2013 Nielsen Breakthrough Innovation Report

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


2/32Copyright 2013 The Nielsen Compan

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.



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


4/32C 2013 t n C

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


5/32the BreaKthroUgh innovation report

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



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.



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.



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.



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.


10/320 Copyright 2013 The Nielsen Compan

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



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


12/32



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



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.



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.



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.



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



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.



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.

spotlight #3



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.



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

spotlight #4



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.



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.

spotlight #5



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.



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.



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.



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

spotlight #6



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.


30/320 C 2013 t n C

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.


31/32the BreaKthroUgh innovation report

aUthors

TADDY HALL

Senior Vice President, Nielsen Innovation Practice North America

[email protected]

CHRIS CASEY

President, Nielsen Innovation Practice

[email protected]

ROB WENGEL

Senior Vice President, Nielsen Innovation Practice North America

[email protected]

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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