NIELSENBREAKTHROUGH INNOVATIONREPORTJUNE 2016
2016 U.S. EDITION
THE NIELSEN BREAKTHROUGH INNOVATION REPORT2
WELCOME
Copyright ©2016 The Nielsen Company 3
WELCOME TO THE 2016 NIELSEN BREAKTHROUGH INNOVATION
Report, and congratulations to our 18 winners! This is our biggest class
of winners ever, and it features two start-up companies—a Breakthrough
first. The report celebrates the high achievements of all of our winners
and shares insights from their extraordinary accomplishments, most
notably in our largest-ever collection of case study Spotlights, which
showcase Breakthrough Innovation in action.
As we reflect on the success drivers of the 92 Breakthrough Winners
across the five years of our study project, leadership has played a
consistent, decisive role. Given its pressing importance, for 2016
we have chosen to elevate and dedicate this report to breakthrough leadership.
Based on our many client conversations, we are confident that few will
dispute we are managing through an era of unprecedented change and
challenge. There is less room for missteps—and a greater need for
leadership.
The largest consumer packaged goods (CPG) firms control valuable
global capabilities that can catalyze innovation and organizational
transformation. But those very same capabilities can be misdirected
to strategies designed to fight yesterday’s war. Leadership is what will
make the difference. Leadership is what is necessary to ensure that
today’s flagship brands do not become tomorrow’s ghost ship brands—
drifting relics—from the perspective of consumers, shareholders and
the best talent.
The challenge is, without a doubt, surmountable. We have never had the
benefit of better innovation knowledge or better innovation tools than
we do today, and we need to put them all to work—right now.
Though the challenges of the present are largely artifacts of inheritance,
we are the ones who define the future course. There is a way forward
to a profitable, albeit very different, future. These are exciting times, so
let’s get to it.
L E T T E R F R O M T H E A U T H O R S
TADDY HALLPrincipal, The Cambridge Group;
Leader, Nielsen Breakthrough
Innovation Project; Author
ROB WENGELPrincipal & Leader, Strategic
Innovation, The Cambridge
Group; Co-Author
EDDIE YOONPrincipal, The Cambridge Group;
Co-Author
THE NIELSEN BREAKTHROUGH INNOVATION REPORT4
NIELSEN BREAKTHROUGH INNOVATION WINNERS
SKINNYPOP® POPCORN
PG 80 �
MILK-BONE® BRUSHING CHEWS®
PG 62 �
NASACORT® ALLERGY 24HR
PG 67 �
BAIPG 44 �
CHOBANI FLIPTM
PG 56 �
CHILI’S® AT HOME
� = SEE WINNER SPOTLIGHTS
C O N G R A T U L A T I O N S 20
16
ARM & HAMMERTM
CLUMP & SEALTM
PG 40 �
SALLY HANSEN®
MIRACLE GELTM
PG 76 �
DOLE® CHOPPED
SALAD KITSPG 59 �
C O N G R A T U L A T I O N S
Copyright ©2016 The Nielsen Company 5
C O N G R A T U L A T I O N S
GIOVANNI RANA
BUTTERFINGER® PEANUT BUTTER CUPS
PG 53 �
GAIN® FLINGS®
NEXIUM® 24HR
OSCAR MAYER P3
PG 71 �
CHEEZ-IT®
GROOVESTM
THE MAKING OF WINNERS:NIELSEN BREAKTHROUGHINNOVATIONCRITERIA
DISTINCTIVENESSDeliver a new value proposition to the market. Ingredient reformulations, repackaging, size changes, repositioning, and other minor refinements to existing brands are excluded.
RELEVANCEGenerate a minimum of $50 million in U.S. sales during first year of national distribution.
ENDURANCEAchieve at least 90% of first year 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.
� = SEE WINNER SPOTLIGHTS
C O N G R A T U L A T I O N S
GLADE® WAX MELTS AND WARMERS
BEN & JERRY’S® CORES
BREYERS® GELATO INDULGENCESTM
PG 48 �
THE NIELSEN BREAKTHROUGH INNOVATION REPORT6
In last year’s edition of the Nielsen Breakthrough
Innovation Report, we noted that “much better innovation
outcomes are a matter of choice.” That statement remains
true, but the stakes have grown higher.
Innovation may not feel like an existential mandate today,
because of the share of wallet commanded by name-brand
products and the comparatively small percentage of sales
generated by innovation. But if we fail to remake ourselves
in line with emerging consumer tastes, technological
realities and business models of the 21st century, we
will see growth stall and margins erode, we will lose
the battle for world-class talent, and our innovation
capability, already fragile, will collapse. Our market
cap will decline until we lose our independence to
consolidation and industry transformation. We will join
the ranks of the once-great companies that simply failed to
change fast enough.
Let’s be honest: the CPG landscape of 2030 will differ
profoundly from the marketplace of 2000. And to
paraphrase tech pioneer Alan Kay, The best way to predict
the future is to create it.1
Nobody is better positioned to create the food and
nutrition companies of 2030 than today’s leaders, and
here’s the choice and challenge, clean and unvarnished:
WILL WE LEVERAGE OUR CURRENT CAPABILITIES TO CREATE THE FUTURE? OR WILL WE LET OUR ATTACHMENTS TO THE ESTABLISHED ORDER IMPEDE OUR ABILITY TO LEAD THE TRANSFORMATION?
This is where we need to hear Machiavelli’s caution and
channel our inner Alan Kay. We can do this.
Welcome to the 2016 Nielsen Breakthrough Innovation Report and this year’s theme:
BREAKTHROUGH LEADERSHIP
WE MUST BEAR IN MIND, THEN, THAT THERE IS NOTHING MORE DIFFICULT AND DANGEROUS, OR MORE DOUBTFUL OF SUCCESS, THAN AN ATTEMPT TO INTRODUCE A NEW ORDER OF THINGS. FOR THE INNOVATOR HAS FOR ENEMIES ALL THOSE WHO DERIVED ADVANTAGES FROM THE OLD ORDER OF THINGS, WHILST THOSE WHO EXPECT TO BE BENEFITED BY THE NEW INSTITUTIONS WILL BE BUT LUKEWARM DEFENDERS.
— NICCOLÒ MACHIAVELLI, THE PRINCE, 1513
Framing the Challenge: Own Your Future
Copyright ©2016 The Nielsen Company 7
A WORD ON STYLE—SUITED TO ITS SUBJECTWe like to think the Breakthrough Innovation Project is something
unique. And if form follows function (which we have always believed),
we like to think the style of the report is unique, too. That doesn’t
mean we have entirely abandoned Aristotle’s dictum “A whole is what
has a beginning and middle and end.” It does, however, mean we
recognize that, as with many subjects, there is more than one way of
looking at things, and more than one way of writing about things.
Too many business books—you know which they are—argue for “the
three keys,” “the four imperatives,” “the five traits” of whatever it is.
And each year, a new crop comes along with completely different
solutions to the same problem, each soberly presented as the answer.
You may even have noticed, as we have, how strikingly similar their
claims are to breezily aspirational magazine covers.
There is rarely just one answer in the analysis of ever-changing
phenomena, although there is often just one problem. So you will find
here a report of many different sections, with many different ways of
attacking our subject. The one problem is achieving Breakthrough
Innovation. Different readers will respond differently to the different
pieces of the report—allowing us to hope there is something here for
everyone.
BREAKTHROUGH IN PERSPECTIVEMany successful innovations that do not meet the
Breakthrough criteria nonetheless play a critical role in
the life and growth of brands. In fact, the vast majority
of innovation activity comprises the closer-in launches
that keep brands fresh, consumers engaged and retail
customers supportive. “Sustaining innovation,” as the
term itself suggests, is a requirement for survival. You
need it every year—year in, year out.
But as any successful sailor will attest, you never
beat the fleet by following it. The difference makers
are Breakthroughs—products that expand or create
categories, that over the years add hundreds of millions
of dollars to the bottom line and billions to a company’s
market capitalization. Another way of putting it is that
sustaining innovation is fine for achieving year-to-year
performance and to help prevent falling behind the fleet
in the short term. But without Breakthroughs, your
ability to thrive over the long term will be very much in
doubt.
The mark of innovation mastery is a balanced
innovation portfolio. In recognition of this broader
management challenge, we have added a special section
on this topic at the end of this year’s report.
But Breakthrough is the big one—and the easiest to slip
out of a company’s portfolio. It is the kind of innovation
most thoroughly at risk, and therefore the kind of
innovation most in need of recognition, of celebration,
of study and support. It is for this reason that the
Breakthrough Innovation Report exists.
THE BREAKTHROUGH INNOVATION PROJECTIf you’re new to the Breakthrough community, welcome! This is our
fifth edition of the U.S. report, and while each report celebrates a
new class of Breakthrough Winners and shares perspectives on fresh
innovation topics, there is continuity to the series. If you find value in
these pages, we encourage you to visit Nielsen.com/Breakthrough,
where we’ve made available past reports, the Spotlight case study
library, international editions of Breakthrough, discussions of Jobs
Theory, detail on the Demand Driven Innovation system, and other
innovation materials and resources.
As in the past, this year’s winners and their Spotlight case studies
make up the centerpiece of the report. We now have a published
case library of 32 U.S. winner Spotlights and a growing body of
international Spotlights as well. For those looking for an immersion
experience in Jobs Theory and Demand Driven Innovation—the how-
to of Breakthrough Innovation—pick any 10 Spotlights, and you’re off
to a great start. We promise you’ll be surprised by what you learn and
find valuable application for the insights you create for yourself.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT8
In 2015, the top 25 largest food and beverage companies generated
45% of category sales in the U.S. but drove only 3% of the total
category growth from 2011 to 2015 (roughly $1 billion in sales out
of $35 billion in category growth) and grew at a compound annual
growth rate of 0.1%.2
These are striking figures, and the wave of change is far from
cresting.
Our belief is that there will be more change in CPG in the next five
years than there was in the last 50.
This transition is not going to be easy. For many decades, the
CPG world has enjoyed stately product cycles, brand life spans
typically measured in decades, robust barriers to entry, and few
game-changing new entrants. Market share was contested within
well-established category boundaries against a fairly stable set of
rivals. Unlike technology leaders, CPG executives could sleep well
at night—free of worries about becoming the next Blockbuster,
because there was no Netflix ripping around the corner.
CPG ON THE CUSP OF TRANSFORMATION
1. CPG planning cycles were, well,
cyclical. They tended to recur with a
reasonable degree of regularity and
familiarity. Critical resource allocations
and decision making were akin to
playing chess by mail. Long-range
plans of three years or more were a
relevant exercise. Annual operating
plans could be developed 12 to 18
months in advance. Retail resets could
be done twice a year in the spring
and fall like clockwork. Media plans
were bought and paid for months in
advance.
2. Consumer empathy was natural.
Boomer managers could succeed by
serving Boomer consumers.
3. Channels—in both media and retail—
were few, analog and essentially one-
way. It wasn’t until the 21st century
that interactive, digital, social, mobile
and addressable became prefixes
to media. And e-commerce was a
minuscule sideshow to the dot-com
circus, not the main event.
4. Data—though always important—
had the comfort of being “small”
and generally historical in nature.
Amounts increased steadily but not
exponentially; furthermore, the sleep-
depriving question of “Am I even
looking at the right data?” still lurked
in the fairly distant future.
LARGE U.S. MANUFACTURERS ARE DRIVING SALES, BUT NOT
CATEGORY GROWTH
% OF CATEGORY GROWTH
While running a CPG company wasn’t easy, the dynamics were familiar:
OBJECTS IN THE REARVIEW MIRROR ARE FARTHER AWAY THAN THEY APPEAR
25 Largest Food and Beverage Manufacturers
All Other Manufacturers & Retailers
G WE R TW O H DO ER R :N
This was the world of the 20th century—the courtly era of CPG. And doesn’t that feel like ancient history now? Not only are the times
a-changin’, but as the aforementioned growth statistics suggest, they are changing faster than we might like to think.
$35B
Copyright ©2016 The Nielsen Company 9
Seeing the long-tail players driving nearly half of the growth, we explored what they’re doing differently:
Private label drove 23% of the growth ($8 billion) and grew at a 2.6% compound annual growth rate.
Mid-tier companies ranking 26–100 in sales drove 25% of the growth and grew at a compound annual
growth rate of 3.2%.
And in a long and mighty tail, 20,000 companies below the top 100 drove 49% of all category growth
($17 billion), with a compound annual growth rate of 6.3%.
