" Why 97% of innovation fails

On the 24th February, Haines McGregor assembled a group of industry leaders in the Food & Drink sector for a roundtable discussion assessing the nature of innovation. 

Speakers included: 

  • Paul Thomas, International Insight Director, Beam Suntory
  • Brendan Williams, Ex Global Marketing Director, Carlsberg Group and Founder, The Free Consultancy
  • Will Bryant, Creative Partner, Haines McGregor
  • Alicia Jitaru, European Brand Director, Mars Petcare
  • Jamie Holtum, Strategy Partner, Haines McGregor

The goal of the discussion was clear: to investigate why 97% of all FMCG innovations fail – and explore how brands can better stack the odds of driving meaningful change in their favour. 

Jamie Holtum underlined why this was a mission worth undertaking. “If we can move this success rate by just a few percentage points – we can open markets and opportunities worth millions”.

Here is what they found. 

Why 97% of innovation fails
Why 97% of innovation fails

A recipe for disaster 

The panel began by exploring why innovations fail.

“There are many reasons why innovations fail to make an impact”, opened Alicia Jitaru. “But any good idea must have strong foundations; and so my instinct is always to look towards the insight. Innovation must stem from genuine consumer need in order to really resonate”. 

“The second most impactful factor is speed.” Alicia continued. “In an ever changing world, it is crucial that brands are able to get ideas out of the lab and onto shelves quickly. But most FMCG organisations will have a two year development process. This is often too slow. There is no use making a product for the needs of today – that isn’t ready until tomorrow.” 

Jamie picked up on this. “Everybody wants to get insight right. But the reality is they don’t. So is the conventional thinking surrounding insight misplaced?”. 

“97% of innovations fail – but they don’t all fail because they are bad ideas or bad products” pointed out Paul Thomas. “They fail because they are confused, or they fail because the brand gets bored of them much more quickly than the consumer does.” 

“Brand managers will begin with a clear brief and a clear target audience,” he continued. “But by the time this brief has hurdled through the various different departments – from commercial to manufacturing – it is easy to end up with a patchwork monster that lacks clarity. It is a product of compromise rather than purpose.”

“And even when it makes it to shelves, brands themselves get bored. It begins with a big marketing push – but investment and interest quickly withdraws. CMOs and marketing teams are in constant flux. New teams come with fresh ideas, and suddenly your innovative product is old news.” 

Ready, steady - research

Great insight often comes from great research. But are consumers the best guides to ask? How accurately can they verbalise what they want? Should brands trust what they say? 

Paul answered with a question. “Imagine if at the beginning of every innovation project, you understood the consumer, their needs, the moment in which those needs were fulfilled, the competitive sets and the tensions which stop them choosing certain products. If you were the designer, wouldn’t you be grateful for this information?This is what research should achieve.”

“But currently most organisations will spend 80% of their research on testing – and just 20% on exploring. These businesses think they know their consumers – and so develop products first. But when they test these at the end – they discover they don’t know as much as they think.” 

“I would love these figures to flip entirely. Research is the oxygen of innovation. But it has to be used properly. If you are relying on a research house, and a couple of hundred anonymous online survey respondents, to tell you if you should launch innovation – why are you in innovation at all? If you are developing something genuinely new, how can you expect consumers to know if they want it?” 

“Research is brilliant. But it has to be used upfront.” concluded Paul. 

Why 97% of innovation fails
Why 97% of innovation fails

Consumer vs Culture vs Commercial

The panel zoomed in on the types of insight that fuels game-changing innovation. Every brand would describe themselves as ‘consumer led’. But what about the commercial aspects? 

“I’m often amazed by how little commercial consideration is given to ideas,” noted Jamie. “Is the market growing? Is it flat or in decline? What are the trends and forces shaping this sector? These questions should be the first part of the conversation. But too often it isn’t.”

Brendan Williams agreed. “You have to have a very clear category strategy with a quantifiable understanding of what the source of growth is for an idea. Senior leaders will be measured against quarterly sales – with their salaries and bonuses held against meeting these targets. I have seen this pressure cause brands to prioritise short term commercial gains over investment in long-term, category defining innovation.”  

So how can brands tackle this structural imbalance stifling innovation? An increasingly popular solution is to set up siloed ‘disruptive innovation’ teams who work beyond the bubble of bureaucracy. But does it work?

“This method can work,” said Brandon. “But quite often these spin-off innovation arms are not viewed as a priority. It is then easy for these groups to miss targets. Consequently they are often absorbed back into the main business after a few years. The best long term solution comes through having organisational purpose – clear structures at each level which prioritise and incentivise innovation. ” 

“You need a clear success criteria,” Brandon summarised. “There is no use talking about a brand funnel during the third month. But you can talk about customer reorder rates as an indication of whether this product is gaining any traction. It is crucial that your KPIs scale and reflect the life stage of your product – it keeps the wider business engaged and lets you better control the narrative of success versus failure.”

Tips and tricks to get your innovation out the door

The panel agreed that internal engagement is just as important as external buy in. Bringing energy, enthusiasm and creativity to a project can go a long way. 

Will Bryant, Creative Partner at Haines McGregor, shared his insight on how FMCG marketers can overcome internal obstacles and give their ideas a chance to shine. “An innovative idea alone is often not enough. It is important that your product, and the materials you use, feel different and novel in its own right.”

 “Senior leadership teams will describe themselves as rational decision makers. But they are still human first and foremost. People buy people. Passion and conviction are contagious – and play a key role in selling innovations internally. Especially when combined with grounded insights.”

Alicia Jitaru picked up on the importance of this. “You need the buy-in of those who will sell your product – just as much as those who will buy it. I would recommend going beyond this to interview external experts early on. We did this successfully with the team at Haines McGregor during our work on the James Wellbeloved product pipeline.” 

“Engagement and constant contact with stakeholders is essential” added Paul. “But equally problems can occur when too many people jump on the bus. You need to work out who’s opinion really matters. Everyone’s opinion may be equal – but some are more equal than others!”.

Why 97% of innovation fails
Why 97% of innovation fails

In summary – the panel identified three key tips for getting innovation out the door:

  • Differentiate physically as much as theoretically: the best innovation feels tangibly new. 
  • Let your passion supercharge your insight: stakeholders will buy into you as much as your product.
  • Know who holds the keys: keep a laser focus on the opinion of the truly influential decision makers. 

This discussion focused on the issues facing large-scale FMCG brands in getting effective innovation out the door. But what about smaller, more agile challenger brands? 

Join us on Thursday 17th March for the second part of this discussion – where we speak to:

  • Nick Britton, Founder of High Water Hard Seltzer
  • Hugh Thomas, Former CEO and Co-Founder at UGLY Drinks
  • Nicola Matthews, Head of Marketing UK&I, Tony’s Chocolonely 

Reserve your free tickets here.