rules of the game in beverages have changed. Shorter lead times, low entry barriers, new players, new investors, etc. Innovations need to be re-imagined!” Dieter Deceuninck, Global Director Strategy & Insights Waters & Aquadrinks at Danone

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IF YOU CAN’T BEAT THEM, BUY THEM Many established organizations have a clearly-defined innovation roadmap and funnel, yet these are often characterized by many processes, 08

stages and gates involving a diverse set of departments and stakeholders. To bypass this often time-intensive process and take a piece of the disruptive innovation pie, it is not uncommon for companies to buy these smaller players as a means to integrate innovation and grow their portfolio. In July 2016, Unilever announced that it was entering the razor business by acquiring Dollar Shave Club for $1 billion. A similar story for RXBar, the iconic nutrition bar company that started up in one of the founders’ parents’ kitchen. In 2017, four years after sampling at events and pitching their new product (recognizable by its simple ingredients which function as the distinctive packaging design), the company was acquired by Kellogg’s for $600 million.

In September 2017, IKEA bought TaskRabbit, a start-up that provides a marketplace for household chores and other simple tasks. By doing so, IKEA could offer an additional service to consumers that bought their furniture: hiring someone from TaskRabbit to assemble the thing. Start-up acquisitions are a common way to extend a brandâ&#x20AC;&#x2122;s portfolio with innovation extensions. Even Google, where innovation and entrepreneurship are at the heart of the company, has acquired over 218 companies since 2001. ÂŠ IKEA

As attractive as it may sound, buying innovations or innovative startups is not an option for everyone. Not only does it imply a lot of processes and large financial investments, not everything is (or should be) for sale. Although these innovation buy-ins might contribute to positive results on oneâ&#x20AC;&#x2122;s bottom line, far too often they remain a separate construction where the innovation is done in isolation and not immersed in the business. These sidetracks often do not change the actual innovation environment, process or culture. Simply buying a company does not automatically imply becoming that company (or inheriting its innovation culture and practices). I N S I T E S C O N S U LT I N G

IF YOU CAN’T BUY THEM, BORROW AND STEAL SMARTLY A second popular practice established companies undertake is incorporating a start-up innovation mentality by borrowing and copy/pasting start-up thinking and best practices, and merging them into their current processes. One of the most common principles these organizations tend to ‘borrow’ is the whole ‘agile innovation philosophy’. Agile methodologies, after successfully transforming the software industry through increased quality, productivity and speed-to-market, have found their way throughout all business spheres. A recent article by Harvard Business Review shows how, for everything from production to logistics, agility

has been adopted across industries and sectors, ranging from the American National Public Radio which employs agile methods to manage their programming, through machine manufacturer John Deere to develop new products and Intronis, cloud back-up services for their marketing, to Mission Bell Winery, the company behind Corona Extra.

LET’S INVITE A GURU TO GUIDE US Agile innovation is often seen as the holy grail: what if a company could achieve positive returns with 50% more of its new product introductions - just like its success rates in information technology? This explains why many organizations try to embed agile thinking in their organization through inspiration sessions with ‘agile gurus’, to transform current practices and reorganize existing structures. In June 2018, Fidelity, a multinational financial services corporation based in Boston, gathered hundreds of associates to learn more about ‘agile’ through an offline and online session presided by Stephen Denning, author of The Age of Agile. A key deliverable of this effort was to apply the agile approach to their project management, where more than 700 associates will enter agile pilot projects to drive value for clients at a greater speed. Along with this effort, they have also been running Fidelity Labs as a place to experiment with different ways of doing business by approaching customer problems through experimentation and iteration.

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However, despite its enormous potential, the implementation of agile practices in industries outside Information Technology comes with mixed results. According to Stephen Denning, more than 70% of scrum implementations fail to achieve their goals. This inconsistency can be attributed mainly to the fact that many fail to turn their whole organization around. While some agile principles are already in place, such as working in short cycles, most companies continue to manage things the traditional way (often counter the agile philosophy). One could speak of ‘selective agility’, since the agile principles are not embedded throughout the entire line. Even with the best intentions, the benefits and opportunities of working with agile team structures get lost once team decisions are overruled and top-down review layers stay in place.

LET’S ORGANIZE A BOOT CAMP Just like IT professionals organize hackathons - events gathering computer programmers, graphic designers and project managers to create a functionable product within a specific time frame - many organizations try to fuel their innovation funnel by organizing idea-boosting events. These initiatives bring together a broad range of people from the business, that can group and work out potential innovation ideas.