SMALL MANUFACTURERS ARE GROWING CATEGORIES (AND THEIR OWN BUSINESSES)
% Ca
tego
ry G
rowt
h
Rate
of A
nnua
l Gro
wth49% 6%
3%
3%
0%
25%
23%
3%
SMALL MANUFACTURERS(TOP 101 & BELOW)
MID-TIER MANUFACTURERS(TOP 26-100)
RETAILERS (VIA PRIVATE LABEL)
LARGE MANUFACTURERS(TOP 1-25)
1. They play “speed chess” by moving
much faster than traditional planning
cycles. Breakthrough Winner Chobani,
for example, conceived, developed and
shipped a successful new offering in
six weeks. Words are revealing as well:
Traditional firms speak of planning
“cycles,” connoting continuity. Newer,
smaller firms are much more likely to
speak of “iterations,” in which what is
expected is something different.
2. Digital, addressable, fragmented
media shift the currency from tonnage
to precision, mitigating the traditional
scale buying advantages of large firms.
Most smaller firms actively embrace
the cost-effectiveness of digital,
unshackled from the legacy analog
traditions and processes.
3. They’re far more concerned with being
authentic and relevant than huge.
4. They disrupt the scale economics of
large firms’ integrated operations
with the lean, flexible economics
of modular operations. They don’t
have the investments in production
or distribution, so they are able to
operate without the pressure to utilize
or finance fixed assets.
5. They’re “owner-operators” who
immerse themselves in the context
of the consumer rather than rely
on the efficiencies of reports and
subordinates to filter and organize
the outside world’s messiness. Like
the best restaurateurs, they sweat the
details that create great experiences.
So about this growth: Who did drive it if big-CPG didn’t?
OBJECTS IN THE WINDSHIELD ARE CLOSER THAN THEY APPEAR
THE NIELSEN BREAKTHROUGH INNOVATION REPORT10
Today, major CPG firms are structured to play defense—with large balance
sheets, extensive distribution networks, extended supply chains and
hierarchical decision-making structures. Fueling much of the resource allocation and
decision making are innovation incentives that encourage quick-hit small ball in support
of large, existing brands and fixed assets. Even the signature job function, brand manager,
suggests stewardship and operational focus, rather than growth and innovation.
Leading 20th-century CPG firms that not only survive but thrive in the balance of the 21st
century will make major reconfigurations to each of the three core components of their
capabilities, shifting their competitive stance to offense, even as they continue to play smart
defense. For each capability component, we highlight three elements that stand out.3 You’ll no doubt
want to construct your own, prioritized list.
THE BIG AN OVERARCHING CHALLENGE FOR ESTABLISHED FIRMSSHIFT:
CAPABILITIES
RESOURCES PROCESSES PRIORITIES
Copyright ©2016 The Nielsen Company 11
• Innovation failure will be valued as providing essential learning. Much of what passes for “embracing risk” today is lip service unsupported by organizational reward structures or cultures. Ben & Jerry’s actually launched a version of their Breakthrough-winning “Cores” ice cream in 2002, but it failed to gain traction. However, the lessons learned and applied paved the way for this year’s Breakthrough Winner.
• Leaders will protect the “explorers” and ensure that the capabilities that sustain the current business don’t kill the projects that will create the future business. This entails pressing the frontiers of knowledge and embracing the unknown, unfamiliar and uncertain.
• Leaders will ensure that balanced innovation portfolios are real—recognizing that absent senior involvement, efforts steadily shift to the close-in, familiar, quick-hit projects.
• Leading firms will look less like monolithic fortresses and more like collaborative ecosystems. Value will be more a function of how they interact with critical partners than a function of what they directly own or control.
• Investments that increase flexibility will be valued equally, if not more than, investments in efficiency. Fixed, nonflexible assets will be different and almost certainly fewer. Productive assets of the future will be smart, connected and flexible.
• Leadership requirements will shift. In times of rapid change, leaders who are better experimenters, listeners and collaborators will be more valuable than vision casters or financial engineers. They will return to the entrepreneurial habits that made their companies great at inception. There was a day when even the largest firm was a scrappy start-up. Just as global experience is a prerequisite to be CEO, leaders will need bona fide innovation experience to get the top job.
> RESOURCESPRIMARILY ASSETS THAT CAN BE BOUGHT, SOLD, HIRED OR FIRED, INCLUDING INTANGIBLES SUCH AS BRANDS AND INTELLECTUAL PROPERTY
• Firms that want discontinuous, category-creating, breakthrough innovation will build processes dedicated to those outcomes (offense). They will maintain a separate innovation process for sustaining the current business (defense).
• Firms will innovate around experiences more than products, leading to innovation processes looking very different than they do today. Bellisio Foods’ director of R&D, Kimberly Mikaliunas, illustrates the point with the Chili’s at Home launch: “This country recently went through a culinary renaissance—food channels, food magazines, social-media clips. Emphasis shifted from food to the dining experience. Our winning launch brought new, younger and lapsed users into the frozen category to try the Chili’s experience. We also offered loyal restaurant patrons a new, at-home way to enjoy the Chili’s experience.”
• Talent recruiting and development processes will evolve to enable firms to compete for the best and brightest minds, because technology and innovation will be integral to how successful companies operate.
> PROCESSESTHE WAYS IN WHICH AN ENTITY’S RESOURCES INTERACT TO CREATE CUSTOMERS AND SUSTAIN THE ENTERPRISE
> PRIORITIESFORMAL AND INFORMAL GUARDRAILS, INCLUDING INCENTIVE STRUCTURES, MARGIN REQUIREMENTS, RESOURCE ALLOCATION RULES, HIRING AND PROMOTION CRITERIA AND COMMITMENTS TO SHAREHOLDERS
METRICS MATTER: Leading firms will measure share of growth (offense) in addition to share of market (defense). They will abandon misguided activity metrics such as “percentage of sales from new products,” which tends to miscategorize (and reward) waste as if it were innovation.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT12
AMONG THE FEW UNDERDISCUSSED TALENTS OF THE LEGENDARY STEVE JOBS
was his ability to be at once passionately persistent and open to changing his mind
almost instantaneously when presented with compelling, alternative arguments. This
quality may well be the one that CPG executives need to channel most as they push
into a future that is far more discontinuous than it is continuous with the familiar
forces and flows of the 20th century.
In the spirit in which many organizations have embraced “zero-based budgeting,”
we believe that the firms that emerge as the leaders of the 21st century will apply
a corresponding blank-sheet approach to business models, organizational structures,
innovation, research, procurement, external collaboration and so on. The “consumer packaged
goods” industry—a moniker that already carries a quaint ring—will grow increasingly anachronistic as it
describes less and less of what industry leaders actually do to serve consumers and generate returns. Successful
firms of the future will master consumer experiences, not just consumer goods.
CHANGING THE WAY WE
THINK
In moments of discontinuous change,
the “expert’s mind” can become a
liability, because expertise is rooted
in what worked in the past, which can
become baggage in the context of
creating the future. The “beginner’s
mind,” in which there are many
possibilities and few certainties, will
prove to be the smart one.
Arguably the biggest obstacles faced
by established CPG companies are
legacy assets—yes, the “fixed” ones
for sure, but also the entrenched
beliefs and knowledge assets. It is
this second category of assets that
gives us not only our sense for the
businesses we’re in but also our sense
of self.4 This, ultimately, is why change
in business is so hard.
Last year we related the story of
the U.S. auto industry executives
who rejected and denied Toyota’s
manufacturing superiority until denial
led to an existential crisis. It took
about a decade. CPG leaders might
have a decade as well. Maybe more or
maybe less, but the clock is ticking.
The good news that runs throughout
this report and fuels the Breakthrough
findings is Jobs Theory: the reality
that innovation is a function neither
of genius nor luck. As we discuss
later in this report (and discussed
in greater detail in the 2015
Breakthrough Innovation Report),
Jobs Theory encourages us to think of
consumer products not as a sum of
attributes but as services that enable
desired progress and create valued
experiences. This is thinking like a
successful innovator!
We may be navigating an unfamiliar,
rapidly changing marketplace, but we
can do so with a robust understanding
of what causes successful innovation.
This again, however, requires a
dramatic change of mental models.
For leaders who view the rapidly
transforming marketplace as an
opportunity rather than a threat, the
future is bright.
The body of this report, as well as the
unprecedented collection of 11 world-
class Spotlight case studies, provides
input and ideas for mastering the “big
shift” posed by the discontinuous 21st
century.
Seeing a World of Many Possibilities
Copyright ©2016 The Nielsen Company 13
L E A R N I N G F R O M L E A D E R S :
THE NIELSEN BREAKTHROUGH INNOVATION REPORT14
rom the first presentation of the Demand Driven Innovation system in 2013,
leadership played an integral role; it was instrumental in every single Breakthrough
success we studied.5 Frankly, we struggled to go deep on the topic—one so vast
that discussions too often devolve into platitudes and inactionable exhortation.
However, that it’s a tough topic to address succinctly is a lousy reason to ignore it,
especially when leadership holds the key to future success.
As noted already, the standout CEOs of the future will chart a dramatically different
course than their predecessors. Stewards need not apply. We are in need of leaders
who have a high level of comfort with upheaval and transformation, and we should
look for that experience in their credentials.
We also need a generation of chief executives willing to roll up their sleeves and
dirty their hands in the hard work of innovation. According to a 2013 PwC survey of
CEOs, 37%—up from only 12% in 2010—saw leading innovation as their personal
responsibility. Admittedly, 37% feels awfully low, but the steep trajectory suggests that
more and more CEOs are waking to the reality that this is not a challenge to delegate.
LESSONS LEARNEDAND APPLIED
REAL-TIME PERFORMANCEMANAGEMENT
DEMAND DRIVENINSIGHT
DEMAND DRIVENDEVELOPMENT
DEMAND DRIVENACTIVATION
BREAKTHROUGHLEADERSHIP
DEMAND DRIVEN INNOVATION SYSTEM
Copyright ©2016 The Nielsen Company 15
Geoff Tanner took over innovation
in pet at Del Monte at a time when
there was a self-admitted absence of
consumer-driven innovation at the
company. Geoff led the development
and launch of a 2013 Breakthrough
Winner, Milo’s Kitchen dog treats,
Del Monte’s first new brand in over a
century. After the division was spun
off as independent Big Heart Pet,
Geoff oversaw the development of
two additional Breakthrough Winners
(Meow Mix Tender Centers in 2014
and Milk-Bone Brushing Chews
in 2016) and developed a robust
Demand Driven Innovation system
at Big Heart (recently acquired by
the J.M. Smucker Company). Geoff is
now senior vice president of growth
and innovation at Smucker.
There exists, unofficially, a Breakthrough Innovation Hall of Fame, and its ranks comprise those elite few who
have proven themselves to be not only enduring winners, but true industry leaders as well. They have shared their
successes—and many scars—in the interest of advancing the state of knowledge and practice. To prepare this
year’s central theme, breakthrough leadership, we enlisted a few of these all-stars to help breathe both wisdom and
actionability into our discussion.
Barry Calpino helped SC Johnson
launch Ziploc food storage
containers, Kellogg’s Special K
protein line (which pioneered the
brand’s successful presence in the
vitamins and supplements aisle),
and Wrigley Extra Dessert Delights
before becoming the vice president
of Breakthrough Innovation at Kraft,
where he played an instrumental
role in six Breakthrough Winners.
Barry is currently a part-time adjunct
professor at Kellogg, teaching
innovation, and also holds one of the
coolest job titles in the industry: vice
president, Innovation Hothouse, at
Mondelez.
Pat McGauley created the first
dedicated innovation department at
Anheuser-Busch. During his 12 years
of leading the innovation effort, Pat
and his team developed over 150 new
products and packages, including
Bud Light Platinum, Chelada, Shock
Top and the aluminum bottle along
with four Breakthrough Winners,
including the transformational
Bud Light Lime and Lime-a-Rita
family. Pat is now consulting for AB
InBev and a founding partner of
the innovation consulting firm The
Startup Within.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT16
We are indebted to Barry, Pat and Geoff for their contributions to this report, past reports, numerous Breakthrough Spotlights,
conference presentations, webinars and other special events. We are also grateful for their friendship.
WHEN WE LOOK ACROSS THESE THREE LEADERS, A NUMBER OF SIMILARITIES EMERGE. HERE ARE 15:
Promote consumer empathy• They put consumer demand at the center of their innovation efforts.
• They don’t just champion empathy; they practice it by routinely immersing themselves in the circumstances of
consumers.
• They seek surprises.
• They “benchmark outside of category,” constantly seeking inspiration and opportunity, not only from outside the
company but from outside the CPG industry as well.
Fit the process to the objective• They apply comprehensive measurement, testing, screening and forecasting protocols in the interest of making
innovations bigger and better.
• They modify stage gate processes as necessary, but they do not compromise proven innovation principles.
• They prototype and experiment with consumers in-market relentlessly.
Fail valuably and learn systematically• They study past successes and failures rigorously to learn and improve with every initiative.
• They exercise a healthy paranoia, manifest in a “nothing is impossible” attitude toward risks and opportunities.
• They value failure. This is a huge difference from the commonplace and often empty appeals for “risk tolerance” and
“embracing failure.” Breakthrough leaders realize that if you’re not failing, then you’re not trying hard enough nor
learning enough to succeed greatly.
