NIELSEN BrEakthrough INNovatIoN rEPort · 2019-05-29 · 2 c 2013 T n company BrEakINg through This...

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NIELSEN BREAKTHROUGH INNOVATION REPORT JUNE 2013

Transcript of NIELSEN BrEakthrough INNovatIoN rEPort · 2019-05-29 · 2 c 2013 T n company BrEakINg through This...

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1THE BREAKTHROUGH INNOVATION REPORT

N I E L S E NB r E a k t h r o u g h

I N N o vat I o Nr E P o r t

JUNE 2013

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2 Copyright © 2013 The Nielsen Company

B r E a k I N gt h r o u g hThis report presents the story of this year’s Breakthrough Innovation

Winners. Given the long odds and paramount importance of breakthrough

innovation, our first purpose is to celebrate the winners – and in the

pages that follow we’ll recognize high achievement. Second, we highlight

some essential themes and takeaways that can help marketers improve

their innovation performance and win in the marketplace. Finally, we have

interviewed the winners to learn from their experience – enabling us to

share their stories, discoveries, and transferable insights.

Readers of the popular press may be forgiven for thinking that breakthrough

innovations generally have an “i” at the beginning or a “.com” at the end.

But, as this year’s Breakthrough Innovation Winners demonstrate, success

is rooted in the three core disciplines of Demand-Driven Innovation –

none of which has much to do with technology.

DemanD-Driven insightDemanD-Driven Development

pervasive leaDership

This framework is a distillation of our research on more than 14,000

launches over a four-year period. For this 2013 report, we evaluated over

3,400 consumer products launched in 2011 – identifying 14 Breakthrough

Innovation Winners. Each of this year’s winners illustrates the power of

embracing the demand-driven disciplines, and several of these stories

are shared in greater detail in the Winner Spotlights incorporated in this

report.

There is, of course, no shortage of successful incremental innovations

that generate compelling returns for their managers and owners. They

keep brands fresh and relevant. But, however necessary they may be

to the growth and vitality of enduring brands, these closer-to-the-core

efforts are not the ones that create new platforms for growth or unleash

$200-million brands.

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3THE BREAKTHROUGH INNOVATION REPORT

Three core disciplines of demand-driven innovaTion

DemanD-Driven insight Uncovering latent demand – lurking

in the unmet needs and poorly

performed jobs in consumers’ lives

– is at the core of breakthrough

innovation.

pervasive leaDership Driving the innovation process

with rigor and passion over the

countless hurdles that must be

cleared from idea to launch to years

of in-market support requires top-

down, bottom-up, outside-in, and

inside-out leadership throughout a

committed organization.

DemanD-Driven DevelopmentFrom beginning to end, the innovation

team must pursue the demand-driven

insight faithfully and fully. The concept,

product, and go-to-market execution all

must align – free from the constraints of

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 satisfy three requirements:

relevanceGenerate a minimum of $50

million in year-one U.S. sales.1

enduranceAchieve at least 90% of year-one sales

in year-two. This measure confirms a

sustained level of consumer demand while

allowing for some drop in revenue during

the transition from trial to adoption.

disTincTivenessDeliver a new value proposition to the

market. Ingredient reformulations, re-

packaging, size changes, repositioning,

and other minor refinements to existing

brands are excluded.

The maKinG of Winners: nielsen BreaKThrouGh innovaTion criTeria

celeBraTinG The Winners

ColgatE® optiC WhitE™

DaNNoN oikos® grEEk

YogUrt

MoNstEr rEhab®

sparkliNg iCE®

spECial k® CraCkEr Chips

allEgra allErgY

DoWNY UNstopablEs™ iN-Wash sCENt

boostEr

FibEr oNE® 90 CaloriE broWNiEs

MagNUM® iCE CrEaM

Mio liqUiD WatEr

ENhaNCEr

Milo’s kitChEN® hoME-stYlE Dog trEats

rEEsE’s® MiNis

skiNNY CoW™ CaNDY

VElVEEta ChEEsY

skillEts®

= See Winner Spotlights

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4 Copyright © 2013 the nielsen Company

1 Synthesize and refine megatrends through the lenses of

your brands. Consider how these megatrends might create

new consumer demands and new opportunities for your

brands and organizational capabilities – whether it’s aging

populations, personalization, mobility, changing palates,

health and wellness, and on-the-go eating just to name a

few. Tapping multiple trends, Fiber One created a brownie

that promised a deliciously indulgent treat while delivering

a large helping of fiber – and kept the whole thing at 90

calories.

2 Walk in your customers’ shoes to understand deeply the

circumstances in which they pull your brand into their lives.

Consumers resolve any recurring need in a variety of different

– and sometimes unexpected – ways. These surprises can

challenge accepted category boundaries and presumed

competitors – and reveal opportunities. Alternatively, search

for the “pain points” and nuisances that recur in consumers’

lives. These are the pulses of 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 for a noncarbonated

energy+hydration offering. The insight eventually led to

Monster Rehab.