Zalando SE, the German e-commerce company based in Berlin, organizes innovation hack weeks where employees can ‘hack’ the fashion ecosystem. All that week, anyone from the company can free up their calendar to work on an idea. The initiative was launched in 2013 to drive open innovation and experimentation within the company. While initially this took place once a year, the company broadened the initiative to four events a year, each edition hosted by a different business unit. A similar example can be found in the financial industry, with ING organizing an Innovation Bootcamp where employees can come up with smart ideas and turn them into reality. The second edition took place in 2018, with ING employees from across the world submitting more than 1,800 ideas for five strategic challenges. The 100 best ideas entered their Innovation Bootcamp, to be fine-tuned with the support of

innovation mentors. © ING

There are many similar innovation-boosting initiatives: executives going on inspirational innovation tours, the set-up of innovation labs, the launch of brainstorm weeks… Yet kickstarting the innovation process goes beyond installing agile processes, launching a turbo-innovation factory or working in innovation sprints alone. These initiatives often just lead to superficial changes without truly affecting an organization’s innovation culture. I N S I T E S C O N S U LT I N G

WHY NOT BE MORE LIKE THEM Installing an intrapreneurial innovation mindset requires a deeper shift, 14

where all organization processes are aligned to point in the same direction. To be more like these disruptive innovators, one needs to understand what factors lie at the basis and deeply embed these in the current processes and innovation routines.

THE NEWCOMERSâ&#x20AC;&#x2122; DNA WE WILL RIGHTFULLY ENVY When analyzing the parameters of successful newcomers, we find that these are composed of three important factors, namely friction, passion and pilot mentality. Friction boils down to understanding and experiencing a real unmet need. Passion represents the newcomersâ&#x20AC;&#x2122; drive and persistence to take their idea forward. And last but not least, innovation is not predictable and requires a portion of gutfeel, a pilot mentality. These are the three components that established organizations rightfully envy and should strive to embed in their DNA.

friction

passion

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friction Many disruptive innovations start with a friction, a frustration, an unmet need: the founder experiences a problem for which there is no solution. Just consider the story of Michael Dubin, who recognized buying razors was a dreadful experience costing a lot of money. Or how Nova Covington, founder of Goddess Garden, a mother whose daughter suffered from allergies, was in search of body care products that would not cause any allergic reactions.

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“I started my company as a way to solve a problem. My baby daughter, Paige, was the

inspiration for our first product. As a six-month-old, she was allergic to most synthetic ingredients (even in so-called “natural” body care products). Poor baby! As a mom, I started looking at all of the junk we were using on our kids and ourselves. This was the beginning of Goddess Garden.” Nova Covington, founder of Goddess Garden 18

This friction is what drives these entrepreneurs to exploring the solution space and starting a quest to answer their needs. For established innovators, this means investigating underlying market frictions and translating these into insights. Yet, as obvious as it might sound, many innovations do not have an insight at the basis. A possible explanation is the lack of know-how as to what an insight is and how it can be used to feed business decisions. ‘Insight(s)’ is one of the most misused terms in marketing and market research. In essence it is a short, single-minded statement written in consumer language that reflects a consumer need, a wish or a desire and can be defined as ‘an understanding of the inner nature of things, leading to a discovery of something that is not yet obvious but at same time recognizable and real, and providing the basis for relevant and actionable innovation, ultimate-

ly leading to a competitive advantage’. Moreover, we see that the agility buzz (and organizations’ quest to work more agilely) as described before has often been a detriment to insights. There exists the belief that there is no room for insights in an agile innovation philosophy, yet the opposite is true, considering the multitude of examples showcasing how a friction and a mono-insight have been at the basis of successful market entrees.

Insights should form the cornerstone of any new product or service innovation. In order to drive business impact, we find that a good insight is a unique combination of 3 key ingredients: 19

It’s me – A good insight is relevant for a consumer. Relevance can be driven by personal identification or by peer identification (which is when an insight is called contagious). Aha! - An insight should be fresh and present a new way of looking at things. This includes both discovering something completely new and uncovering an existing reality in a new or fresh way. An insight should not be apparent immediately. It is rather something that is present latently; you only realize that it is true the moment you hear it. It brings to the surface what was there subconsciously. Emotion - An insight should have an emotional valence. This could be a problem that consumers want to solve, but it could also be a desire for something. Consumers should be excited about having a potential solution. I N S I T E S C O N S U LT I N G

GENERATING INSIGHTS TO FUEL YOUR INNOVATION So where does one start? Where do you obtain those insights from? Unlike the entrepreneurial success stories, where the founder experienced a friction (and cracked the insight) from their personal life, as an employee you might not be the target consumer yourself. It is thus essential to truly immerse yourself in the consumer reality and detect those insights that can fuel innovation.