• They persevere, persevere, persevere.
Embrace a culture of transparency, collaboration and humility• They keep their CEOs actively engaged in—not merely aware of—their innovation activities.
• They think cross-functionally and are relentless integrators and collaborators.
• They display no egos. They own the blame and distribute the glory.
• They have a sense of humor. You can’t be in this game if you can’t laugh easily and often—
especially at yourself.
Copyright ©2016 The Nielsen Company 17
Readers will probably read nothing of a “wow, I never would have thought of that!” nature in the pages that follow. Interpret that as a double-edged sword:
• On the one hand, there is no magic required, no pixie dust to sprinkle, no special software to install, no required
research methodology. That’s good.
• On the other hand, this is bloody hard work. Often unappreciated with few internal allies and many naysayers and
contrarians (remember what Machiavelli said), innovation leaders should not expect to win popularity contests, even
as they oftentimes provide the lifeblood of the company.
BREAKTHROUGH
The following perspectives from serially successful
innovators not only reinforce one another, they also align
powerfully with Nielsen Innovation Practice and Cambridge
Group client engagements across 100+ projects in the past
two years. We encourage folks to give a close read to what
this power trio has to share, because it offers a prescient
synthesis of a much broader body of client work and
research.
As we’ve already noted, Breakthrough Leadership isn’t easy.
For many organizations the historic role of C-suite leaders
in the context of innovation has been at arm’s length:
extolling its importance and convening periodic reviews to
check status. A much more hands-on role is required. For
many accomplished leaders, this will feel fundamentally
unnatural, because they have never actually managed
an innovation initiative with end-to-end responsibility.
Nonetheless, it needs to happen. The stakes are high, and
time is short.
As Geoff Tanner notes, “At Big Heart Pet, by far the
majority of our growth is coming from innovation and
has been for several years.” Moreover, in the short span
of a couple of years, Geoff and his team transformed
innovation at Big Heart from “something that other
companies do” to a core competency and an engine
for growth. At the same time, Geoff will assure you that
leading this kind of transformation is not for the faint of
heart.
Focusing on leadership in the fifth year of Breakthrough
is both fitting and telling: It is fitting to cap five years
with such an important theme. It is telling because of the
considerable time it took us to understand, synthesize
and validate exactly what needs to be said—and more
importantly changed—regarding leadership’s role in
driving successful innovation.
THE QUESTIONS WE’VE BEEN PURSUING ARE FOCUSED: WHAT ARE BREAKTHROUGH LEADERS DOING DIFFERENTLY FROM THEIR PEERS TO ENABLE SUCCESSFUL INNOVATION? AND SPECIFICALLY,
What are the implications for C-suite executives?What are the implications for senior managers with innovation mandates?What needs to change in terms of mental models and operational processes in order to make innovation consistently successful?
THE NIELSEN BREAKTHROUGH INNOVATION REPORT18
B R E A K T H R O U G H L E A D E R S H I P :
Copyright ©2016 The Nielsen Company 19
W I T H T H O S E E N C O U R A G I N G W O R D S, L E T ’S L E A R N F R O M A F E W O F T H E V E R Y B E S T.
“In 2008 and again in 2009, we were one of the very worst innovation performers
in the industry,” recalls Barry Calpino, former Kraft vice president of Breakthrough
Innovation.6 “We publicly acknowledged our status as ‘worst’ and simultaneously
committed ourselves to becoming first. President Tony Vernon didn’t just proclaim
and delegate; he showed up, literally. We had quarterly pipeline review meetings,
which were cross-functional leadership jam sessions in which we hashed out issues
related to priority projects. By being there, being engaged and constantly playing the
role of the instigator to think bigger and make ideas sharper, Tony sent a powerful
signal to the organization that innovation mattered, that big bets were important,
that boldness was rewarded and championed.
“I think a lot of people in our industry are accustomed to hearing senior executives
extol the importance of game-changing innovation, but then the incentives a little
lower down in the org are all aligned with getting stuff into market fast and doing
what it takes to hit a quarterly sales number. Honestly, I think many managers are a
bit cynical about C-suite commitment to Breakthrough Innovation, but Tony really
defied any would-be doubters.
“By 2012 we were ranked externally—by retailers and industry analysts—as one of
the very best. We had launched three $100 million platforms, including creating a
new brand and category with MiO water-enhancing drops. We earned Wal-Mart’s
vendor of the year award and numerous other industry accolades, including six
Breakthrough Winners in four years.”
“When I met with client CEOs as a consultant last year,” Calpino emphasized,
“one of my first questions was, What are your top three new product initiatives? If
they didn’t know what they were, why they were important, and the core consumer
demand they addressed, that’s a problem. Most senior execs think it’s sufficient
to articulate priorities, but that turns out to be insufficient. The CEOs need the
initiative-level engagement on the big bets, or else decisions will be made and
resources allocated based on shorter-term incentives of middle managers—and
that’s suicidal for Breakthrough Innovation.”
Leaders who expect transformational innovation outcomes need to show up and
roll up their sleeves. Sustained, profitable growth depends on a robust, consistently
successful innovation capability in which C-suite leaders play an active role.
LESSON 1: LEADERS ROLL UP THEIR SLEEVES AND GET DIRTY
THE NIELSEN BREAKTHROUGH INNOVATION REPORT20
LESSON 2: PROTECT THE EXPLORERS
“It was shortly after the formation of AB InBev,” recalled Pat McGauley, the company’s
former vice president of innovation.7 “We gathered our top 50 executives for a strategic
planning meeting at Harvard. A central part of the multiday session focused on organizing
ourselves for growth, and we performed a self-assessment exercise concluding that we
were incredibly proficient exploiters of opportunity but not nearly as capable of exploring
for future opportunities.
“I think many executive teams get that far—acknowledging strengths and weaknesses—
but a key contributor to our success was that our zone president, Luiz Edmond, didn’t
just say, ‘OK, you guys go fix that.’ He realized that we had a massive set of processes
and incentives and a deeply rooted culture that would conspire against efforts to allocate
serious resources to exploring and developing radically new growth frontiers. Especially
when you consider the massive scale of our flagship brands, anything truly innovative is
just going to look ridiculously small by comparison, so innovation has built-in opposition.
“A specific example of the impact Luiz had was in how he created his Explore agenda,
where he allocated significant time and regularly met with me and other key stakeholders
to review Explore projects, challenged us to think bigger and drove alignment within the
organization.
“Luiz was also critical in making sure we were working on the right projects. As
with most large organizations, many of the more unusual innovation ideas were
products of senior-leader speculation rather than consumer insight, and we
had to stop that. Big innovations definitely require executive sponsorship, but
we needed the senior executives to champion our process, not pet projects.
While I quickly earned the reputation in the executive
suite as the guy who was constantly saying no, Luiz
absolutely understood how important it was that we
protect a disciplined process rather than executive
privilege. Luiz played an essential role, especially in
the days before we had a track record.”
Geoff Tanner reported a similar experience. “[The]
CEO for Big Heart Pet Brands, Dave West, regularly
asked us, ‘What do you need me to do?’ He stayed
very close to major initiatives and instituted full
C-suite participation in regular, informal, hands-on ‘pictures and prototype’ sessions with
the Innovation Team. Dave understood full well that blockbusters need senior support
because these initiatives run contrary to every entrenched discipline and cultural norm
and short-term economic incentive of the organization. CEOs who assume they can just
declare the need for innovation and leave it to their subordinates to follow through will be
sorely and systematically disappointed. For better or worse, Breakthrough Innovation has
to be a hands-on executive activity.”
BIG INNOVATIONS DEFINITELY REQUIRE EXECUTIVE SPONSORSHIP, BUT WE NEEDED THE SENIOR EXECUTIVES TO CHAMPION OUR PROCESS, NOT PET PROJECTS.
—PAT MCGAULEY
Copyright ©2016 The Nielsen Company 21
LESSON 3: BECOME THE VOICE OF “YES”
As discussed earlier and noted by Machiavelli 500 years ago, innovation has
entrenched forces opposed against it and plenty of eager naysayers. When
C-suite leaders become the voice of “no,” innovation withers. By contrast,
good things happen when CEOs systematically ask these questions:
• What can I do to help?
• How do we make this even bigger?
• What barriers are in your way?
Actions in the C-suite reverberate powerfully, and if managers anticipate a senior champion,
they’re motivated to strive greatly and do their very best work. Conversely, when the C-suite
is perceived to be a risk-averse firing squad, the flicker of early innovation dies a predictable
and quiet death. There is symbolic value in the ratty pair of Nike sneakers that Jeff Bezos
hands out with tremendous fanfare to the Amazonian who “just does it” and brings a great
idea to life. There is practical value in the way that Intuit permits managers to conduct
small in-market experiments without any internal approval requirements. A CEO who
wants innovation should work hard to be known as the leader who asks, “What if . . . ?”
This is an unnatural act for executives trained to act decisively, know the answer and drive
the quarterly number. The perception is that such leadership demonstrations inspire
confidence, and in certain instances, this may be true. However, successful leaders of
systematically successful innovation organizations loosen their grip on certainty and find
comfort in the honesty of not knowing. The certainty that managers need from CEOs flows
from the conviction that the future needs to be created and that past practices and present
profit engines will not be allowed to impede the vital work of the innovator. Furthermore,
as managers chart new territories, they need to believe their CEO will be there, breaking
trail and covering their backs.
LESSON 4: BALANCE THE INNOVATION PORTFOLIO
“Well before President Tony Vernon engaged in our quarterly innovation pipeline meetings
at Kraft, we had a three-tier system for organizing our initiatives,” Calpino explained. “The
reality, however, was that virtually all of our initiatives were tier-three incremental
improvements with only the occasional tier-two category-expanding idea. Tier
one was basically a null set unless we fudged and bumped things in there for the
optics rather than the substance.
“When Tony showed up, all he wanted to hear about was the tier ones,
and he wanted the substance, not the spin. Unsurprisingly, the forces
that continuously conspire to make big ideas conform to established
processes and production lines and ways of working were offset by Tony’s
insistence that we invest in true breakthrough work. When you know the
president is going to ask you about the progress on your tier-one initiatives, well,
that’s definitely what you put your time and money against.”
THE NIELSEN BREAKTHROUGH INNOVATION REPORT22
Virtually every company we assist has some form of tiered portfolio system, but a client’s
newly installed chief growth officer concluded a self-assessment that applies to many: “For
us, the set of top-tier or transformational innovations is basically empty, and much of the
so-called incremental stuff is unlikely to prove incremental at all. Our teams are running
like crazy, but we’re not going anywhere.”
SUCCESSFUL CEOS WILL OWN THE TOP INNOVATION TIER. THEY SHOULD HAVE FAMILIARITY WITH THOSE INITIATIVES AND PROTECT THEM FROM ENTRENCHED FORCES THAT WORK TO CO-OPT AND UNDERMINE THEM.
“Early in my career, I was an innovation leader at SC Johnson when Fisk Johnson was relatively
new at the helm and the legend of Sam Johnson loomed large,” Calpino recalled. “Fisk had
inherited and shared his father’s deep and real commitment to innovation. The family’s
intense commitment ran strongly through the company’s senior leadership, including CEO
Bill Perez. Bill’s leadership was hands-on and open-minded. He not only wanted to lead,
he wanted to learn and improve. One of the projects Bill devised was to divide marketing
and R&D managers and senior execs into three cross-functional teams to analyze decision
making, resource allocation, team composition, insight generation and other key variables
related to three discrete sample sets. One team focused on our most successful launches. A
second team—the one nobody wanted and I was on—analyzed our unsuccessful launches.
The third team looked at some of the best innovation organizations in the world across a
variety of industries.
“So what did we learn from our study project at SCJ? Every success we found had an active
senior-executive champion. This was someone in the C-suite or divisional president with
[profit-and-loss] authority. There were no exceptions to this finding across all three of the
study sets. By contrast, among our failed launches at SCJ, none of them had that level of
senior leadership. The initiatives failed primarily because of cuts and compromises, not
because the core ideas were bad.”
The study conducted at SC Johnson illustrates something underscored by McGauley and
Tanner as well. Successful innovators study their own launches, study competitive launches
and benchmark outside the category—learning lessons from as many places as possible in
the interest of continuous improvement.
LESSON 5: LEARN METHODICALLY TO IMPROVE CONTINUOUSLY
Copyright ©2016 The Nielsen Company 23
LESSON 6: CULTIVATE CREATIVITY AND KEEP INSIGHTS INTACT
One of the points that Calpino, McGauley and Tanner each emphasize is that a
robust innovation capability is like physical fitness; without systematic discipline,
it’s easy to lapse into bad habits, and you can lose it much faster than you attain it.
Institutionalized capabilities quickly atrophy when senior leaders divert attention or
allow short-term expediencies to trump category-creating exploration.