3 Identify nonconsumers or circumstances of nonconsumption:

identify groups of potential customers who due to lack of

wealth, expertise, or access find consumption impossible,

inconvenient, or unsatisfying. These populations can be ripe

for category expansion. Downy Unstopables dramatically

expanded the laundry detergent additives category, for

example, by drawing in a neglected pool of consumers

seeking long-lasting fragrance. The journey to launch

Reese’s Minis began with research to identify “barriers to

consumption”: What did candy eaters consume when they

were not choosing Reese’s?

4 Identify over-served consumers and develop a suitable

offering. More often than you might think, opportunity lies in

neglected pools of demand where simpler, less expensive, or

discipline #1

DEMaND-DrIvEN INSIghtiDENtiFYiNg UNMEt DEMaND

This is where the quest begins: the search to identify the unarticulated

desires, partially expressed needs, and recurring frustrations in

consumers’ lives. Rarely does latent demand pop neatly from customer

surveys or focus groups. As Henry Ford famously observed, if he had

asked people what they wanted, they would have said faster horses. More

recently, Steve Jobs noted that consumers can’t describe what they’ve

never experienced.2

six approaches for idenTifyinG unmeT demand

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5the BreaKthroUgh innovation report

more convenient offerings can thrive. This does not necessarily

mean low-end. In many cases, this involves tailoring a

“professional grade” product to mainstream demand. For

consumers seeking effective teeth whitening without the cost

or inconvenience of strips or professional services, Colgate’s

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

powerfully associated with your brand? Are there “missing

benefits” in a category – or perhaps in a particular region – that

you 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 fuel growth. They moved very quickly with a taste-test-

winning product, broad distribution, and their powerful

brand, propelling Dannon Oikos past $275 million in first-year

sales.4 Dannon also found that Greek was an attribute that

could profitably expand established brands such as Activia®

and Light & Fit®. Critically, Dannon did not allow Chobani’s

impressive results to define the category or constrain their

thinking. Certainly, they did not consider ceding the space.

If anything, Chobani’s success expanded their horizons and

energized their efforts.

6 Challenge assumptions about what consumers value, growth

drivers for the future, true competition and alternatives,

category boundaries, and the prevailing business model. Roll

back the accepted barriers limiting what the organization “can”

and “cannot” do. Recognize that product attributes constitute

just one dimension of potential value creation. Revisit your

“dead letter office” of innovation. Upon witnessing competitor

success, marketers are heard to exclaim, “We thought of that”

as frequently as, “Why didn’t we think of that?” Be relentlessly

curious and keep asking why. As the Winner Spotlights reveal,

Del Monte acknowledged, “You can’t do transformation half

way…it’s riskier to go slow or partially commit…and everyone

from marketing to sales to finance has to fully commit and go

all in.”

Breakthrough Winners painstakingly sift through extensive research and

complex data to identify the weak signals and map the hazy contours

of latent demand. Expertise, curiosity, and persistence are required for

this work. In studying this year’s winners, as well as those from the prior

three years, we’ve learned that there is no simple demand-driven insight

cookbook. However, we have identified six successful approaches, which

we share below.

Searching for opportunity by exploring the landscape of latent demand is

no simple task. It’s a voyage of negative discovery: searching for what’s

missing and imperfect 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 off: as innovation authority Clayton

Christensen observed, “Creating new markets is more rewarding and less

risky than entering established markets against entrenched competitors.”3

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6 Copyright © 2013 The Nielsen Company

discipline #2

DEMaND-DrIvEN DEvELoPMENtFroM iNsight to laUNCh aND bEYoND

Demand-driven insight is a prerequisite for breakthrough success, but

it often challenges accepted category boundaries. Consumers don’t

live their lives within the crisp confines of existing UPC classifications.

Latent demand rarely organizes itself neatly into demographic buckets or

aligns with other familiar proxies. When demand challenges companies’

traditional ways of thinking, managers often yield to the powerful process

disciplines, stage gates, timelines, incentives, and cultural forces that

compel conformity.

Breakthrough Innovation Winners achieve uncommon results because they

pursue, shape, develop, and activate insights with faithful adherence to

the specifications of consumer demand. They eschew false comforts and

advocate for the consumer in the face of intense organizational pressures

that might compel a more conventional path.

The main – and often only – advantage that many successful start-

ups wield against large and entrenched competitors is what they lack:

organizational and operational constraints that mold the future in the

image of the past.

Del Monte’s VP of Innovation, Geoff Tanner, recalled the challenge the

Milo’s Kitchen team faced in staying true to their core insight. “From the

outset, we were committed to launching a new-to-the-world brand that

would transform the category and deliver topline growth. This led to our

establishing the Milo’s team almost as a skunk works, with considerable

autonomy and decision-making authority.”

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7THE BREAKTHROUGH INNOVATION REPORT

Breakthrough innovators don’t shy away from opportunity, even when

another brand has historically dominated. Kraft’s 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

Velveeta’s strengths,

overturning internally held

truths and addressing

latent consumer demand

for exciting and easy dinner

solutions.

These winners challenged

convention and triumphed by expanding or transforming categories –

a Breakthrough Innovation Winner hallmark. Through unencumbered,

demand-driven development, Breakthrough Innovation Winners create

visible separation from the pack. The Winner Spotlights featured in this

report showcase successful, transferable 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 faces, success to and through

implementation is effectively impossible without the third, essential pillar

of the Demand-Driven Innovation framework: Pervasive Leadership.