Ever heard of Gemba? It is a Japanese term originating from the Total Quality Management era and is a synonym for ‘the real place’. By going where the real action is taking place, whether it is a crime scene, a supermarket or a living room, managers can sharpen their senses and enhance their creative potential, thus stimulating their consumer brain. To research consumers effectively and extract fresh insights, we need to go to the real place, immerse ourselves in the consumers’ lives and

look at the consumer reality from a ‘traveler’s viewpoint’. Think about how you behave differently on holiday; you’re on high alert, spotting details. You may notice things that even locals do not see. And it’s a vicious circle: the more people (want to) know and discover, the more they realize what they don’t know. Finding those insights that can drive your innovation is therefore a matter of immersing yourself in the consumer reality to uncover consumers’ frictions and unmet needs.

CASE:

How Royal Canin used consumer immersion and is becoming more pet owner inclusive and reinforcing effective innovation Royal Canin, a Mars company, is a global leader in delivering health through nutrition for cats and dogs. Royal Canin develops nutrition solutions based on science and observation, and is now increasingly considering the perspective of pet parents and prescribers in the new developments. To gather stakeholders company-wide around pet owner insights, Royal Canin embarked on an immersion journey connecting 460+ pet owners around the world in a 3-week online community. The scope was to understand in depth the experience of having a cat or a dog along the pet-owner journey, from acquisition all the way to parting. This resulted in an insight-driven pet owner journey, highlighting opportunities and priorities for innovation. Royal Canin is using the Square now as a structural capability to immerse with specific pet profiles when needed.

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VALIDATING INSIGHTS TO SET YOUR FOCUS POINT The stronger the insight, the higher the business potential. A good insight has the power to unlock marketing innovation on different levels: brand innovation, product innovation, service innovation, communication and consumer activation. Key here is to prioritize and select which insights should form the cornerstone of your innovations. Essentially this is also what you see amongst successful market entrants: they do not aim to solve a multitude of problems at once but they rather focus 22

on one key friction, something we could call a â&#x20AC;&#x2DC;mono-insightâ&#x20AC;&#x2122;. An essential step is to prioritize, find that mono-insight and take it forward in your innovation funnel. Even companies that put consumer insights at the core of innovation sometimes lack the discipline to validate these insights before moving to the idea generation phase. Yet, research has shown that ideas and concepts based on validated insights perform significantly better, with the unpriced buying intention of concepts based on validated consumer insights scoring up to 20% higher in comparison with concepts based on insights that were not tested upfront.

CASE:

How insight validation strengthens the consumer-led innovation process at Heineken As part of an organizational drive to strengthen their consumer-led innovation process, Heineken International is a strong believer of insight validation as a necessary step in the innovation routine. Since 2010, Heineken has tested hundreds of consumer insights across the globe using our Insight Validation approach. The solution allows to detect the most potent consumer insights to use as a basis for product innovation or branding/communication initiatives. The insight validation phase has become mandatory in the Heineken Innovation process and the quality of product concepts generated further down the innovation funnel is clearly benefiting from this. By conducting insight validation, Heineken significantly reduces their chances of using weak insights further down the innovation funnel. As a result, ideas and concepts based on validated insights have shown to perform significantly better.

â&#x20AC;&#x153;A protocol for Consumer Insight testing, which is in line with our HNV Consumer Insight criteria, allows us to understand our consumers and their language even better, adding significant value to our innovation projects while helping minimize the risk to the companyâ&#x20AC;? Marion Hoek-Koudenburg, Global CMI manager at Heineken International

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ACTIVATING INSIGHTS TO GAIN AN ORGANIZATION-WIDE IMPACT You might have selected those key insights, yet to make sure your idea, concept, product or service truly embraces these insights, all involved parties need to truly ‘live’ them. They need to feel like a consumer, understand their mindset and use this insight-first, consumer-centric thinking throughout the innovation process. This can be reached by connecting your stakeholders with actual consumers to make sure they feel and breathe the insight, that they experience the insight from up close, by immersing themselves in the consumer reality, which helps 24

them experience how consumers think, act and feel. After an extensive global survey to reposition its Dove brand, Unilever found that only 2% of women would describe themselves as beautiful. And worse so, by frequently showing perfect women in their advertisements, they had a part in affecting women’s self-esteem. When confronted with these insights, Dove’s executives couldn’t believe it. So, they were sent out to interview their own wives, daughters and nieces on the subject of beauty, to hear it firsthand. The insight (and the belief in it) led to Dove’s highly successful Real Beauty campaign.