Calpino offered a cautionary tale: “Throughout my career and during my time at Kraft,
I’ve seen the engagement and commitment of senior leadership ebb and flow—even the
best ones. There are so many other ‘more urgent’ and burning issues, and therein lies
a huge challenge, because Breakthrough Innovation just never becomes routine. It is
always, always hard work requiring senior engagement and commitment. It is so easy to
slip, and the next thing you know, the tier-three list is huge again, and it’s back to ‘Where
are the tier ones?’ The truth is that I’ve learned—by my own mistakes—that you have to
be relentlessly vigilant, or hard-earned capabilities will quickly atrophy, and bad habits will
reassert themselves.”
The most valuable innovation ideas are ideas that open new categories or expand existing
ones. Generally they break accepted category definitions and, consequently, tend to challenge
internal organizational processes, incentives and mental models. Big ideas cross disciplines
and integrate seemingly disparate fields—product science, manufacturing technology, pricing,
packaging, finance, media and retail activation, to name a few domains. It’s almost a certainty
that the more unexpected the idea, the more natural enemies the idea will find internally. It’s
not personal; it’s a reflection of incentives and established priorities.
If senior leaders expect their organizations to seek, develop and commercialize deeply
creative ideas that challenge the status quo, then these same senior leaders need to be
at the forefront of pushing boundaries, bringing outside perspectives into the
company, challenging assumptions and cultivating a playfulness that fuels
imagination. Successful innovation executives publicly recognize and reward
lateral thinking and managers who keep fragile insights whole rather than
dilute or distort them in the interest of complying with established beliefs and
practices. And yes, sometimes cherished timelines need to be adjusted in the
interest of getting it right.
Many readers may push back, saying, “In our company, timelines are
nonnegotiable.” That’s exactly the point: C-level involvement is required to
ensure that ideas aren’t sacrificed in the interest of timelines. The launch of
Butterfinger Peanut Butter Cups was delayed eight months in order to get
every detail right, for example. As L’Oreal’s Said Dabbagh said regarding the
CEO support for 2015 Breakthrough Winner Advanced Haircare, “There was
always a sense of urgency, but it was urgency in getting it perfect.” That’s senior
leadership that fuels Breakthrough success.
LESSON 7: REMEMBER, INNOVATION IS HIGH MAINTENANCE
THE NIELSEN BREAKTHROUGH INNOVATION REPORT24
WHAT’S A JOB?• A “job” is the progress that an individual seeks in a given circumstance.
• The job to be done generates the energy required for someone to take an action, such as pull a brand into his or her life or develop a compensating routine.
• While many of the jobs in our lives have adequate solutions, successful innovations resolve circumstances of struggle and fulfill unmet aspirations: they perform jobs that formerly had only inadequate or nonexistent solutions.
• Because jobs occur in the flow of daily life, the circumstance is the essential unit of innovation work—not customer characteristics, product attributes, new technology, or trends.
50%LIGHTER
50%LIGHTER
LIT TER
All the strength, half the weight.Wow! It’s like they’ve been reading my mind.
Lighterweight? purr...
purr
40LBS
$$$
These small bags are such a waste of money. Back to the store... again... [sigh]
And they barelyfill the box!
Smells like the cat box needs changing... ugh! Out of litter, again. I can’t even lift them.
The value-sized bags are impossible...
The criteria that people apply in evaluating “job candidates” (i.e., potential solutions).
Understanding the job dramatically reconfigures category structure and competitors. For a given job, consumers regularly consider an array of solutions that extends well beyond a given store aisle—and often beyond the store as well.
Remember: criteria are always circumstance specific.
The functional, emotional and social dimensions of benefit that collectively constitute the ideal solutionfor the job: the “job spec,” or blueprint for successful innovation.
Breakthrough Winners nail poorly performed jobs:All the strength, half the weight.
Who, when, where
Desired progress, outcome, experience or solution
Complication, compromise, trade-o�, or struggle
1. Buying and using a product that imperfectly performs the job2. Cobbling together a workaround solution involving multiple products3. Nonconsuming compensatory behaviorRemember: Sometimes the struggle is discernable and quite clear; other times, especially when consumers have developed compensating routines, the struggle is far less obvious.
CIRCUMSTANCE STRUGGLING MOMENTS CRITERIA SOLUTION
DIRECTLY VERIFIABLE ELEMENTS INCLUDE: ELEMENTS THAT NEED TO BE INFERRED INCLUDE:
criteria
are ALWAYS
circumstance
speci�c
WHAT DOES A JOB LOOK LIKE?YOU CAN VISUALIZE A CIRCUMSTANCE IN WHICH A JOB ARISES AS A SHORT STORYBOARD CAPTURING ESSENTIAL ELEMENTS. SOME OF THESE ELEMENTS CAN BE DIRECTLY VERIFIED, AND OTHERS NEED TO BE INFERRED AND VALIDATED.
JOBS THEORY REFRESHER
Copyright ©2016 The Nielsen Company 25
50%LIGHTER
50%LIGHTER
LIT TER
All the strength, half the weight.Wow! It’s like they’ve been reading my mind.
Lighterweight? purr...
purr
40LBS
$$$
These small bags are such a waste of money. Back to the store... again... [sigh]
And they barelyfill the box!
Smells like the cat box needs changing... ugh! Out of litter, again. I can’t even lift them.
The value-sized bags are impossible...
The criteria that people apply in evaluating “job candidates” (i.e., potential solutions).
Understanding the job dramatically reconfigures category structure and competitors. For a given job, consumers regularly consider an array of solutions that extends well beyond a given store aisle—and often beyond the store as well.
Remember: criteria are always circumstance specific.
The functional, emotional and social dimensions of benefit that collectively constitute the ideal solutionfor the job: the “job spec,” or blueprint for successful innovation.
Breakthrough Winners nail poorly performed jobs:All the strength, half the weight.
Who, when, where
Desired progress, outcome, experience or solution
Complication, compromise, trade-o�, or struggle
1. Buying and using a product that imperfectly performs the job2. Cobbling together a workaround solution involving multiple products3. Nonconsuming compensatory behaviorRemember: Sometimes the struggle is discernable and quite clear; other times, especially when consumers have developed compensating routines, the struggle is far less obvious.
CIRCUMSTANCE STRUGGLING MOMENTS CRITERIA SOLUTION
DIRECTLY VERIFIABLE ELEMENTS INCLUDE: ELEMENTS THAT NEED TO BE INFERRED INCLUDE:
criteria
are ALWAYS
circumstance
speci�c
WHY ARE JOBS SO IMPORTANT?• Understanding the job reveals why (the cause) people purchase and use products and services, as well as
why they sometimes behave in ways that involve no purchase at all (nonconsumption).
• Innovation initiatives that are organized to resolve well-defined yet poorly performed jobs proceed with purpose and efficiency. Conversely, initiatives untethered to specific jobs lack meaning and proceed haphazardly, if at all.
• Viewing the marketplace through the lens of consumers’ jobs to be done redefines categories (typically far larger than conventionally envisioned) and reframes competitors (typically more numerous and diverse than
conventionally considered).
• Jobs Theory focuses the insight process on the search for circumstances of struggle, unmet aspirations, and pools of nonconsumption. Demand Driven Insights identify poorly performed jobs.
• Jobs Theory creates a shared purpose and common language that facilitates communication and integration across diverse functional areas. A well-defined job enables efficient development as well as in-market success.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT26
NAMENAMENAMENAMENAME
SUCCESSFUL INNOVATIONS RESOLVE CONSUMER CIRCUMSTANCES OF STRUGGLE — AND YOUR CONCEPT SHOULD TOOCreating an appealing product concept is an important innovation milestone. A concept conveys the promise that the product will fulfill.
MOST CONCEPTS INCLUDE:*
HOWEVER, ONLY 1/3 SUCCEED IN PRE-MARKET TESTING.
= 2,000 concepts tested annually
WHY? ONLY
OF CONCEPTS FULLY DESCRIBE THE CONSUMER’S CIRCUMSTANCE OF STRUGGLE:
The situation in which the innovation could help solve a problem or fulfill an aspiration. As a result, consumers fail to connect with the product idea.†
PRODUCT BENEFIT
95%
CONSUMER INSIGHT
80% REASON TO BELIEVE
70%
Copyright ©2016 The Nielsen Company 27
A COMPLETE CIRCUMSTANCE OF STRUGGLE EXPLAINS:
WHO IS STRUGGLING
WHEN THEY ARE STRUGGLING
WHERE THEY ARE STRUGGLING
* Based on an analysis of more than 600 concepts from 40 clients across 30 countries and 60 categories. Concepts were coded by a panel of experts.† Many factors have been shown to contribute to concept success, including: collaborative ideation, testing a wide range of ideas with consumers, and conveying key messages in a clear, focused way.‡ Data based on Nielsen’s Factors for Success concept testing framework, which is highly predictive of in-market success.
These concepts help to sharpen the connection between the “job to be done” in consumers’ lives and the product’s key messages and benefits. As a result, consumers are more likely to “hire” these products.
CONCEPTS THAT CLEARLY EXPRESS A CIRCUMSTANCE OF STRUGGLE PERFORM 58% BETTER‡
BE MORE INNOVATIVE
BE MORE RELEVANT
HAVE AN ADVANTAGE OVER SIMILAR PRODUCTS
BE A BETTER VALUE
Consumers perceive concepts with a complete circumstance of struggle to:
THE NIELSEN BREAKTHROUGH INNOVATION REPORT28
O R G A N I Z I N G F O R I N N O V A T I O N S U C C E S S :
Copyright ©2016 The Nielsen Company 29
ne of the most frequently asked
questions of the Breakthrough
Team, Nielsen’s innovation
business partners and Cambridge
Group principals is how best to organize
the innovation function. Should it be
within the business unit or stand as an
independent corporate function? Should
we create a “blue sky” or “breakthrough”
group separate from our existing
operations? Should innovation report up
through marketing or R&D, and where
should consumer insights live? Should we
create an innovation “center of excellence”
or a chief innovation officer role to ensure
best practices are shared company-wide?
The list goes on and on, and you’ve
probably wrestled with these important
questions inside your company as well.
Given the frequency of the
reorganizations, the diversity of
approaches applied and the variability of
results, there’s actually a very rich sample
for researching the question of how best
to organize. However, our extensive client
experiences reveal few patterns or credible
clues. In fact, the lack of patterns poses
a more fundamental challenge: Are we
asking the right questions? Are we even
adjusting the right variables or pulling the
relevant control levers?
Jobs Theory can help us. It turns out that
most companies are framing the “How
should we structure ourselves?” question
in a fundamentally unhelpful way. Typically,
leadership focuses on “organizing” into
some ideal vertical structure based on
function or geography or business unit or
technology or customer segment or brand
or industry category. Regardless, the angle
of analysis is fundamentally vertical: who
reports to whom, which budgets sit where,
who is responsible for what, where the
P&L sits and the like.
What Jobs Theory compels us to do is shift our angle of analysis
from the vertical silo to the horizontal alignment with the desired
progress of the end customer. In other words, the key organizing
question is this: How do we best integrate across functions
such that the end-to-end internal process is perfectly configured
to perform the customer’s job to be done? Kellogg’s found
Breakthrough success with Cheez-It Grooves, for example, by
tightly integrating the brand, innovation, R&D and supply chain
teams, rather than working sequentially and independently.
A “REORG” IDEA WORTH USING? INTEGRATE YOUR
ORGANIZATIONAL RESOURCES INTO PROCESSES THAT PERFECTLY
FULFILL THE CUSTOMER’S JOB TO BE DONE.
Our working hypothesis for why so many corporate
reorganizations fail to deliver desired results is that they merely
shift from one form of vertical organizational structure to another
form of vertical organization. Reporting lines for innovation might
shift from marketing to R&D or reassign P&L responsibility to
the region rather than the business unit and reorganize country
managers into regional zones, but
all of these common types of moves
are just so much shuffling of the
deck chairs. One order might prove
marginally better than another, but
our belief for why so few of these
efforts pay out is that precious few
are guided by the end customer’s job
to be done. Consequently, they apply
the wrong lens—hierarchical vertical
organization, rather than the job-
aligned horizontal integration.
Remember what Jobs Theory teaches
us: new products succeed because
customers hire them to perform
important jobs in their lives. Consumers pull products into the
flow and fabric of their daily lives in order to resolve struggling
moments and trade-offs. New products succeed by enabling
desired progress, fulfilling unmet aspirations and creating desired
experiences.