BreaKthroUgh innovators Don’t shy away from opportUnity, even when another BranD has historiCally DominateD.

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8 Copyright © 2013 The Nielsen Company

discipline #3

PErvaSIvE LEaDErShIPthE DNa oF brEakthroUgh sUCCEss

The annals of Breakthrough Innovation Winners are rich with leadership

qualities of many types – of vision, of persistence, of creativity – and

at many organizational levels, from the executive suite to R&D labs,

to retail store floors. The core, transferable leadership lesson from 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 of any organization

chart or reporting lines.

What we have discovered is a version of Andy Grove’s maxim that “only

the paranoid survive.”6 Breakthrough Innovation teams exhibit a charged

awareness of the hazards posed by the pressure to conform to established

processes and entrenched beliefs. This iconoclastic mindset is highly

unusual. There is an audacity to Breakthrough Innovation as it does not

work without a real disregard for the status quo. Without leadership at

all levels to identify, shape, and fulfill demand-driven insights through to

their fullest, uncompromised realization, breakthroughs will never have a

chance. We identify three essential dimensions of Pervasive Leadership.

leaDership that BriDges BoUnDaries

Integration and alignment among all functions touching on the innovation

process is essential. Leadership in this context manifests as ownership of

outcomes and an eagerness to collaborate in the interest of achieving

goals. We’re all aware of how important CEO involvement is, but seeing is

believing. As Kraft Foods Group, VP of Innovation Barry Calpino recalled,

when Chief Executive Officer Tony Vernon made it a regular practice to

participate in quarterly innovation meetings, people noticed. Pervasive

leadership always emanates from the top, but real alignment and

commitment require more than chief executive exhortations.

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9THE BREAKTHROUGH INNOVATION REPORT

leaDership that Drives foCUs anD sUstains exeCUtion

Winners apply a process rigor that has much more in common with a

world-class manufacturing operation than with a freewheeling idea factory.

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 blood

of innovation through the operational and executional limbs.

There is little rest. Leaders embrace a three-to-five year timeframe that

encompasses development, launch, support, and extension. Absent

active and persistent leadership, the gravitational forces of established

processes, entrenched beliefs, and “satisficing” stage gates will bend

innovation towards conformity rather than transformation.

leaDership that CUltivates shareD Core Beliefs

Leadership instills the belief that innovation is essential. Breakthrough

Innovation Winners redefine the impossible as possible – otherwise they

would not be able to “do the impossible.” Del Monte’s journey to launch

Milo’s Kitchen dog treats began by acknowledging “if we were going to

innovate in dog treats, we were not simply going to copy the competition.

We were not going to be a follower. We wanted to define the category on

our own terms – to expand the category, not just take share.” Winners

have attitude and take ownership. If that sounds exaggerated, spend some

time with the Skinny Cow team at Nestlé, or the Velveeta or MiO teams at

Kraft, the Milo’s team at Del Monte, or the Magnum team at Unilever. It is

impossible not to see that Breakthrough Innovation Winners systematically

stretch the limits of possibility. Winning requires more than believing, but

there is no greatness – or breakthrough – without belief.

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10 Copyright © 2013 The Nielsen Company

2013 Winners - sprinTers

ProfILES IN actIvatIoNthE MarathoNEr aND spriNtEr approaChEs

Consistent with our findings from the Breakthrough Innovation Winners

of 2012, this year’s winners followed one of two activation strategies:

Sprinter or Marathoner. One can think of Sprinters as following a strong

“push” strategy, while Marathoners trust consumers to “pull” brands into

their lives.

Sprinters accelerate distribution of their new products, rapidly reaching

their maximum penetration. They also spend heavily on advertising

support during the first year. The result is that they achieve very high

levels of trial and sales in year-one. Then Sprinters pull back on advertising

alleGra allerGy$680–$690 million

milo’s KiTchen® home-sTyle doG TreaTs $175–$185 million

mio liquid WaTer enhancer $265–$275 million

reese’s® 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 - maraThoners

Two-Year Revenue Two-Year Revenue

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11THE BREAKTHROUGH INNOVATION REPORT

support by almost one-half in the second year – and both distribution and

sales levels remain stable through the second and third years in market.

This year’s Sprinters include Allegra, MiO, Reese’s Minis, Milo’s 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 first year, and build

distribution more gradually. Consequently, their sales levels in year-one

– while impressive – are typically only 60% of what Sprinters achieve.

However, they continue to build distribution in years one, two and three,

and maintain relatively consistent levels of 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-half the advertising spend than the average

amount allocated by Sprinters.

Marathoners include brands from smaller companies that lack the

resources to adopt a Sprinter model, such as Monster Rehab and Sparkling

ICE, as well as launches from larger companies – often when launching

further-from-the-core brands (i.e., Optic White, Magnum, Unstopables,

and Oikos).