CASE:

How Van de Velde makes their male employees experience what being a woman feels like Van de Velde, the company that has been designing and manufacturing luxury lingerie since 1919, wanted their employees to deeply understand the role of good, high-quality supportive lingerie. One of their leading brands, Prima Donna, focusses on women with larger cup sizes. In order to make male employees understand what it feels like to have (larger) breasts, they organized ‘the national E cup day’ at their offices, with male employees having to carry 1.5kg weights per breast (the equivalent of an E cup) around their neck. This (at first sight humorous) initiative definitely made an impact: while many experienced the expected back aches, neck tension and uneasy situations, it created a shared understanding and increased motivation to create products that give maximum support to women. © Van de Velde

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CASE

How Viacom inspires executives to visit Millennial hotspots After conducting a study on the Millennial lifestyle in ten capital cities around the world, Viacom wanted senior executives to truly grasp what it means to be young today and use these insights in their advertising and television formats. For these senior executives to really immerse in the Millennial world, small city guides were created capturing the tips & tricks gathered through research. When on a business trip, executives were motivated to use these guides to explore the places their target group recommended for eating, shopping, going out and sleeping. This way they really immersed in their target audienceâ&#x20AC;&#x2122;s 26

environment, almost stepping into their shoes and truly experiencing the research insights. This initiative showed to be truly valuable, as the Viacom executives fed back that experiencing some of the insights opened their eyes and triggered them to take action.

In order to embed friction in the innovation routine, organizations should thus build an insights-led culture where consumer insights form the corner stone of all decision making. They can do so by extracting insights through consumer immersion, validating the insight, selecting their focus and activating the insight throughout the organization. Itâ&#x20AC;&#x2122;s a matter of finding that friction or mono-insight and staying true to it.

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passion After the friction comes the drive to ideate and create, where newcomers nurture and fine-tune their idea and take it forward. These friction solvers are characterized by an immense drive and passion to bring their idea to life. Whilst these entrepreneurs are often also the idea initiators, they surround themselves with passionate people to help shape their idea.

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“There were a few natural sunscreen alternatives, but they had the texture of toothpaste and felt greasy to me. I knew there had to be a better way. Enter my super-supportive husband, Paul, who created our first natural sunscreen. He helped me turn our basement into a lab. As a nutritional scientist, he used the best food-grade ingredients he could find and made it with only sheer minerals, plant-based organic oils and pure lavender for the scent.” Nova Covington, founder of Goddess Garden

This passion is also expressed in how tightly they hold on to their idea; it’s their baby, which they nurture, curate and grow towards a final product.

“One can steal ideas, but no-one can steal execution or passion.” Tim Ferriss, productivity expert and author

THE ART OF IDEA AND CONCEPT CURATION Just like the founders of successful innovations passionately hold on tight to their idea as if it’s their newborn (which one could argue it theoretically is), innovation stakeholders should hold on tight to their insights, ideas and concepts rather than pass them around without any sense of ownership. Passion thus also boils down to carefully curating your innovation assets. Yet in many organizations, even with the best intentions, the innovation process can be seen as a relayrace-like approach. The insight, idea or concept is passed around (like a relay baton) from one person or department to another with people letting go as soon as it is handed over. Just think of a typical stagegate innovation process (which is still the norm in many organizations), where the gates function as serving hatches and ownership stops as soon as the insight, idea or concept enters the next stage. Yet idea and concept ownership and curation are key throughout the whole funnel. While the terms ‘idea’ and ‘concept’ are often used interchangeably, there exists a clear distinction. An idea is a rough notion, a raw sketch of the potential solution space linked to a particular insight, while a concept can be seen as the final form of an idea, which has already gone through some fine-tuning and pruning stages.

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A first step in the curation process is successfully moving from insight to idea by means of ideation. During this idea-generation phase, stakeholders are motivated to boldly share all that comes to mind. Itâ&#x20AC;&#x2122;s a divergent process where people can go wild and share thoughts without limitations (e.g. feasibility, pricing, execution). Apart from involving enough people (which shows to clearly correlate with the number of valuable ideas that comes out of the process), participant diversity is beneficial. To cover the broad spectrum of the solution space, it can be beneficial to involve people with different roles and backgrounds, each bringing a different perspective to the table. This is also what we see amongst successful innovators: whilst many are the idea initiators (having felt the friction themselves), they surround themselves with others to further shape their idea and concept. Yet in many organizations, innovation comes with some sort of protectionism, where the 32

process is done internally without the involvement of external stakeholders or consumers. Yet, as Stiven Kerestegian, Design Lead at Lego, pointed out: 99.9% of the smartest people donâ&#x20AC;&#x2122;t work for your organization. Organizations can benefit from an outside-in perspective, where they involve passionate stakeholders (including potential consumers) from outside their company walls to co-create ideas and concepts.