When managers focus on perfectly fulfilling the customer’s job to
be done, they ask themselves the right question: How should we
> THINK ORGANIZATIONAL INTEGRATION, NOT ORGANIZATIONAL HIERARCHY
NEW PRODUCTS SUCCEED BY ENABLING DESIRED PROGRESS, FULFILLING UNMET ASPIRATIONS AND CREATING DESIRED EXPERIENCES.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT30
You don’t have to sit through too many board meetings,
strategic-planning sessions or acquisition integration
meetings to determine that the essential unit of most
organizational structuring efforts is a “box.” A box generally
signifies a person in a defined role with lines identifying
associated reporting relationships. But Jobs Theory has
very little to say about the vertical organization of these
nodes on the org chart. Instead, Jobs Theory compels
managers to think less about the nodes and far more about
the interfaces: How do the nodes across functional silos
interact so as to perform the customer’s job to be done?
> THINK INTERFACES, NOT BOXES OR NODES
integrate across functions in order to nail the customer’s
job? Notice the shift. The relevant axis for orienting our
organizational-structuring effort is not the vertical function,
but the horizontal process for fulfilling the job.
WHO IN YOUR ORGANIZATION OWNS THE CUSTOMER’S
JOB? WHO IS RESPONSIBLE FOR ITS PERFECT
FULFILLMENT? DO THESE PEOPLE HAVE THE DECISION
RIGHTS TO ALLOCATE RESOURCES AND ESTABLISH
OPERATIONAL PRIORITIES TO NAIL THE CUSTOMER’S
JOB SPEC?
In our experience, nobody owns responsibility for the end
customer’s job, and in the organizational conversations
that proceed, the job has no voice. When we’re asking the
wrong questions and framing the issue incorrectly, it’s
unsurprising that so few reorganizations deliver desired
results.
Most stage gates are constructed as
a series of if-then checkpoints: If you
meet the established requirements,
then you may proceed. There are all
kinds of good reasons—reasons that
go all the way back to Adam Smith
and the pin factory—for why process
structure is important. Processes work
as long as inputs are consistent and
a standard set of rules can effectively
govern how items move through a
process and what happens along the
journey.
Innovations, especially the
breakthrough variety, do not come
with an attached set of instructions
for how they should be developed.
Specifically, there is no standardized
set of rules that can effectively govern
how discontinuous initiatives should
be passed along among functional
areas so the essential elements of the
offering that are critical to performing
the customer’s job-to-be-done endure.
The challenge of the development
process is to add all of the dimensions
of benefit that enable the customer’s
desired progress and experiences
yet add nothing else that would only
increase cost or distract or confuse
the customer. Rigid stage gates do not
do this. They do the opposite. Rather
than adapt the process to ensure
perfect fulfillment of the job, they
force the initiative to conform to the
strictures of the stage gate mandates.
We and many others have made much
of the need for cross-functional teams
in pursuit of Breakthrough Innovation,
and here is why: process interfaces
are modular (subject to a clear spec)
under normal business conditions
but interdependent when it comes
to discontinuous, transformational
innovation.8 Consequently, managers
actually must work cross-functionally
to manage the interdependent
functional interfaces; otherwise,
essential meaning will be lost. If this
sounds inefficient, in a way it is, but
the alternative is to be extremely
efficient at doing the wrong
things. Unfortunately, too many
organizations actually reward doing
the wrong thing fast and penalize
doing the right thing in the time
and fashion required for in-market
success. Not good.
> STAGE GATES: THINK HOW—NOT WHEN—PROCESS STEPS CONNECT, AND NEVER FORGET THE WHY
Copyright ©2016 The Nielsen Company 31
It’s actually shocking—and we use
that word advisedly—but we have
seen great managers in world-class
organizations essentially being taken
captive by their governing stage gate
process. In other words, the timelines
they follow, the decision-making
protocols they apply and the resource
allocation criteria they employ are
dictated not by the consumer’s job
to be done or even by the long-term
(two to three years, rather than two
to three months) financial interests
of the enterprise, but by what is best
described as a “machine.”
Chobani Flip, Cheez-It Grooves and
Butterfinger Peanut Butter Cups are
not the first Breakthrough winners to
highlight the importance of delaying
launch dates in order to nail the job
and perfect the offering.
As we called out in the “New
Growth Order: CPG on the Cusp
of Transformation” section, the
successful innovation processes of
the very near future will be adaptable.
For each initiative, there is an ideal
process that should leverage all
relevant experience and should be
both better than and different from
prior efforts. In short, the innovation
process should be mindful of the
nuances of the specific initiative as
well as consistent with the ultimate
purpose of the innovation effort.
When this is not the case—when
innovation activities are merely slavish
responses to an inanimate, inflexible
stage gate machine—innovation
outcomes will suffer.
As Geoff Tanner noted, “If we had
subjected our three Breakthrough
Winners to the constraints of
our stage gate process with the
same requirements as sustaining
innovations, none of them would have
made it through. These initiatives
were designed with transformational
intentions, and they required distinct
development processes.”
Finally, in organizations in which a
machine-like process trumps all else,
the creative spark required to create
a future different from the past has
no chance of catching flame. Said
differently, folks won’t even bother
trying, because honestly, what’s the
point? Either transformational ideas
will be killed because they don’t
conform to established processes
and rules, or they will be so badly
distorted in order to conform that
their inherent difference and value will
be engineered out of them.
Dysfunctional and fundamentally
flawed innovation stage gate
processes are a major reason why the
industry is enduring an innovation
crisis. Only breakthrough leadership
will address this urgent reality.
A culture of
breakthrough
leadership places
high value on both
economic and
learning outcomes.
LOW Economic Value
HIGH Economic Value
One-offs
Waste
Home Runs
Proprietary Knowledge
CALE
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AR M
ANAG
EMEN
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HIG
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Learning ValueLO
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Lear
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H LEAD
ERSHIP
PRIORITIES DETERMINE BEHAVIORS, WHICH DRIVE OUTCOMESREPETITION OVER TIME SHAPES CULTURE
Use this framework to map actual innovation initiatives. What questions, insights or opportunities for improvement emerge?
Cultures that focus
myopically on
efficiency metrics
and quarterly results
tend to generate
considerable
innovation waste at
worst—and “one-off ”
successes at best.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT32
ven as we strive for and celebrate blockbuster
innovation success, not all innovations can be
“breakthrough,” nor should they be, as we noted
at the beginning of this report. Innovation portfolios
must balance the need to keep existing brands fresh—to
drive growth today—with the very different challenge of
redefining the marketplace with products that drive growth
tomorrow.
Reflecting this reality, most companies categorize new
product initiatives using segmentations such as tiers one,
two and three; gold, silver and bronze; or breakthrough,
reframe and refresh, to name a few. Three-bucket
segmentations are the most popular, though we work
with clients who reduce to two and others who expand to
four. Whatever we call it and however we slice it, we need
to “future-proof” and better align our portfolios to meet
current, latent and emerging demand of an ever-changing
set of consumers and their needs.
A SPECIAL FEATURE
PORTFOLIO PROBLEMS
TIER 1 – CATEGORY CREATION & TRANSFORMATIONTIER 2 – BRAND EXTENSION & EXPANSIONTIER 3 – REFRESHES
CPG new-product activity is very high, but less than 20% of initiatives generate greater than $10 million in year-one retail
sales, and 54% produce $3 million or less. Given the urgency to grow and the considerable expense associated with every
innovation initiative, these results are alarming.
FEWER THAN 20% OF CPG INNOVATIONS GENERATE MORE THAN $10 MILLION IN SALES IN THEIR FIRST YEAR
$10M+
$1-3M
<$1M
$3-10M
B A L A N C I N G T H E I N N O VAT I O N P O R T F O L I O
Copyright ©2016 The Nielsen Company 33
A balanced innovation portfolio
requires more than a tiered naming
convention and good intentions;
it requires leaders to manage the
landscape of resources, processes,
and priorities in a holistic manner
to deliver the desired growth and
operational efficiency. Ultimately,
leaders ensure teams are doing the
right projects (strategic alignment)
and doing those projects right
(Demand Driven Innovation).
In the interest of clarity, we eliminate
the murky middle tier and speak only
of “sustaining” and “discontinuous”
innovations. We generally encourage
leaders to tilt their portfolio balance
toward more focus on discontinuous
projects. Growth demands that
we create and expand markets,
categories and brands by prioritizing
underserved consumers and poorly
addressed circumstances. Search
for opportunities to attract new
users, increase day parts and usage
occasions, and create benefit bundles
that earn a premium. At the same
time, sustaining innovation should
complement this work, leveraging
existing brands and assets to stay
relevant, sustain distribution and
maintain price.
To be successful, each project should
serve a clear and additive purpose,
with the organization aligned in
understanding the project’s role in the
innovation strategy. All innovations,
no matter how near in or far out,
AMBIDEXTROUS INNOVATION MANAGEMENT: MAKING THE BALANCE HAPPEN
Leaders are hungry to find growth and operational
efficiency, and most are finding that the high level of
activity is producing neither. They lean too heavily on small,
inconsequential new products and pack changes that offer
very limited consumer appeal. Leaders believe tier-two
and -three projects are low risk, when in fact, the results
produce limited growth and high waste, thus compounding
risk. There is too much thrown against the wall, absent a
purpose and consumer job, perpetuating a costly, broken
system.
In our interviews, most leaders are surprisingly aware of
the systematic waste:
• They describe the high level of activity as “churn,” even
deriding the practice as “SKUs for news.”
• Multiple executives acknowledge that their innovation
“funnels” operate as “tunnels” through which
initiatives pass via stage gates that never seem to
close.
• We encounter widespread recognition that the plethora
of “tier-two” and “tier-three” projects justified by
“needing to stay fresh” simply mislabel motion as
progress, and the launches rarely exceed the sales of
what the new products replaced.
• They talk the talk of “fewer, bigger, better” while
walking a different path.
• Few leaders have a holistic view of how their
innovation activities fit together to deliver the required
financial and share-growth goals.
Despite this common awareness, when it comes to
resource allocations, innovation portfolios are anything but
balanced. We find that innovation activity and investment
concentrate overwhelmingly in the sustaining tiers.
Independent McKinsey research finds the same: “Most
established companies err on the side of overloading their
innovation pipelines with relatively safe, short-term, and
incremental projects that have little chance of reaching
their growth targets.”9
LEADERS BELIEVE TIER-TWO AND -THREE PROJECTS ARE LOW RISK, WHEN IN FACT, THE RESULTS PRODUCE LIMITED GROWTH AND HIGH WASTE, THUS COMPOUNDING RISK.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT34
A SPECIAL FEATURE
should enable a desired experience for consumers. Each
tier demands a distinct process by which it proceeds from
idea to launch.
IN TERMS OF ALIGNING INITIATIVES WITH
APPROPRIATE DEVELOPMENT PROCESSES, THERE IS A
BASIC LITMUS TEST MANAGERS CAN APPLY: CAN WE
TRUST THE EXISTING PROCESSES AND INCENTIVES
TO DEVELOP THIS INITIATIVE FAITHFULLY AND FULLY,
OR WILL THE ESTABLISHED STRUCTURES BEND THE
INITIATIVE INTO CONFORMITY?
The sustaining innovations that keep our current business
strong typically align with the processes and priorities of
our established businesses. These projects will leverage
existing assets and know-how, require relatively little
investment, demand little explanation to our retail
partners, and provide a return measured in months, not
years. As noted previously, because too many initiatives
are being ushered through the stage gates with inadequate
consumer validation, the process even for the lower-tier
sustaining innovations is not performing as it must. Once
we scrub our pipelines of these “innovations without a
cause” (to borrow language from the 1955 James Dean
classic), these initiatives should accelerate through
the development and assessment stages expeditiously,
supported by efficient use of innovation science and
predictive analytics.
Discontinuous innovations, by contrast, tend to create
unfamiliar challenges for existing processes and expertise.
Additionally, organizational incentives and resource
allocation rules are specifically designed to discourage
investments in activities that do not improve operating
efficiencies by leveraging existing capabilities. Discontinuous
innovation is the work of explorers, not exploiters, to borrow
the AB InBev terminology. Managers need a distinct mind-
set, asking questions such as: How big can we make this?
What needs to be true in order for this to succeed?
Capital expenditures, longer development horizons and
sustained marketing support should be expected. Category
expansion, sustained growth and follow-on platform
extensions also should be expected. To expect all of these
changes to flow from the same processes and incentives—
and managers—that drive sustaining improvements and
this quarter’s number is foolhardy, yet this is too often the
industry reality.
THE RESULT OF A ONE-SIZE-FITS-ALL APPROACH
TO INNOVATION DEVELOPMENT IS TREMENDOUS
AND SYSTEMATIC WASTE—AS WELL AS THE
COMPOUNDED OPPORTUNITY COST. WHEN SENIOR
LEADERS WRING THEIR HANDS OVER THE THREATS
OF NIMBLE UPSTARTS, THEY GENERALLY DO SO
WHILE NEGLECTING THE EXPONENTIALLY MORE
DESTRUCTIVE FORCES DESIGNED RIGHT INTO THEIR
OWN PROCESSES.
All initiatives, sustaining and discontinuous, should have a
clear purpose answering these basic tests:
• Does this offering enable desired progress in my
customer’s life?