YEAR 3YEAR 2YEAR 1YEAR 0

SPRINTER MARATHONER

0

$50

$100

$150

$200

SALE

S L

EVEL

AVERAGE SALES LEVELS IN MILLIONS OF DOLLARS

2013 Winners - maraThoners

Source: Nielsen ScanTrack, 2008–2013

2012 Winners

Two-Year Revenue

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13THE BREAKTHROUGH INNOVATION REPORT

W I N N E r S P ot L I g h t Sspotlight 1 : rEEsE’s® MiNis

spotlight 2: MagNUM® iCE CrEaM

spotlight 3: allEgra allErgY

spotlight 4: Milo’s kitChEN® hoME-stYlE Dog trEats

spotlight 5: Mio liqUiD WatEr ENhaNCEr

spotlight 6: skiNNY CoW™ CaNDY

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14 Copyright © 2013 The Nielsen Company

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15THE BREAKTHROUGH INNOVATION REPORT

spotlight #1

rEESE’S MINISthE pErFECt CoMbiNatioN oF ChoColatE, pEaNUt bUttEr aND iNNoVatioN

Mike DePanfilis was the VP Shopper Marketing responsible for the Reese’s

franchise in 2011 and, as he assessed the venerable brand’s situation,

the findings were concerning: growth was lower than the category, and

recent innovations had relied on close-in extensions and short-term

“limited editions.” DePanfilis pulled no punches, “We had a leaky bucket

and were failing badly. Recent launches had been margin-dilutive,

cannibalistic, and off-equity. Our process systematically underperformed

and that poor performance reinforced a mindset of underachievement.”

In short, Reese’s recent innovation track record showed no expansion of

the category – just a zero-sum game that failed to deliver excitement for

customers or results for Hershey’s.

Like many Breakthrough Winners, Hershey’s march to greatness began

with four elements:

• A clear-eyed assessment of the current reality

• A clear sense of ownership – “Ours is a ‘what have you done for me

lately’ culture, so solving our growth problem was on me and my

team. Failure to innovate and failure to grow were simply unacceptable

outcomes.”

• A compelling call to action – “We set clear criteria for innovation

ideas in an effort 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 brand’s core value – “We reaffirmed our core

brand equity as ‘the perfect combination of chocolate and peanut

butter,’ and we required all innovation ideas to reinforce and leverage

that core equity. Again, looking at our recent past,” DePanfilis

elaborated, “there was a pattern of straying from all that we had built

up, and we had to embrace our strengths.”

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16 Copyright © 2013 The Nielsen Company

DePanfilis also challenged his team to think beyond product-centric

innovation. “Our solution had always been a new color or flavor or product

tweak. Specifically, we started thinking about packaging and marketing as

innovation levers to pull.”

With a clear diagnosis, urgent sense of purpose, and exacting criteria,

DePanfilis and his team began the insight process: a search for unmet

demand that would address neglected usage occasions or engage new

customers.

“We had a hypothesis that we wanted to explore with qualitative research,”

DePanfilis began. “The specific hypothesis is now unimportant, but we

had committed to 24 focus groups to flesh out our idea. Well, 10-minutes

into the first session, a participant speaks up: ‘So here’s the way I see it:

you want me to buy a solution to a problem that doesn’t exist.’” The room

went silent. The focus group moderator called a break to huddle with the

Reese’s team: “Now what?” the moderator asked.

“We had to think quickly on our feet and develop an alternative plan,”

DePanfilis recalled. “What were we going to do? Scrap the research?

We returned to our core criteria around new usage occasions and new

consumers for a quick brainstorm. We instructed the moderator to explore

what the group members consume when they’re having candy and not

choosing Reese’s or simply hold a ‘barriers to usage’ conversation.”

What unfolded was electrifying to the Reese’s team: “Basically we

heard people describe all the ways that Reese’s 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 of consumption. By identifying all these barriers to

consumption, consumers were revealing latent demand and scripting our

innovation brief.” DePanfilis acknowledged, “Truth is, we got lucky in what

we came up with because we were asking the right questions, looking

in the right places based on our criteria around category expansion. I

had a talented team of brand marketers and consumer researchers that

knew the consumer inside and out to assist me,” said DePanfilis. “All the

arrows were pointing at a theme we’d tried but never fully embraced: what

the industry refers to as ‘hand-to-mouth’ consumption.”

“Hand-to-mouth was a familiar theme to us. We had this ‘Pieces’ concept

that we’d tried with York, Almond Joy®, and Special Dark, but there were

inevitably compromises in delivering the full taste experience. We knew

from our research that Reese’s delivers a unique emotional experience,

not just a physical product. In short, our prior efforts with these other

items were not totally leveraging the powerful equity of these great

brands. They were compromise solutions that delivered middling results.

we haD the insight, BUt the teChnology to proDUCe a perfeCt reese’s minis DiD not exist.

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17THE BREAKTHROUGH INNOVATION REPORT

The opportunity was for a hand-to-mouth offering that delivered an

uncompromised solution to these neglected usage occasions consistent

with the eating experience of the brand.”