“99.9% of the world’s smartest people don’t work for us” Stiven Kerestegian, Innovation & Direction Design Lead, Future Lab, LEGO

CASE:

Crafting new-generation cleaning products through internal and external ideation Coming up with new, disruptive and out-of-the-box ideas is not easy. This was also a challenge Reckitt Benckiser was facing when crafting the new generation of Cillit Bang cleaning products, where traditional ideation did not lead to fresh or out-of-the-box ideas. A more innovative approach was advisable. A first stage was centered around uncovering insights and defining the business challenge the brand wanted to tackle, a step particularly helpful to enrich the creative brief and select the ideas afterwards in the workshop. In a first ideation round, Cillit Bang employees were invited to share their ideas in the Studio platform, using different ideation techniques that stimulate creative thinking (e.g. brand alphabet, thinking hats…). The purpose of this ideation round was to scrape the surface and come up with quick opportunities and new ideas for the brand. In the second round, we partnered with eÿeka, a community of creative consumers that have little experience in the cleaning industry but are experts in the creative sector. Users could upload their ideas directly into the Studio platform, in the form of Tiles. This made it very easy for them to share their ideas and to read/ build on the ideas of others. Goal of this second round was to have a fresh eye on the challenge and gain as many out-of-the-box ideas as possible. By combining technology, expertise and creativity, we generated 126 ideas for speeding up the cleaning process. This mix of internal and external ideation through the Studio platform led to three brand-new concepts, warmly embraced by both consumers and employees.

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“By bringing the outside in through deep collaboration with consumers, resulting in being more consum34

er-centric, we’ve strengthened our innovation pipeline. I was especially amazed by the quantity and quality of the ideas that were generated by crowdsourcing with creative consumers, which were true to the insights we uncovered to recruit our target consumers… Some of those ideas were warmly embraced by the business and are currently under development!” Stiven Kerestegian, Innovation & Direction Design Lead, Future Lab, LEGO

Once you have explored the solution space, it is time to enter a convergent mode where you bundle ideas into idea platforms, to then validate and prioritize which ones to take further. The choice of your validation approach often depends on the extent to which an innovation is disruptive or incremental, as well as on time and budget availability. The approach ranges from a full idea screener where you can add multiple

qualitative plug-ins for deeper understanding, to a more lean & mean approach such as an overnight screener using MaxDiff (i.e. maximum differentiation - where consumers see a random set of ideas and have to select their most and least favorite) or even a Tinder-like approach where ideas are shown and consumers have to swipe left or right (depending on whether they dislike or like an idea respectively).

CASE:

Screening new lingerie ideas using an agile swiping approach Van de Velde, the luxury-lingerie company behind brands like Prima Donna, wanted to evaluate which items its summer collection should feature. To do so, new lingerie ideas were tested on their stopping power, i.e. the extent to which it makes people stop to look at the item in-store or click on the item in an e-commerce environment, using an agile swiping approach where items were shown and participants had to swipe left (disliked) or right (liked). Next, we measured holding power, i.e. how likely would people be to try it, using 3D visuals offering a 360Â° view and zoom. To have a detailed overview of the likes and dislikes of a specific lingerie concept, we integrated the iTag tool, allowing participants to â&#x20AC;&#x2DC;tagâ&#x20AC;&#x2122; what they liked and disliked, and to add suggestions on how to improve it.

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The winning ideas are then taken further into conceptualization, where concepts build further on the embryonal idea, bringing it to a higher and more concrete level. A well-developed concept is both an art and a science. The science comes from having the right elements in the right formula - for positioning concepts that means insight, benefit and reasons to believe; for new product or service concepts an additional succinct description is required. A good concept has both internal and external value, as it not only connects the idea with potential consumers but also serves as brief for development and communication. The success of a concept thus depends on how your concept board is well-curated: crap in crap out. Whilst detecting insights is often done with mainstream consumers 36

and ideation with more creative consumers (just consider the Reckitt Benckiser example earlier on), concept optimization is preferably done with heavy category users and innovators that are keen to share their opinion and feedback. When it comes to concept screening, and thus selecting which potential concepts to turn into reality, unpriced and/or priced buying intent is regarded as one of the key performance indicators of a particular concept, as it has shown to have a strong relationship with the actual purchase. While online concept testing is traditionally done using a mobile or web survey, in some instances it might be relevant to do this in a particular and controlled context (e.g. testing an iced drink concept in the summer rather than the winter or a laundry concept when people are doing their laundry). This is supported by the belief that context drives consumer behavior.

CASE

How JDE measures concept performance in coffee-related contexts D.E Master Blenders, an international coffee and tea company active in 45 countries, wanted to understand how much context influences concept ratings. Using a gamified mobile design, participants had to complete 2 missions, each referring to a given (coffee) occasion (i.e. at the supermarket, at breakfast, after lunch, when tired and when taking a break). Only when participants were in that specific occasion could they unlock the mission and rate two random concepts on 5 core KPIs, allowing for real in-the-heat-of-the-moment measurement. To unlock a mission, participants had to prove they were in the middle of that occasion by uploading a picture through their mobile device. The in-context measurement shows to be more predictive when it comes to actual behavior. Moreover, we saw differences in predictability depending on the context occasion, demonstrating that context should be recognized as a key influencer. Next, the mobile image capturing, where we gathered a total of 351 pictures, enabled us to grasp the contextual background of these coffee occasions.