• Does it resolve a struggling circumstance?
• Does it do a job better than what consumers hire
today?
Beyond these common core values, we’ve identified seven
areas in which conscious effort and concrete steps need
to be taken in order to make the promise of a balanced
innovation portfolio a reality. Is this a comprehensive
checklist ensuring success? By no means. But if you get
these items right, you’ll be thinking and acting like a
balanced-portfolio innovator.
You’ll want to devise the list that’s right for your
organization, but these are some of the major elements
requiring differential management:
A BALANCED-PORTFOLIO DIAGNOSTIC
B A L A N C I N G T H E I N N O VAT I O N P O R T F O L I O
Copyright ©2016 The Nielsen Company 35
SUSTAINING DISCONTINUOUS
LOCUS OF IMPATIENCE
ROLE OF STAGE GATES
INCENTIVES
SENIOR SPONSORSHIP
METRICS
TEAM STRUCTURE
IN-MARKET SUPPORT
HORIZON
Be impatient for hitting timelines, budgets and forecasts.
Keep the trains on time and on budget while ensuring initiatives are additive to consumers and the full portfolio, never assuming that “close-in” means low risk. Use predictive analytics to guide decisions.
Senior leaders can safely delegate decisions to the team and process, applying established priorities and resource allocation rules.
Modular handoffs from function to function maximize efficiency with no loss of fidelity to the core idea.
Established incentives align for effective development.
Assess potential using the natural metrics for sales and margin that organizations have in place for ongoing operations. Adhere to them.
Provide sufficient execution support to achieve goals, while leveraging proven and cost-effective sales and marketing elements.
Be impatient for perfection. Nail the job. Make no compromise to the demand-driven insight in the faithful, painstaking development and activation of your commercial offering.
Design the gates and action standards that are appropriate for each individual initiative. At each step of development, ask: Are we staying true to the insight? How can we make this initiative even bigger, even better?
These initiatives fail without a senior champion and protector.
Functional interfaces are interdependent and require integrated, cross-functional teams collaborating from inception throughout development and launch.
Consciously liberate managers from the strictures of short-term mandates. Proper incentives need to be custom-crafted for discontinuous innovations to flourish.
Nothing—repeat, nothing—systematically kills discontinuous innovations like return on assets and similar efficiency metrics. Discontinuous efforts should deliver strategic (as well as economic) benefits. Share of growth is typically a more relevant measure than share of market.
Commit to best-in-class support and execution to drive Reach, Resonance and Reaction to make the launch as big as it can be and sustain into years two, three and beyond.
Until senior leaders begin to finance, staff, develop and evaluate fundamentally different types of innovation in appropriately
differentiated ways, balanced, high-performance innovation portfolios will prove elusive and mythical. A culture of innovation
success requires leaders to push their organizations to think differently and act differently. It’s the only way to perform differently.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT36
Copyright ©2016 The Nielsen Company 37
e are extremely bullish on the opportunity for Breakthrough Innovation—
and high-performance, balanced innovation portfolios—in the CPG
industry. As we noted at the outset, the marketplace of 2030 will look
wildly different than the marketplace of today:
• The products will be different.
• Many brands will be new.
• Shopping habits will evolve.
• Traditional “category” definitions will
lose utility and meaning.
• Consumers will become increasingly
diverse in their tastes and priorities.
• New online-enabled channels will
emerge.
• There will be a proliferation of new
business models.
• Innovation will be far less product-
centric.
• Smart technologies will continue
to transform how consumers
shop and use, while also affording
manufacturers new opportunities for
innovation.
• Collaboration spanning multiple firms
and industries will be widespread.
• There will be a new age of R&D
focused less on product benefit and
food science and more on leveraging
digital, mobile and social technologies
to enable desired consumer
experiences.
• Innovation will also address the
need—and the opportunity—of
feeding and caring for a global
population of 10 billion people.
• Food, nutrition and health care will
become more intertwined.
• Sustainability will move from
buzzword to table stakes. Successful
companies will make the planet a
better place for all forms of life.
This is not to play soothsayer or futurist but to underscore that the future will be
created by those who harness the energy of the entrepreneur and the power of
innovation. We look forward to assisting those who want to lead.
The 2016 Breakthrough Winner Spotlights provide real-world case studies of
what transformational innovation looks like and how to achieve it. Remember,
much better innovation outcomes are absolutely a matter of choice. Innovation
is far more science that happenstance or luck. Jobs Theory provides us with
an understanding of the causal mechanism for consumer purchase and use.
The Demand Driven Innovation system gives us the framework for converting
opportunity into outcomes.
There is little doubt that the accelerating pace of change will have leaders and
laggards. Laggards will find little margin and tight windows to regain footing
before they tilt toward irrelevance and extinction. Leaders will create a future in
which opportunities abound, if only because of the creative opportunities afforded
by the relentless advance of technology and the inherent creativity of the human
spirit. Organizations that can harness and nurture both—the technology and the
creativity—will define the future, and we are confident that it will be a remarkable,
exciting place.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT38
WE EXTEND SPECIAL THANKS TO THIS YEAR’S WINNERS, WHO HAVE NOT ONLY SHOWN THE WAY THROUGH THEIR ACTIONS BUT SHARE THEIR STORIES, BRINGING BREAKTHROUGH INNOVATION TO LIFE. THIS MAY JUST BE OUR BEST, AS WELL AS OUR BIGGEST, SPOTLIGHT COLLECTION EVER. SO BUCKLE IN FOR SOME RIVETING READS THAT OFFER PLENTY OF TRANSFERABLE WISDOM.
A final thought to consider as you read the following stories: If we were to add a subtitle
to the Spotlight section, it would be “Breakthrough Data.”
Confusing? Crazy?
The point is that the insights powering Breakthrough Innovation are stories, not
statistics. Stories are data.
Stories not only captivate Spotlight readers but also align teams and propel
development processes that retain fidelity to the insight. As Kraft Heinz’s senior director
of marketing, Geoff Feil, said in the context of 2015 Winner Lunchables Uploaded,
“It’s amazing how many meetings we didn’t have to have.” The data that provides the
aligning clarity is a simple, compelling story of a consumer struggling to make progress
in a specific circumstance—and every Breakthrough Winner has such a story at its core.
So enjoy this year’s amazing class of Spotlights. We hope that as you finish the report,
you will feel inspired to seek out compelling moments of struggle in your customers’
lives. That’s how you’ll begin your own breakthrough journey.
2016 BREAKTHROUGH INNOVATION REPORT PROJECT LEADERS
KRISTIN BEHRMANN KELSEY THORTSEN
This report is the product of a great team, working together, against deadlines, with
impossible authors—while never missing a beat in their day jobs.
The indefatigable 2016 Breakthrough crew:Genevieve Aronson, Mike Black, Anqi Chen, Daisy Dimov, Kim Gaskins, Courtney Gaynier,
Katie Gottron, Kayla Grayson, Aritra Kanjilal, Lisa Karigan, Nicholas Kaufman, Micah Kim,
John Lavelle, Al Lemieux, Jen Loukes, Steve Luebkeman, Regine Mechulan, Emily Mescher,
Lauren Minton, Kevin Nielsen, Andrew Oberright, Courtney Ramirez, Saul Rosenberg,
Craig Smith.
Thank you!
Copyright ©2016 The Nielsen Company 39
WINNER SPOTLIGHTS
SPOTLIGHT #1 ARM & HAMMERTM CLUMP & SEALTM
SPOTLIGHT #2 BAI
SPOTLIGHT #3 BREYERS® GELATO INDULGENCESTM
SPOTLIGHT #4 BUTTERFINGER® PEANUT BUTTER CUPS
SPOTLIGHT #5 CHOBANI FLIPTM
SPOTLIGHT #6 DOLE® CHOPPED SALAD KITS
SPOTLIGHT #7 MILK-BONE® BRUSHING CHEWS®
SPOTLIGHT #8 NASACORT® ALLERGY 24HR
SPOTLIGHT #9 OSCAR MAYER P3
SPOTLIGHT #10 SALLY HANSEN® MIRACLE GELTM
SPOTLIGHT #11 SKINNYPOP® POPCORN
THE NIELSEN BREAKTHROUGH INNOVATION REPORT40
S P O T L I G H T # 1
ARM & HAMMER™ CLUMP & SEAL™
A N “I M P O S S I B L E ” Q U E S T I O N U N L E A S H E S A N U N R E A L O U TC O M E
SOMETIMES IT TAKES AN “IMPOSSIBLE” QUESTION
to spark a Breakthrough win, and certainly we have seen
this before. For Church & Dwight’s Arm & Hammer
cat litter team, the question was this: If price were no
issue, could we make litter box odor completely disappear?
Despite decades of cat litter improvements, odor was
still the dominant complaint among cat owners. As Barry
Goldblatt, the company’s vice president of market research,
noted, “We constantly measure ‘consumer need gaps,’ and
there was always a persistent gap relating to odor.”
“Litter odor creates a ‘glass ceiling’ of consumer
satisfaction,” added Bryan Harpine, director of global new
products. “Across all manufacturers, nobody was doing
better than 75% satisfaction, which is a pretty low ceiling.
This dissatisfaction led to numerous undesirable quality-of-
life consequences, from the functional:
“Cleaning the litter box is the worst job in the house . . .
worse than cleaning the toilets.”
. . . to the emotional:
Copyright ©2016 The Nielsen Company 41
“I just feel like a bad homemaker if my house smells.”
. . . to the social:
“Sometimes I feel embarrassed when I have guests over.”
“Consumers were passionate in their dissatisfaction and
said so,” Harpine continued. “This sentiment prompted
70% of cat owners to use odor-mitigating accessories.
They bought sprays or air fresheners, or sprinkled baking
soda on the litter. The dissatisfaction also explained
why consumers were loath to pay premiums; even the
best litters didn’t live up to expectations. And here’s an
interesting paradox: While it had been difficult historically
to raise prices even 3% to 4% with a new product, the
category showed tremendous price elasticity for this
new extraordinary benefit. In other words, consumers
would happily pay more, but only for a litter that actually
performed against total odor removal. Across the
Breakthrough Innovation Project, we have seen this
consistently: Products that nail jobs command price
premiums.”
“And this is where we set our sights,” Harpine
underscored. “Replace the ‘glass ceiling’ with the ‘gold
standard.’ And the gold standard is to have guests over and
have them ‘not even know I have a cat!’”
“Just contemplating this notion had a profoundly
motivating effect on the company,” Harpine recalled.
“Church & Dwight has been extremely cost conscious
long before the recent industry cost-cutting movement,
and here we were, asking a revolutionary question: Could
we transform the industry if cost were no issue? It was a
challenge that brought cross-functional leaders and the
ranks together in pursuit of this goal, and we were really
motivated both by the prospect of industry transformation
as well as by the opportunity to make substantial quality-of-
life improvements to our customers’ lives. In the context of
cat litter, this was one of the most remarkable missions we
ever took on.”
“The thing that happens when you ask a huge question,”
Harpine described, “is it unleashes creativity: You’re out
of the sandbox, and now you have the whole playground.
Suddenly you are open to ideas that you never would have
considered previously. One of the first consequences of
our expanded ambition was to engage a team of experts
to perform a global technology search for substrates that
could lock in odors. We didn’t even ask them to focus
on litter, because we didn’t want to constrain thinking or
searching. They returned with 145 candidates, which we
evaluated and reduced to a short list of 10. Among these,
there was one with demonstrated ability to seal in odor
such that there was, literally, zero detectable smell.
“It was one thing to have a promising substrate; it was
another to have a commercial product that we could
produce at scale and, eventually, sell at a price consumers
were willing to pay. We spent four years getting the
substrate right and formulating the necessary blend of
additives as well as developing the coating technology
to get to an effective product. And by effective, we were
very clear on the claim we needed to make: a ‘seven-
day odor-free home.’ This would be unprecedented, and
nonetheless, on this point, there was complete team
commitment.
“Notably, producing this new litter required $10 million
in capital expenditures, and it was as much the prospect
of revolutionizing the industry as any business case that
motivated our management to approve the investment.
This was a cause we believed in, and we were determined,
organizationally, to succeed.”
THE THING THAT HAPPENS WHEN YOU ASK A HUGE QUESTION IS IT UNLEASHES CREATIVITY: YOU’RE OUT OF THE
SANDBOX, AND NOW YOU HAVE THE WHOLE PLAYGROUND.
Premium pricing is an innovation consequence, not an innovation input. The sequence matters.
SPOTLIGHT #1 | ARM & HAMMER™ CLUMP & SEAL™
THE NIELSEN BREAKTHROUGH INNOVATION REPORT42
“Once we had the product ready,” recalled Melissa Martin,
the marketing vice president, “there was no doubt. We
contracted a national consumer research firm, and they
substantiated the ‘seven-day odor-free home’ claim via
double-blind in-home testing. That result was confirmed
in a subsequent market simulator test, where the product
far exceeded expectations and previous experiences with
marketed litters. From a product perspective, we had done
the impossible, and now we had to take it to market.”