“We had the insight, but the technology to produce a perfect Reese’s

Minis did not exist. There is a ratio of peanut butter to chocolate, quality

specs for ingredients, viscosity parameters for the peanut butter, and

myriad variables that define the real Reese’s. We pushed on the Product

Development team, and they really rose to the challenge. This was

not a simple manufacturing fix, and solving it required collaboration

across Sourcing, Innovation, Logistics and Sales as well as R&D and

Manufacturing. This was an organization-wide collaboration, a massive

undertaking, and a major team accomplishment.”

Product attributes were part of the consumer requirement, but DePanfilis

coaxed his team to activate additional innovation levers: “We sought

innovation in the packaging and the marketing in addition to product.

Delivering unwrapped Reese’s in a resealable bag that stood up at shelf

was an essential dimension of fulfilling the consumer requirement and

reinforced the hand-to-mouth eating experience. From a marketing

perspective, it was about alignment and execution: getting the creative,

the media weights, the frequency, and the seasonality in seamless

alignment with the functional and emotional experience our customers

desired.”

Breakthrough success didn’t come easily to the

Reese’s team. Their clear initial criteria, their

willingness to adapt to new information, 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, Reese’s Minis success provided an

operational blueprint and innovation platform

that Hershey’s successfully leveraged to launch

“Minis” versions of other brands with confidence

and impact. The success of this initiative was made

possible by a broad cross-functional team consisting of Operations,

Packaging, Engineering, Research, Sales and Marketing, which worked

together collaboratively supporting one another. It wouldn’t have occurred

without the support of everyone.

Sometimes you can make it big by going small. Reese’s Minis: a huge win

for Hershey’s and a bigtime Breakthrough Winner.

“this was an organization-wiDe CollaBoration, a massive UnDertaKing, anD a major team aCComplishment.”

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18 Copyright © 2013 The Nielsen Company

MagNuM IcE crEaMpUttiNg soME stYlE iNto iCE CrEaM

Unilever’s Magnum brand generated year-one sales of $95 million and

year-two sales of $136 million. While success may look straightforward

in hindsight – bringing a stylish, high-end offering into a relatively

quiescent category – that’s not the real story. For starters, and despite

Magnum’s success in other markets, U.S. entry plans met significant

internal skepticism. Responsible for the Magnum launch, Alfie Vivian,

VP Refreshments 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 first major challenge was to break Unilever’s “internal

paradigm” of the ice cream category. That paradigm was rooted in

product-centric notions of innovation. From inexpensive family gallons

to ultra-premium varieties, the historic category focus was primarily on

the physical product and packaging. What the Unilever insights team

uncovered were three core findings:

• The category had lost excitement in the U.S. grocery business

• Glamour, decadence, and sexiness were powerful, relevant

emotional dimensions of indulgence – qualities more fully explored

in the super-premium chocolate business, but largely absent from

the ice cream category

• Unilever’s global insights team further identified a compelling pool

of consumers who seek style, indulgence, sexiness, and decadence

in their lives

The Magnum team concluded that nothing in the U.S. market was

delivering sophisticated elegance and high style. While Magnum was

bringing product innovation and a super-premium product to market,

the success formula was not only rooted in the functional characteristics

of the physical product. From the beginning, Magnum was about

transforming a category by creating a lifestyle brand that would employ

luscious and decadent ice cream as its vehicle for satisfying pleasure-

seeking consumers.

spotlight #2

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19THE BREAKTHROUGH INNOVATION REPORT

“We wanted to take satisfying 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 transform, energize, and expand the category.” The Magnum team was

convinced that the emotional and social elements of a true lifestyle brand

were not just absent in the category but were powerfully relevant to a rich

pool of latent consumer demand. Extensive research and global experience

supported their confidence.

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 force that flowed from the top of Unilever and throughout

the entire organization: Magnum would be big, it would delight American

consumers, and it would transform the category.

Magnum’s launch strategy reflected the objective of transforming the

ice cream aisle with an entirely new brand energy. Creative direction was

entrusted to fashion icon Karl Lagerfeld in the context of a high-visibility

engagement with the fashion industry. Since when do you see ice cream on

red carpets and runways? Magnum was clearly no ordinary ice cream – or

run-of-the-mill brand.

But image isn’t everything. Retailers were essential collaborators, and Magnum

engaged them with a three-pronged promise that the product would:

• Energize the freezer aisle

• Expand the ice cream category

• Increase margins

Aligning Magnum’s strategy with the economic incentives of retailers was

a critical success factor. And this is just the beginning.

Platform extensions and new launches are already in the market for 2013

and in the works for 2014 and 2015. Again illustrating a Breakthrough

Innovation Winner hallmark, the Magnum launch is a sustained, multiyear

commitment.

As sweet as the Magnum success is, and as we know from Breakthrough

Innovation Winner findings as well as from years of client work, the popular

press often gets it wrong when the high-gloss story of innovation is told

from 30,000 feet. Innovation is hard, hard work and success is a function

of breaking through walls and overcoming setbacks. As Vivian remarked,

“I can give a long list of all the things we struggled with: from scaling

the supply chain to getting the pricing right to agreeing on the branding

strategy to balancing the demands of different channel partners...it would

be a long list.”

But, for Breakthrough Winners, the only “impossible” is failure.

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.