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At the end of the day, we all want to know how our idea, concept or product is performing. You might have tested performance on a broad range of metrics and derived an overall concept stength score, yet what does that absolute score truly meanâ&#x20AC;Ś? This is where benchmarking comes in, where you compare your scores to a previously tested set of items. But even this requires caution, as traditional benchmarking has several flaws, one being the fact that benchmark databases are reflections of the past and that changing demographics and market dynamics affect consumer attitudes and purchase intentions.

Moreover, one needs to carefully understand which items one is benchmarking against; one canâ&#x20AC;&#x2122;t simply compare apples to oranges. Just 38

consider a new soft drink with high-caffeine content; should you benchmark it against refreshing soda concepts or against energy-boosting product innovations? These aspects as well as the type of innovation (incremental or disruptive) and the extent to which you are evaluating a rough idea or a finalized concept will drive the choice of your benchmarking approach.

CASE

Nomad Food’s agile innovation routine Nomad Foods, the UK-headquartered frozen-foods company, recently embarked on a mission to move towards more agile innovation. This shift required an adapted research approach supporting fast decision making. Rather than recruiting large samples on an ad-hoc basis, a consumer network was built to service these research needs, resulting in an input (where ideas are fed to consumers) to output (validated results) time of only a few days. Alongside this lean and mean testing approach, there was the use of an alternative benchmarking method, removing all contextual or biasing factors. This ‘individual Innovation Potential Index (IPI)’, reflects how well a specific idea or concept performs for a consumer compared to that consumer’s natural tendency to adopt a new product within the category. Rather than benchmarking against a database, participants were firstly asked about their openness to new frozen-food products; this openness to new category introductions was then used to calculate the benchmark score, allowing for better benchmarking across countries as well as across target groups - where segments can be compared directly due to the within-subjects measurement approach applied (Verhaeghe, De Wulf, Schillewaert, & De Boeck, 2008).

For established innovators, passion thus boils down to idea and concept curation, namely carefully managing your assets throughout the different phases of the innovation funnel, through an iterative approach alternating exploration and validation, where one moves from ideation to idea screening, conceptualization, concept optimization and ultimately to validating concepts. Ownership is key throughout this process of small loops; it’s about carefully and skillfully holding on to your assets rather than pushing them through the funnel from one stakeholder to another.

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pilot Last but not least, entrepreneurship comes with a necessary portion of gut(feel), a pilot mentality; you must be brave enough to trust your hunch and launch your product in what could be an unfamiliar or established market. Inventors often have a launch & learn attitude, where they donâ&#x20AC;&#x2122;t consider the market launch as the finishing line, but rather as the start for optimizing and growing their product or service.

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“I think a large part of our success has been: paying attention to what people really want and need... Learning from other moms, Goddess Garden grew up at the Boulder Farmer’s Market.” Nova Covington, founder of Goddess Garden

A launch & learn approach isn’t custom amongst established organizations as it involves a sizeable portion of risk. Instead, these innovation roadmaps are often characterized by many traffic lights at the back of the funnel. To bring a degree of certainty and affirmation before launch42

ing a product or service, these innovation routines are often driven by validation overdrive, traffic-light syndrome and benchmark fever. Not only is this paired with demanding time and financial investments at the end of the funnel, this may also lead to a delayed market entrance or the risk of being obsolete upon product launch. There is nothing wrong with outlined practices in innovation, on the contrary. Innovation needs procedures and timely checks, yet these need to be spread throughout the process rather than concentrated at the end of the funnel. One could say that removing all the risk is a risk on its own, or as Winston Churchill once said: “Perfection is the enemy of progress”.

“Perfection is the enemy of progress” Winston Churchill

Consider the Microsoft Zune, launched in 2006. The Zune, Microsoft’s portable music player, was built to take on the iPod. Although its interface and quality were appreciated by its users, it did not convince the masses sufficiently to outperform Apple. Reason is a combination of bad timing and a lack of innovative features. The first Zune was released five years after the first iPod which had taken over almost the entire mp3 market, but it did not come with any advanced features and was simply a me-too product.

“We just weren’t brave enough, honestly, and we ended up chasing Apple with a product that actually wasn’t a bad product, but it was still a chasing product, and there wasn’t a reason for somebody to say, oh, I have to go out and get that thing.” Robbie Bach, former leader of Microsoft’s home entertainment and mobile business

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EMBRACING PERPETUAL BETA THINKING This can be overcome by considering the market launch as part of the innovation funnel and working with a beta-introduction approach, for example by launching a product in one particular market or pre-launching a product or service amongst beta testers before the full-market launch or even by introducing pop-up launch initiatives to get real market feedback for further optimizations.