“We did a number of things very differently on this
initiative,” Harpine reflected. “For starters, we began
collaborating with our national retail accounts two years
ahead of the launch. There were three pillars to our case
for why they should get behind this product in a major
way:
• “First, the consumer benefit goal of a seven-day odor-
free home was demonstrably powerful.”
• “Second [was] the strategic appeal of “breaking the
glass ceiling” of consumer satisfaction.”
• “Third [was] the business case for a premium-priced
litter, based on the transformational benefit this litter
would deliver for the consumer.”
“We shared our research with the retailers as well as our
insights on price elasticity—that consumers were more
than willing to pay more for a litter that truly did the
job. This advance groundwork with retailers generated
tremendous pull for the product, enabling us to accelerate
distribution and gain prominent shelf space in the store
once we launched.”
“We did something else to win at the shelf which was
huge,” Harpine continued. “The orange package is an
iconic part of our Arm & Hammer brand identity. It links
to our essential equities rooted in our century-old baking
soda franchise. However, we were about to introduce a
truly revolutionary product. Internally, we were challenging
and questioning every conceivable assumption and
established belief, so it was only natural that we started
rethinking the color scheme of the pack. We tested
various ideas just as we had through the process and the
black box really popped. It signaled three things to the
consumer which were exactly the messages we wanted
conveyed: this litter is powerful, it is, truly differentiated,
and it is believably premium. Importantly, we knew we had
premium benefits, not just premium packaging.”
“Another critical element we tested was price point,”
Harpine explained. “Remember, this is a category in which
a 5% price increase is a very tough sell, and we were
experimenting with 30%, even 50%, price premiums. It
turned out that 50% was simply too much, but 30% was
acceptable and offered the best business case, so that’s
what we went with.”
“Getting the consumer to actually try the product was the
key, though,” Martin elaborated. “We couldn’t afford to
scare consumers away at shelf with sticker shock, so we
implemented a range of trial sizes and coupons to lower
the barrier to trial. We also headlined a 100% satisfaction
guarantee: ‘Any odor smell, return it for a full refund.’ We
were that confident. But once consumers experienced the
benefit of an odor-free home, they loved the product. It
was like we were giving them their house back—and the
confidence and peace of mind and joy that went with it.
Clump & Seal also relieved the stress of hosting guests: no
more shame, embarrassment, candle lightings and litter
hidings.” Martin shared some customers’ testimonials:
SPOTLIGHT #1 | ARM & HAMMER™ CLUMP & SEAL™
OUR SOLUTION: CLUMP & SEAL NEW &
DIFFERENT TECHNOLOGY
100% Satisfaction“Odor Free Home”50% – 75% Odor Control Satisfaction
Transformational Innovation
Current Litter on the Market
BREAK THROUGH ODOR “GLASS
CEILING”
Copyright ©2016 The Nielsen Company 43
• “It controlled the odor so well that my mother-in-law thought we no longer
had a cat!”
• “It was like the cat was just gone!”
• “I’d pay extra for it.”
“Consumers were thrilled with the product,” Martin continued. “Our retailers
were ecstatic to see new life and profit in this category. We supported the launch
with effective media that really brought the insight to life. In one early TV ad,
a woman pulls the litter box from under her coffee table, and her friend sitting
next to her says, ‘Oh, I didn’t know you had a cat.’” Martin added that this “very
simple” message “connects perfectly to the emotion and anxiety that we knew
we could resolve.”
“The launch was a tremendous success, with first-year retail sales approaching
$100 million and better than 50% growth in year two. What we’ve been looking
for since the launch,” Harpine noted, “has been ways to extend the runway for
this terrific brand by identifying targeted customer need gaps. For example, we
have launched a lightweight version as well as a bacterial-odor-control product
for consumers more conscious about bacterial odors. So we continue to extend
and leverage the platform.”
“Reflecting on this launch,” Harpine summarized, “not only did we achieve a
lot, we learned some important things. First, once you’ve done transformation
the first time, you are much more open to seeing it and doing it again. It’s
as if the blinders come off, and this ties directly to a second lesson: the
value of asking ‘impossible questions.’ This all began with this seemingly
impossible notion of ‘If cost were no issue, could we create a litter that would
actually eliminate odor completely?’ If we don’t ask that question, none of
this success happens. Third [is] the power of a compelling story. We are very
much a financially driven company with a strong performance record with our
investors, but sometimes you can get so focused on the numbers that you
lose sight of what drives the long-term game, and a hugely compelling story of
transformation has the effect of elevating everyone’s performance and engaging
with the potent consumer struggles that offer the real growth opportunities.
Fourth, when innovation becomes a company-wide mission, the power to create
and realize is exponentially greater than when innovation happens in functional
silos. It’s when you align diverse skill sets at all levels with a huge goal that you
create a powerful catalytic effect that lifts everyone’s game. Everyone wins—the
retailer, the manufacturer and the consumer.”
Breakthrough Innovation doesn’t just deliver great products; it also makes a
difference in consumers’ lives, inspires teams, unifies organizations and builds
better companies. In showcasing all of these qualities, Clump & Seal sealed the
deal on a category-transforming Breakthrough win. n
SPOTLIGHT #1 | ARM & HAMMER™ CLUMP & SEAL™
WHEN INNOVATION BECOMES A COMPANY-WIDE MISSION, THE POWER TO CREATE AND REALIZE IS EXPONENTIALLY GREATER THAN WHEN INNOVATION HAPPENS IN FUNCTIONAL SILOS.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT44
S P O T L I G H T # 2
BAIF I N D I N G A S U P E R F R U I T I N A WA S T E S T R E A M—
A N D T U R N I N G I T I N TO A B R E A K T H R O U G H W I N N E R
“I NEEDED A SALES GUY, AND MY DAD NEEDED A
job,” Bai founder and CEO Ben Weiss recalled, “so that’s
how we started selling. My dad and I took the first bottles
of Bai to local retailers we knew in Princeton, N.J., and
made the sales one-by-one, door-to-door. The retailers may
have just been being nice at first—giving some local guys
a shot. But we really believed in our product, so we made
the most of these initial opportunities—giving away a ton
of samples and telling people about the drink and why we
loved it.”
It turned out that the shoppers loved the product, too, and
from those humble beginnings in 2009, a Breakthrough
Winner was born.
The story begins years earlier, with Weiss graduating from
college with a strong entrepreneurial streak and a passion
for coffee. Spend time talking with him, and you realize he
loves everything about coffee—the plant, the farms, the
history, the community, the roasting, the retailing, the café
culture and the product innovation. And despite his years
in the broadly defined coffee industry, one thing he couldn’t
Copyright ©2016 The Nielsen Company 45
SPOTLIGHT #2 | BAI
make sense of was why the coffee fruit, the actual “cherry” that surrounds the
coveted bean, was systematically discarded as a waste product. As Weiss first
learned from Indonesian farmers, the cherry is rich in antioxidants and enjoys
many nutritional and medicinal uses in the traditional practices of coffee-
growing societies. “It’s a legitimate superfruit,” Weiss noted, “but in First World
markets, it’s used in a few nutraceuticals but generally just thrown away.”
Weiss determined to turn this fruit into a drink that consumers would love, and
he was convinced there was an opportunity.
“To use your language of Jobs Theory,” Weiss reflected, “there have been a ton
of layoffs in the ‘sugary beverage’ industry. The decline of carbonated soft drinks
is old news, but there’s a broader trend with diverse drivers that are particularly
pronounced among Millennials and younger.” Weiss quickly rattled off the
following list:
• “They’re trying to make healthier choices.”
• “They want calories that will work for them, as opposed to empty calories.”
• “[There is] resistance to drinking calories, especially among women.”
• “‘Diet’ products are seen as outdated and offering undesirable trade-offs.”
• “[They have] interest in antioxidants and natural foods that keep you at your
best.”
• “[There is] unwillingness to compromise on flavor or taste.”
• “Younger consumers, particularly, are looking for new, exciting experiences
and brands. This is true in food and beverage, but it’s a generalizable
phenomenon.”
• “Authenticity matters, which is why you see the boom in craft beers,
farmers’ markets, boutique hotels and so many other businesses and
brands.”
“The initial products that my dad and I were delivering in 2009 were midcalorie,
and then in 2010, we introduced Bai 5, and it just took off. We had the black-cap
midcalorie and the red-cap five-calorie, and even though we had some super-
popular black-cap flavors, the weight of the consumer demand was all on the
Bai 5 red cap. To focus our resources and energy and expansion strategy, we
shut down the black cap and doubled down on Bai 5—ultimately just dropping
the 5 and calling it Bai.”
“I think we did a number of things that were unusual for a start-up,” Weiss
explained. “One, we did a lot of consumer research early, and two, we focused
on building ‘distribution equity’ as much as brand equity. In my estimation, too
many CPG start-ups focus mostly on the product and the brand, figuring that
they’ll just pay the slotting fees or get it into stores one way or another. They
don’t prioritize distribution as a strategic pillar. We did. Building distribution,
cultivating retailer relationships, working hard on the in-store execution—this
is mundane stuff, but it’s the bones and flesh of great consumer products
BUILDING DISTRIBUTION, CULTIVATING RETAILER RELATIONSHIPS, WORKING HARD ON THE IN-STORE EXECUTION—THIS IS MUNDANE STUFF, BUT IT’S THE BONES AND FLESH OF GREAT CONSUMER PRODUCTS BUSINESSES.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT46
businesses. We didn’t allow the growth to get ahead of our distribution
capability. As a result, we’ve been able to grow at triple-digit rates for five years,
maintain operational and quality control, and feel confident that we’ll sustain
our growth rate for the next five years.
“We were growing fast, but we really built the business in a very deliberate way.
We built our own ‘direct store delivery’ capability, and we focused on our in-store
real estate strategy: How do we connect with consumers in-store, and how do
we make this a huge win for our retail customers? Entrepreneurs overlook this
unsexy, block-and-tackle grunt work at their peril.
“Costco in the Northeast was our first big account, and they’ve been a great
partner. We did a bunch of four-day road shows (imagine a sampling and
shopper-engagement marathon) in their stores. These events were promoted
by Costco and invaluable in generating tons of consumer awareness and trial
while also proving ourselves to a huge channel partner. Our Costco success
also provided visibility to other chains, so we quickly began receiving calls from
grocery chains and mass discounters. Target also came onboard early and has
really helped us develop the brand in a fantastic way.”
“In many ways, we inverted the traditional model” by starting to offer the
product in warehouse clubs and getting into convenience stores later, explained
Weiss. Noting that convenience stores (C-stores) provide a chance to get many
consumer trials, he added that this channel is “appealing on that front, but
we felt strongly that if we invested in our distribution equity and built strong
partnerships with some key retail customers first, that we’d then be in a much
stronger position to manage the fragmentation and complexity of the C-store
universe later on.”
“I don’t emphasize the channel strategy and distribution elements because
they’re somehow more important than the consumer story,” Weiss explained.
“They’re not, but they are often overlooked, and they’re critical to success. The
whole time we’re building out our infrastructure and retailer relationships, we
are engaging with consumers every day in a very systematic way. Our ‘Bai-ology’
tasting sessions were structured to learn not only what consumers preferred but
why and what they were switching from. Again, using a ‘jobs’ frame: in order to
get hired, it really helps to understand what will get fired and why.
“If you look at our product line and also our source-of-volume data, there’s
structure and symmetry. There are products that pull, variously, from sodas,
juices, waters and teas. We’ve identified trade-offs associated with each of these
alternative beverage categories and offered options—in the form of enhanced
waters in a variety of flavors, both carbonated and flat—that are beverages with
no barriers. To me, and I think to many of our consumers, the magic of Bai is
that all of their other beverage options have some sort of trade-off, whether it’s
too much sugar, or not enough taste, or artificial additives or too much caffeine.
ONCE YOU SEE THE BEVERAGE LANDSCAPE AS CONSUMERS EXPERIENCE IT, THE IDEA OF A ‘BEVERAGE WITH NO BARRIERS’ IS A BIG IDEA.
SPOTLIGHT #2 | BAI
Copyright ©2016 The Nielsen Company 47
SPOTLIGHT #2 | BAI
Once you see the beverage landscape as consumers
experience it, the idea of a ‘beverage with no barriers’ is
a big idea. You also see that what is often described in
blanket terms as a ‘mature market’ is actually an extremely
diverse and dynamic landscape, rich in opportunity.”
“We live in a society in which many people are looking
to make healthier choices in their lives, and it turns out
that one of the very first things people change is what
they drink. It may be hard to give up pizza or burgers or
chocolate, but when people look for low-hanging healthy
alternatives, high-sugar
and high-calorie beverages
[are] the first place many
people go.”
