CPG Industry Innovation
The CPG Industry aims to continuously reinvent itself as the online shopper experience and the in-person retail customer both demand personalized, convenient, in stock, economical, and exciting products. CPG embraces constant change and ceaseless innovation to keep up with consumer demands while building brands customers rely on in their daily lives. How do the major companies’ research and development teams build and manage a portfolio of innovative products while ensuring long-term market success and consistent brand loyalty? It’s a complex, interdepartmental system that is augmented with 3 tactics: the advantage of open innovation, strategic supply chain forecasting, and tools for enhanced collaboration across teams that bring new products to market.
Utilize Open Innovation for R&D
Half the company’s ideas must come from the outside
Open Innovation is a proactive strategy complementing your R&D department. Certainly, your company is filled with great ideas and talented employees, but external innovation working with rising entrepreneurs, patent-filing scientists, and the creative consumer captures the power of a worldwide collaboration for designing the best new products. The ‘Connect and Develop’ model embraced by Alan G. Lafley, former CEO of Proctor & Gamble, set in motion a proud culture of Open Innovation for P&G’s product development strategy. More recently this deeply innovative company culture is best demonstrated in the P&G LifeLab, an extended reality consumer experience of its varied brands in the metaverse.
P&G leads with a relentless pursuit of innovation, constantly reinventing the consumer personal care experience by developing an innovation portfolio based off new technologies, customer input, and emerging trends. They also look to outside ideas in competitions like the P&G Ventures Innovation Challenge, sharing the stage of ideation with promising startups.
Following the competition and battling over market share is not a viable strategy. Innovation from within and in conjunction with strategic partnerships is the key to long term consumer product relevance.
“P&G innovation is intended to create value by growing the size of the entire market. Superior performing offerings drive market growth by attracting more users, creating additional usage occasions, and bringing more spending into a category. This creates sales growth that is typically more sustainable than taking business from a competitor.”
– Marc Pritchard, P&G Chief Brand Officer video
Today, Technology Scouting is the most powerful tool to identify prime targets for innovation and capitalize on opportunities outside of the company walls.
Study Past Trends for Future Forecasting
The best predictor of future behavior is past behavior
Another opportunity in innovation is to look to CPG growth strategies for the year based off the lessons learned from the last recession. Metrics reanalyzed from 2008 can provide an outlook for how consumer behavior may repeat if we find a recession triggered in the coming year as some economists are predicting. The report highlights key learnings from the Recession Proof Your Business series which tracks trends in CPG spending during a recession. Companies that innovate incrementally may find success in products which provide consumer comfort, personal indulgence or self-care attributes, as well as items that aid home meal preparation and foster preventative nutrition. Additionally, with gas prices rising and inflation a continued concern, cost conscious spenders will ultimately navigate away from costlier convenience or luxury brands. CPG brands that learn from the past can possibly find competitive leverage in the future.
Using Technology Discovery through a Landscape or Horizon Scan, your company will be better positioned to outperform the competition when it comes to exceeding consumer expectations through exciting, beneficial, and innovative products.
Innovation Portfolio Management Integrates Strategy, Ideation, and Collaboration Across Resources
Is innovation about creativity, or is innovation about process?
Jean-Christophe Flatin, President of Innovation, Science, Technology, and Mars Edge at Mars, Inc. answers this question by underscoring that creativity and process must work in unison; a company must foster ideation and invention within a structured framework of collaborative resource allocation. Innovation must also have a purpose and a measurable, achievable objective to mobilize across departments to solve a specific consumer problem.
Start with Innovation Strategy to develop the most effective innovation organization, processes, and infrastructure. Transformational improvements and invention of new consumer products that drive profitability start with a clear strategy of innovation portfolio management that relies on effective ideation, technology discovery and collaboration across a system of enthusiastic problem solvers.
Here are some important questions to ask your CPG Leaders who are responsible for maintaining a strong innovation portfolio and innovative company culture:
Interested in more? Check out another article about innovating in CPG.
Talk to Ezassi about your Innovation Portfolio and the benefits of our software tools that manage the Innovation Ecosystem, driving your best innovations forward.