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20 Copyright © 2013 The Nielsen Company

aLLEgra aLLErgYNothiNg to sNEEzE at

When you’re a prescription brand moving to a crowded over-the-counter

(OTC) marketplace, success is far from certain. That was the case when

Sanofi/Chattem introduced Allegra to consumers in 2011. Entrenched

brands such as Claritin®, Zyrtec®, and low-cost Benadryl® were already

crowding the allergy relief aisle. That didn’t stop Richard Spangler, Senior

Director of Marketing, Chattem, and his team from boldly betting big that

Allegra would be a success.

Despite the myriad products available, many allergy sufferers still found

themselves making an undesirable trade-off – one that Chattem’s insight

team had identified. Either their medicine was too slow-acting when they

first took it or it caused drowsiness. No matter what choice sufferers

made, they felt that they were “sacrificing,” and it was that word from the

consumer that energized and focused the Allegra team. The problem in

context: allergy symptoms peak in the spring seasons when people are

active and outdoors. Existing solutions that addressed their symptoms

made them feel drowsy and listless, so consumers had to choose between

“living in the moment” and suffering, or taking a medication and feeling

drowsy. In addition to providing complete relief without drowsiness,

“living in the moment” meant that solutions needed to work fast when

symptoms first appeared, so this was another essential element of the

ideal solution that Chattem knew they had to deliver.

Despite a crowded market, Chattem saw a huge opportunity if they could

introduce a brand that resolved the persistent consumer trade-off.

spotlight #3

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21THE BREAKTHROUGH INNOVATION REPORT

While Chattem R&D was confident they had the benefit bundle nailed, the

consumer engagement plan was no less critical. The allergy relief 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 sufferers with

empathy and relevance. The creative fully captured the circumstances of

the sufferer and the tension of the trade-off.

Like all Breakthrough Winners, Allegra took root in a poorly addressed

consumer demand. The team developed a message that incorporated

all the essential benefits desired by allergy sufferers. Brand imagery and

advertising messaging spoke to the emotional and social dimensions of

consumers’ needs – how they wanted to feel 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 failing to

address essential dimensions of consumer demand, and if the late

entrant addresses the functional, emotional, and social dimensions of

the consumer need, and if the late entrant activates in market with an

engaging, effective communication and channel strategy to bring the

brand to life for consumers on a grand scale.

Chattem saw a hUge opportUnity if they CoUlD resolve the persistent ConsUmer traDe-off.

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22 Copyright © 2013 The Nielsen Company

MILo’S kItchEN hoME-StYLE Dog trEatStraNsForMiNg a CatEgorY

“In recent years, Del Monte has been focused on building its innovation

DNA,” said Geoff Tanner, Del Monte’s Vice President of Innovation.

“We’ve 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 of us started working on a big idea. Not

exactly a skunk works, but pretty close,” Tanner described. “We put a few

stakes in the ground from the outset,” Tanner recalled. “We decided that

if we were going to innovate in dog treats, we were not simply going to

copy the competition. We were not going to be a follower. We wanted to

define the category on our own terms – to expand the category, not just

take share.”

The small team of highly talented, entrepreneurial cross-functional

leaders on the Milo’s Kitchen team had a total belief and commitment to

the opportunity and vision. According to Tanner, “This was probably the

single most important factor in the success of the launch.”

The insights team went to work, and one finding was that while the

pet food category had seen a steady increase in premium brands and,

specifically, “human-quality food,” the pet treats category lagged. In fact,

pet accessories and services such as insurance and grooming had all seen

successful, premium offerings – in step with a well-understood trend of

“pet as family member.” This was one of the early signs that the latent

demand pool could offer a significant opportunity.

Tanner’s colleague and Vice President of Insights, Courtney Moore, led

the research to get to the truth. Arguably the breakthrough insight came

from a unique research methodology in which the company observed the

behaviors and underlying thought processes of consumers when they

spotlight #4

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23THE BREAKTHROUGH INNOVATION REPORT

were told they could no longer use their favorite treats. What they learned

in the research, in combination with numerous supporting studies, led to

Milo’s Kitchen’s successful brand position of “wholesome like human.”

The defining characteristic of the consumer-demand pool was that pets

held equal or near-equal status with other family members.

Armed with a disruptive insight, the team then worked to bring it to life

across every touch point. The brand name was carefully chosen, with

“Kitchen” connoting not just careful preparation and high quality food,

but increasingly the place where family members – both two-legged and

four-legged – spend time together. Activating the insight also led to a

window on the packaging that visibly showcased the product, the use of a

real person with her dog on the front panel (a first for the category), and

a 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 faced many significant challenges and obstacles on

the road to making their vision a reality. The team’s dogged persistence

and grit paid off, and Milo’s Kitchen went from concept to shelf.

Tanner and Moore were confident enough in their research findings and

their executional capabilities that they convinced management to bet big

– believing that the opportunity should be executed with huge support

or not done at all. As Tanner recalled, “You can’t do transformation half

way. We were convinced that it was riskier to go slow or partially commit.

We really felt that we had the chance to transform a category and build a

powerful 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 force. It was all part of a single strategy. There was

nothing to hedge, no optional elements.”