“When you launch it, it is not finished… that’s where it starts.” 44

Dieter Deceuninck, Global Director Strategy & Insights Waters & Aquadrinks at Danone © Danone

Danone recently experimented with A/B testing through pop-up stores as part of their Innovation Acceleration Manifesto. Rather than inviting a group of pre-selected tasters to a lab, they opened a pop-up store in London for three weeks, where consumers could taste their latest product AYEM, a high-protein almond-based breakfast bowl.

CASE

How PepsiCo invited employees to be their Drinkfinity beta testers PepsiCo recently embarked on a mission to craft an authentic drink that gives consumers choices and empowers them to create their own experience. This resulted in a new product concept called Drinkfinity. Drinkfinity is a new drink made with no artificial flavors or artificial sweeteners, empowering you to create completely new enhanced beverages by freshly mixing water with real dry & liquid ingredients. The product comes with a vessel (the water bottle) and a variety of pods that are sealed until you pop the pod onto the vessel. To understand its market potential and optimize the product, PepsiCo opted for a beta test amongst its employees. An intake survey was sent to the 60,000 people working at PepsiCo; 3,000 of those were selected to try the new concept - peel the seal; pop the pod; shake the water till it wakes - and provide their feedback in seven follow-up surveys. Based on these learnings, the team could optimize the product and fully launch it in market.

ÂŠ PepsiCo

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CASE

How Telenet guaranteed their first-mover position through their Yelo beta launch Back in 2010, Telenet, a provider of cable broadband services in Belgium, wanted to be the first mover in the Belgian market for digital television. Time was critical for them to outplay their biggest competitor, as digital television was entering the European market after its success in the US. To ensure their first-mover position, Telenet launched a beta version available only on Apple devices. This was done during a press conference by their former CEO Duco Sickinghe, who transparently explained the product being beta and their eagerness to grow and learn from customer feedback. People could tweet their questions to the Telenet team that would follow them up during and after the 46

press conference. After this launch, all online conversations were analyzed to understand how the first users had experienced the product. To optimize and co-create the product and prepare for full launch on all devices, a group of consumers was invited into a 3-week online community to discuss their experiences and ideas for new features. Based on this tester community, an optimized product was released 6 months later. Not only did these beta testers help the brand optimize its product, they furthermore became natural ambassadors that helped new users when issues or questions would arise.

For established innovators, piloting essentially means â&#x20AC;&#x2DC;not waiting for a final product to initiate your launch to marketâ&#x20AC;&#x2122;. It comes down to testing prototypes and first executions as a means for optimization and marketing-mix development. Rather than testing hypothetical paper concepts, this approach where minimal viable products are tested amongst (a subset of) consumers leads to more solid decision making. The real-time user-experience testing does not only uncover meaningful occasions and use cases for a product or service which are essential for communication and packaging development, but the realistic setting also provides more accurate input for price setting and other marketing-mix components.

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WHAT ESTABLISHED INNOVATORS CAN LEARN FROM SUCCESSFUL DISRUPTORS With change being a constant, so comes the need to innovate. Innovation comes in many grades, shapes and sizes, yet one must not think 48

it’s the sole privilege of small players and entrepreneurs. Many established players successfully innovate, yet robust organizational structures often challenge flexibility and agility. This leads to what we could label ‘innovation envy’, where larger organizations envy the innovation fast tracks of disruptive newcomers. What drives these successful entrepreneurs? What are the common denominators to their success? And what can we learn from them? These questions formed the starting point of our research. Analyzing a multitude of successful start-up innovations allowed us to identify three key characteristics present amongst successful newcomers, namely friction, passion and pilot mentality. To leverage the intrapreneurial attitude in the current organization reality, we believe established organizations can benefit from embedding these components in their innovation culture and routines.

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One can jump on the innovation bandwagon, by creating an environment where innovation starts with uncovering relevant insights, making sure these validated insights are recognized, understood and taken forward by all stakeholders (friction) towards ideas and concept that are carefully curated (passion) in an environment where timely checks are in place and where perpetual beta thinking is accepted (pilot). It’s about embedding these elements and integrating them into current processes and structures to create a new climate and culture for innovation. By no means do we want to frame this as the holy grail; innovation demands a culture shift which takes time and can’t be reached overnight. Yet one can speed up the time to market, by moving from an environment driven by benchmark fever and traffic lights at the end of the 50

funnel, to a more modular approach composed of small cycles alternating exploration and validation with the necessary feedback loops. By smartly embedding friction, passion and pilot mentality in your current innovation routines, today’s Goliaths can become the Davids. Are you suffering from innovation envy? Do you want to embed more friction, passion and pilot mentality in your innovation process? Imagine a dedicated and always-on hub to satisfy all your innovation research needs – from fuzzy front end all the way to go-to-market. Our Square solution combines state of the art proprietary technology, a hybrid innovation research toolbox and a powerful team of experts and consultants to create impact among the different innovation stakeholders. Our Square capability allows you to design a tailored innovation research track to get to the right insight faster and cheaper.