At a breakneck pace – 14-months from 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 ownership

committed to consumer understanding and investment in growth, there

is now an internal expectation and strong support for transformational

innovation. “I believe that the success of Milo’s Kitchen has played a part

in building a more robust innovation runway at Del Monte,” said Tanner.

we were ConvinCeD that it was risKier to go slow or partially Commit. we really felt that we haD the ChanCe to transform a Category anD BUilD a powerfUl new BranD.

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24 Copyright © 2013 The Nielsen Company

MIo LIquID WatEr ENhaNcEr kraFt’s iNNoVatioN rEVolUtioN aND hoW to bUilD a platForM For sUstaiNED groWth

It’s amazing what’s not possible if you believe it’s impossible. If an

organization “believes” that it is incapable of breakthrough innovation, the

prophesy will be fulfilled. If the lore of innovation within an organization

is the memory of epic failure, dollars wasted and careers shortened, who’s

likely to aspire to lead that futile charge?

This pessimistic mindset about innovation can take hold even in a

company as successful as Kraft Foods, with some of the best-known food

brands on the planet. Where one might expect to find swagger, there was

fatalism: it was a “can’t do” innovation culture stuck in a cycle of failure,

small ideas with even smaller levels of support behind them. What’s even

more surprising? This is not ancient history, this was 2010.

So how do you, in the words of VP of Innovation at Kraft Foods Group,

Barry Calpino, go from “worst to first”? How do you move from launching

130 tactical, uninspired, half-efforts to bankrolling 12 big initiatives with

confidence – and unprecedented success?

step 1: faCe reality

If your company is underperforming in innovation, acknowledge it openly

and bluntly. In Kraft’s case this required the courage to declare, “Right

now we are at the bottom of the pack at innovation.”

“ spotlight #5

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25THE BREAKTHROUGH INNOVATION REPORT

step 2: taKe an “honest looK in the mirror”

Identify the enemy. It might be a resource issue. Sometimes a process flaw

is to blame. Occasionally metrics and analytic tools need to be changed.

For Kraft, the honest look revealed the biggest detriment was a mental

model grounded in failure: thinking small, not investing, and a resulting

culture of “we can’t” – and subsequently that “innovation doesn’t matter

here.” Self-created and self-fulfilling. Belief is essential, and belief in failure

is devastating. One quick check is to collect the innovation mythology and

lore of an organization: are tales told of crowning achievement or of serial

defeat? Belief is destiny, and innovation success cannot take root in a

culture convinced or in a rut of failure.

step 3: start the revolUtion

“We will transform our innovation capabilities, our success rates, and

our mental models. It is simply unacceptable and unsustainable to fail at

launching successful growth products.” Having a CEO leaning in helps,

as CEO Tony Vernon’s involvement illustrates.

step 4: thinK Big

When the goal is breakthrough innovation, ask, “How big can this be?”

and “What type of support do we need to put behind ideas to make them

truly big?” – not “What is the minimum threshold of acceptability or

spending?”

step 5: taKe a long-term view of sUCCess

This doesn’t mean being too patient for impact. It means committing

to supporting successes for two-plus years. “Launch and leave” is not a

winning strategy for breakthrough innovations.

step 6: reCognize yoUr organization’s strength

Embrace and energize them! In Kraft’s case this meant:

• Great brands

• Powerful R&D organization

• Extensive, skilled sales force

• Retail partners clamoring for innovation

• Unexplored insights

Kraft had some pretty powerful innovation assets for an organization

convinced of the improbability of innovation success.

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26 Copyright © 2013 The Nielsen Company

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 fuzzy front end of

innovation is no longer fuzzy or that strategic pivots based on marketplace

feedback disappear. To the contrary, these essential process steps are

defined with appropriate tolerances for 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 if they hit most of

the elements on the checklist, a concept is market ready. That’s not how

processes work, and organizations employing a scorecard approach to

innovation are unlikely to find themselves in this report.

Finally on process: extend it. Reach upstream to generate insights about

emerging and latent consumer demand. Look for struggles, nuisances,

compromises, work-arounds and nonconsumption in consumers’ lives.

At the other end of 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 story” The path that led to Kraft pushing 130 middling launches into market was

acceptance of almost mindless tweaks and changes to existing product

features and attributes. Categories exist in the lives of consumers and are

defined by the jobs they need to perform in their daily lives. By insisting that

all innovation ideas present a category story framed by the circumstances

of the consumer – rather than by the attributes of the product – Kraft

made a clean break with historic incrementalism and embraced a more

expansive and ambitious mission for innovation.

step 9: emBraCe retailers as partners, not

DistriBUtion pipes to pUsh proDUCt throUgh By bringing retailers into the innovation process, a consistently successful

shopper experience is far more likely.

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27THE BREAKTHROUGH INNOVATION REPORT

step 10: set goals anD Define sUCCess

Kraft decided that they wanted fewer, bigger, better launches that received

the best talent and ample resources. Success was defined as year-one

sales of $30 million and margin-accretive. As Calpino said, “You’ll never

do anything big if you don’t think big – and act big by the investment you

put behind the ideas you believe in the most. You need a culture of ‘How

big can we make this?’ – and a culture of 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 of MiO, the idea of a liquid-concentrate flavor pack for

water had been around for 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, “Let’s create an entirely new

brand 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 far as possible and investing very heavily in

supporting the launch – in years one, two, and now three – MiO generated

cumulative first- and second-year sales of $268 million. Moreover, more

than 30% of 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 isn’t magic or blind luck. As Kraft’s

innovation transformation shows, putting on the overalls and rolling up

sleeves can make the grunt work glorious.

yoU’ll never Do anything Big if yoU Don’t thinK Big – anD aCt Big.

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28 Copyright © 2013 The Nielsen Company

SkINNY coW caNDY thiNkiNg oUtsiDE thE aislE

For Nestlé’s Skinny Cow, what started in the ice cream aisle found a

fast following in the candy section. It was a big, bold leap – enabled

by compelling demand-driven insight and realized by relentless pursuit

of consumer requirements through a comprehensive and insight-driven

go-to-market plan.

For the Skinny Cow team, the good news is that they had identified

a compelling pool of unmet demand. The challenge remained: could

they fill it? The marketing team gave the R&D powerhouse the demand-

driven product specification and they delivered with excellent products

validated by consumer research.

Even with a clear brief for the benefit bundle, huge marketing challenges

remained. Notably, how to succeed in a low-traffic aisle? No easy task.

The Skinny Cow plan: “We gotta make sure that shoppers literally

fall over our product. We need to get the product to other areas of

store.” This was a big move and a gutsy investment: custom displays

were built to merchandise Skinny Cow chocolates in other parts of the

spotlight #6

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29THE BREAKTHROUGH INNOVATION REPORT

store – notably, in front of the Lean Cuisine section of the freezer bank.

Sounds crazy, but what the insights team uncovered was that, though the

products were wildly different in terms of their specific attributes, they

were closely aligned in the core benefits they delivered and in the vital job

they performed in consumers’ lives. Specifically, for consumers looking

for assistance in living healthier lives without undesirable sacrifices,

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 of Skinny Cow

ice cream, the marketing team had curated an

active group of loyal consumers on a variety of

social platforms. The consumers were energized,

engaged online influencers – and fanatics of

the Skinny Cow brand. At launch, the Skinny

Cow team gave these consumers the two things

that research shows influencers value most:

recognition from 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 of the coming release, coupons for free trial boxes, and e-coupons

for sharing with friends. By energizing and activating their fan base,

Skinny Cow created buzz and demand for the product before it even hit

the stores.

In the end, Skinny Cow went outside the candy aisle to bring new users

and, ultimately, “making it safe” for shoppers to walk down the aisle

without fear of temptation. Skinny Cow changed the game and racked up

a big-time Breakthrough Winner. Sweet.

By energizing anD aCtivating their fan Base, sKinny Cow CreateD BUzz anD DemanD for the proDUCt Before it even hit the stores.

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30 Copyright © 2013 the nielsen Company

aN ENcouragINg WorDYoU WaNt to Do this

On average, Breakthrough Innovation Winners generate over $100 million

in first-year sales and sustain annual growth of 23% through year

three in-market. Nothing breeds success like success: the majority of

Breakthrough Winners go on to launch extensions that fuel additional

growth at comparatively low risk. Growth also has a way of attracting

top talent and boosting stock prices. To put a new spin on a Hollywood

classic, “Growth is good.”

Breakthrough Innovation Winners offer a wealth of guidance, but the map

is, famously, not the territory. Every brand and each team must find its

own way. Demand-Driven Innovation provides a valuable approach for

planning your breakthrough journey. The accompanying Winner Spotlights

showcase the framework – and the winners – in action.

Most importantly, “Congratulations” to this year’s winners! We reiterate

our sincere thanks to those who participated in this report, as well as

embracing our belief that an idea shared is an idea improved. While the

odds of innovation success remain daunting, we can make the risks more

manageable and the path to success less hazardous by accelerating the

cycle of sharing, learning, and improving.

Nielsen Breakthrough Innovation Report is the annual synthesis of our

daily, global commitment to marketers – helping them thrill consumers

and create vibrant, valuable growth businesses. We look forward to a year

of innovation successes and to working with leaders to advance the state

of innovation knowledge.

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31the BreaKthroUgh innovation report

aUthorsTADDY 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]

footnotes1 Nielsen ScanTrack (Food, Drug, Convenience, Dollar, Club and Mass Merchandise)

2 Walter Isaacson, Steve Jobs, 2011

3 Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause

Great Firms to Fail, 1997

4 Nielsen ScanTrack, 2011–2013

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

DisClaimerThe information contained in this report is based on compilations and/or estimates representing

Nielsen’s opinion based on its analysis of data and other information, including data from

sample households and/or other sources that may not be under Nielsen’s control. Nielsen shall

not be liable for any use of or reliance on the information contained in this report.

aBoUt nielsenNielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, 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 information, visit www.nielsen.com.

Copyright © 2013 The Nielsen Company. All rights reserved. Nielsen and the Nielsen logo are trademarks or registered trademarks of CZT/ACN Trademarks, L.L.C. Other product and service names are trademarks or registered trademarks of their respective companies. 13/6243

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32 Copyright © 2013 The Nielsen Company