“By bringing the outside in through deep collaboration with consumers, resulting in being more consumer-centric, we’ve strengthened our innovation pipeline. I was especially amazed by the quantity and quality of the ideas that were generated by crowdsourcing with creative consumers!” Levy Mathilde, Senior consumer & insight manager at RB on how we turbo-charged the innovation process, achieving in-market success with a go-to-market time of only 6 months.

“We have more bang for the buck, are on average three times faster than comparable ad hoc project and can build on our learning, being able to pivot mid-research.” Kelly Laher, Consumer Insights Manager CPUK on how we fast-tracked the innovation pipeline by leveraging on the power of ongoing iteration.

Marketing@insites-consulting.com @insites

Filip De Boeck Managing Partner Filip has a passion for innovation and has been working on front-to-back-end innovation projects at InSites for 15 years. He moved back to HQ in Belgium in 2018 after spending 7 years in the New York office. He is a partner for companies that want to drive consumer centricity throughout their innovation practice.

@filip_deboeck Filip@insites-consulting.com

Katia Pallini Content Impact Manager Katia is part of the marketing team at InSites Consulting, where her focus lies on research innovation and content marketing. As a Content Impact Manager she translates the research side of things into easily digestible content, since marketing research is only useful when triggering marketing actions and driving business impact.

@KPallini Katia@insites-consulting.com

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Built the Company by ‘Having a Bias Toward Action’. Retrieved from Entrepreneur: https://

www.entrepreneur.com/article/308136

Covington, N. (2017, January 31). How My Baby’s Allergies Inspired a Multi-Million Dollar Natural

Skincare Business. Retrieved from Working Mother: https://www.workingmother.com/how-

my-babys-allergies-inspired-skincare-business Damra, S. (2017, June 27). Why the Zune failed. Retrieved from Medium: https://medium.com/@

shiriendamra/why-the-zune-failed-132784522ff0

Danone. (2018, June 6). From the Lab to the Street: Danone Adopts a Start-Up Mentality.

Retrieved from Danone: https://www.danone.com/stories/articles-list/from-the-lab-to-the-

street-danone-start-up-mentality.html Denning, S. (2011, April 29). Scrum is a major management discovery. Retrieved from Forbes: https://www.forbes.com/sites/stevedenning/2011/04/29/scrum-is-a-major-management-dis covery/#76aa85df7782 Marcus Bokkerink, G. C. (2017, September 6). How big consumer companies can fight back.

Retrieved 2018, from Bostong Consulting group: https://www.bcg.com/publications/2017/

strategy-products-how-big-consumer-companies-can-fight-back.aspx

Rigby, b. D. (2016, May). Embracing Agile. Retrieved from Harvard Business Review: https://hbr. org/2016/05/embracing-agile Trop, J. (2017, March 28). How Dollar Shave Club’s Founder Built a $1 Billion Company That

Changed the Industry. Retrieved from Entrepreneur: https://www.entrepreneur.com/arti

cle/290539

Verhaeghe, A., De Wulf, K., Schillewaert, N., & De Boeck, F. (2008). Beyond Benchmarking:

Concept performance across countries.

Zalando. (2017, December 12). Hack Week Becomes Hack Weeks: Zalando’s solution-bearing

“hackathon” now celebrated in multiple events. Retrieved from Corporate Zalando: https://

corporate.zalando.com/en/newsroom/en/stories/hack-week-becomes-hack-weeks-zaland os-solution-bearing-hackathon-now-celebrated

nnovation is a top priority for all established organizations, yet many

companies struggle with the speed and quality of innovation and are challenged by successful disruptors and start-ups. The old ways of innovating often lack the DNA of what makes the disruptors successful: friction, passion and pilot. This creates what we label as â&#x20AC;&#x2DC;innovation envyâ&#x20AC;&#x2122; among incumbents. There are multiple ways for large corporations to deal with this envy: simply buy the disruptor, borrow - often short-lived - agile innovation practices, or try to become more like them. This paper focuses on the latter: we highlight how established innovators can - in a simple way - embed the DNA of successful disruptors in their innovation research process, creating a new innovation culture.

By Filip De Boeck (Managing Partner) and Katia Pallini (Content Impact Manager)

ABOUT INSITES CONSULTING From the start of InSites Consulting in 1997 until today, there has been only one constant: we are continuously pushing the boundaries of marketing research. With a team of academic visionaries, passionate marketers and research innovators, we empower people to create the future of brands. As one of the top 10 most innovative market research agencies in the world (GRIT), we help our clients connect with consumers all over the world.