“All of this helps explain,”
Weiss continued, “why
we have such high repeat
rates. On Amazon,
for example, our high
percentage of sales coming
from subscription helped
us win their Vendor of the
Year Award in grocery.
Bai offers a solution for
many people in frequently
occurring circumstances,
and it breaks all the historic
trade-offs and overcomes
historic barriers.”
“Consistent with all of the decisions and priorities I’ve
described,” Weiss explained, “we have built a great brand
that connects with those whom we call the ‘conscious
authentic.’ As the name suggests, they’re concerned with
their health, the environment and their communities.
These conscious authentics live active, socially engaged
lives, and they embrace products that enable and reinforce
their priorities and values. Every Bai flavor honors a
different coffee-growing region of the world, and this
connection to places remote and exotic enables some story
building that enhances the Bai experience for consumers.
Every Bai takes them on a little flight of fantasy. Just an
aside, the word bai actually means ‘pure’ in Mandarin.”
And Bai has taken flight in the marketplace as well. After
signing a distribution deal with Dr Pepper Snapple in 2014,
Bai has gone national in its distribution while unleashing
its first major marketing campaign in an effort to drive
awareness. “For all of our success,” Weiss noted, “as of
May 2015, we had only 7% unaided brand awareness,
which we like to see as a huge opportunity.”
To bring their expansionary ambitions to life, Weiss and
his team took time to gather their fact base and build the
necessary, supporting infrastructure before hitting the
accelerator. But once ready, Bai unleashed a national ad
campaign and celebrated Super Bowl ad, fueling another
wave of explosive growth. It has been a remarkable
transformation since Weiss and his dad embarked on
their first delivery run and handed out the early samples in
neighborhood New Jersey stores. Breakthrough comes in
many forms, and none more inspiring than the amazing
ascent of Bai. n
THE NIELSEN BREAKTHROUGH INNOVATION REPORT48
S P O T L I G H T # 3
BREYERS® GELATO INDULGENCES™
E X PA N D A C AT E G O R Y, R E-E N E R G I Z E A B R A N D, I G N I T E G R O W T H = A S W E E T B R E A K T H R O U G H W I N
“IN THE MANY CONSUMER INTERVIEWS WE
conducted, every single woman shared a rich end-of-the-
day story,” recalled Laraine Miller, the brand development
director for Breyers. “We were primarily looking at a very
specific moment in which there’s a married mom, kids
have been put to bed after an active day, and then there’s
this moment to unwind, connect with her spouse and enjoy
a little reward. How can we make that moment special for
her? What sort of experience is she trying to create? These
were the motivating questions that led, ultimately to the
creation of Breyers Gelato.”
A thinking process such as this holds a useful lesson
because it illustrates a simple, shared feature of many
Breakthrough Winners: They start with a question rather
than a statement. Questions open minds to discoveries,
seek surprises, embrace unknowns and loosen the grip on
certainty. Questions are rooted in a basic humility of not
knowing, and it is by actively not knowing yet seeking to
know that many innovators end up finding the insights that
Copyright ©2016 The Nielsen Company 49
lead to Breakthrough successes.
Of course, posing questions is just the
beginning. “The path was not a simple
or easy one,” Miller continued. “Breyers
was suffering along with the rest of
the mainstream ice-cream industry.
The superpremium segment was the
only growth tier, and even there, many
brands had attempted, and failed, to
gain traction.”
“Despite challenges, there were a couple
of forces aligned behind us in the
revitalization of the full Breyers brand,”
explained Nick Soukas, brand-building
director for Unilever Ice Cream. “In our
favor was a trend toward simple, real
ingredients, which aligned well with
core Breyers equity, and there was this
exciting growth in the superpremium
tier of the marketplace. But as Laraine
noted, premium ice cream was not
growing, and Breyers had never broken
into the superpremium tier.”
“We had a clear business challenge—to
revive profitable growth—and we had
an idea about connecting with this
special end-of-the-day moment, but
there’s a big difference between an
idea and an insight,” Miller continued.
“Our explorations drew on our success in Europe with
the Carte d’Or brand and focused on a defined consumer
and circumstance, so we formed some initial hypotheses
around how we might create a product that would be
different from the plethora of ice creams and relevant to
this special moment. That’s where the insight work really
began.”
“Our target married moms were active, accomplished
and confident. They were happy in their lives, and despite
all they did for kids and community, they still prized their
sense of ‘me.’ They didn’t want to be defined simply as
a mom or a wife. You’d notice that these women were
constantly adding little extras to their lives—whether in
their wardrobe, social activities or home life. They found
ways of making things their own—adding personal accents
to places and moments of daily life. And each night, after
they put the kids to bed, they had an almost sacred time
to unwind and connect with their husband or friend or
partner.
“This moment was not about ice cream at all; it was about
relaxing and unwinding and rewarding. And these women
were quite certain that they had earned these rewards; they
expressed no doubts, guilt or ambiguity in their determined
desires!
“Importantly, we took a very broad view of what the
‘category’ was, because for her, it clearly included a glass
715799-1UnileverUBYIBRP-52296Breyers GelatoSpoon art
100% 8.5” x 11.25”
7.875” x 10.5” 7” x 9.875”
J. Tucker
J. DiSalvo
J. DiSalvo
Ken Stec
2-11-2016 1:46 PM
2-11-2016 2:49 PM
2-11-2016 1:46 PM
2-11-2016 2:49 PM
None
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A delicious trio of textures. Creamy gelato, luscious sauces and gourmet toppings.
IT’S WAY BEYOND ICE CREAM.
YOUR GELATO MOMENT HAS ARRIVED
© 2016 Unilever
CHOCOLATE FUDGE TRUFFLE
RASPBERRY CHEESECAKEVANILLA CARAMEL SALTED CARAMEL TRUFFLE
S:7”
S:9.875”
T:7.875”
T:10.5”
B:8.5”
B:11.25”
SPOTLIGHT #3 | BREYERS® GELATO INDULGENCES™
THE NIELSEN BREAKTHROUGH INNOVATION REPORT50
SPOTLIGHT #3 | BREYERS® GELATO INDULGENCES™
of wine or some chocolate or just putting her feet up and
watching some can’t-miss TV. So if we were going to do
something successful, it had to be relevant to this moment
and the desired experience, not simply differentiated from
other ice creams. So, while ice cream was not the frame
of reference, the contextual importance of indulging and
connecting and relaxing fueled our confidence that we
could do something special that could enhance the desired
experiences.”
“Gelato sales were small from a category standpoint,”
Miller continued, “but they were growing. Also, in our
consumer work, we found that the idea of gelato triggered
associations that were exotic yet approachable, adult but
seriously delicious—which fit well with the end-of-day
story that we were looking to enhance. We also found that
the word gelato triggered images and internal narratives
among our consumer group. Gelato activates associations
with gourmet meals and memories of traveling abroad. It
has an accessibly elegant air to it. Gelato is a very effective
trigger that worked for us both as a product and an
emotive activator.
“By contrast, and especially in the U.S., ice cream has
very much of a ‘family and kids’ set of associations. One
of the critical discoveries of our consumer work was this
revelation of how gelato works very differently in the minds
of consumers—much more adult, exotic and indulgent
than ice cream. These findings helped us realize that
gelato wasn’t just an extension of ice cream but actually
addressed a very different set of consumer circumstances
and desires.”
“We used our validated insights to develop and optimize
a concept that tested well, and this energized our
product developers to create a world-class gelato that
was relevantly differentiated. Fortunately, we had a
tremendous cross-functional team that worked incredibly
hard on the development challenge,” Miller underscored.
He went on to list three essential discoveries that the
team made during early prototyping, which, he said,
“sharpened our brief.”
“Our target consumers wanted decadent, indulgent flavors
but also familiar ones. Additionally, the ideal product
delivered across multiple benefits in addition to great
taste: rich, creamy texture; luscious sauce; and a gourmet
topping. Finally, the visual matters. When consumers
could see the product, they had a very strong, positive
reaction.”
“Each of these elements of the brief provided critical
focus and also challenges,” Miller noted. “On the product
formulation side, we had to identify, evaluate and secure
an array of new suppliers and then figure out how to
produce a sophisticated, premium experience at scale. To
deliver on the three product benefits was no small feat and
required investment in new technology to stream the sauce
all the way through the gelato rather than deposit as a layer
on top. The toppings provided another challenge: to find
a way to incorporate what was visually striking as well as
deeply satisfying to eat. Finally, we packaged the product in
a transparent container—which we had done successfully
with Carte d’Or in Europe but was new for us in the U.S.—
and this made the product really pop at shelf.
“Not only did our procurement, food scientists and
engineers collaborate to do an amazing job, but we found
a vital champion in CFO Henry Schirmer. We presented
the business case for the investment, and Henry not only
endorsed the financial merits, but he completely believed
that if we fulfilled the promise of the initiative, we could
reenergize the parent Breyers brand and bring excitement
to the category.”
Quick editorial aside: CFOs have a most undeserved
bad rap when it comes to innovation. In our five years
of Breakthrough research, we have seen many senior
IN TAKING THIS PRODUCT TO MARKET, WE BROKE EVERY CATEGORY CONVENTION IN THE PRICING
AND PROMOTION BOOK.
Copyright ©2016 The Nielsen Company 51
finance leaders play instrumental roles in supporting bold
investments in growth.
“Finally, in taking this product to market, we broke
every category convention in the pricing and promotion
book,” Soukas reflected. “Ice cream is a highly promoted
category, but we knew that our focus on quality, indulgent
ingredients and the product appearance would command
a considerably higher price than premium ice creams and
also avoid the rampant cycle of promotion.”
“The story we took to our retail partners was not an easy
one to sell, but we made the case with four core elements,”
said Soukas, detailing each one:
• “A data-rich map showing that gelato penetration
was concentrated in coastal, urban pockets, revealing
broad opportunities for geographical expansion.”
• “The core insight around the end-of-day experience—
and that this was a pervasive experience, not just one
that existed in more cosmopolitan zip codes.”
• “A category development business case: Most stores
had only a few, unfamiliar, expensive brands of gelato
on offer. We were able to show retailers our research
that while many consumers experienced this desire
for an emotionally satisfying, indulgent end-of-day
experience, part of what they wanted was comfort
and familiarity, and they rejected unfamiliar brands
and excessively exotic flavors in these circumstances.
Hence the case for Breyers.”
• “We always brought the product with us. The
strategy of “democratizing gelato” was engaging,
and the business case for category development was
compelling, but the product sealed the deal. The
dramatic visual—with the clear container—and the
spectacular taste convinced our partners that we could
deliver on our transformational ambitions.”
“Retailers also embraced our pricing strategy,” Soukas
continued. “Superpremium gelatos were selling at about
a 2.5 times price premium over the premium tier of ice
creams, and this gap was only expanding. Our goal was to
pull non–gelato consumers into the category, not suggest
that superpremium gelato buyers trade down. Our price
tests showed an optimized business case at a 1.7 times
index to ice cream, so this is what we went with, and the
in-market results validated our strategy, as we dramatically
grew the gelato category and the total superpremium
segment.”
“A critical aspect of our category development strategy
involved asking the retailers to give us a full, incremental
shelf of space,” Soukas explained. “We wanted to
command shoppers’ eyes with facings of all four launch
SKUs. Also, we wanted to shelve with other gelatos, not
with the Breyers parent brand. This was important to signal
to consumers that this was truly new, not just a variation
on a familiar theme.”
“So with our product set and retailers onboard, we geared
up for a big launch campaign that would connect this
very novel product to this very specific circumstance in
a way that reached, engaged and motivated our target
consumer,” Miller recounted. “We partnered closely with
our agency, DDB, both on some terrific TV and also online
video. Our launch TV creative we called ‘The Interruption,’
and it really brought the insight to life in a powerful,
effective, funny way. Kids were in bed, and parents were
settling into a very relaxing, shared moment—enjoying
a delicious scoop of gelato. And then in comes their
pajama-clad son, asking, ‘Hey, is that ice cream?’ ‘No,’
Mom responds, not quite licking away a smile, ‘it’s gelato.’
The playful ad underscores that this is not kiddie ice
cream. It is indulgent, sophisticated-yet-accessible adult
deliciousness.
“Online, we used targeted Facebook videos that generated
a tremendous amount of sharing, conversation, awareness
and interest. The video showed a couple dancing and
celebrating at home—again in a way that many of our
target consumers connected with. The story line resonated
precisely with what we’d heard from women in our initial
qualitative research, and it really clicked. There were posts
like ‘Were you filming me?!’ and ‘Got my plan for tonight!’”
Results? Sweet. Year-one sales were $62 million, and
sustained media support and an additional four SKUs
propelled year-two sales growth of 30%. Better yet, many
of the buyers were new to the brand, and all of them
SPOTLIGHT #3 | BREYERS® GELATO INDULGENCES™
THE NIELSEN BREAKTHROUGH INNOVATION REPORT52
were paying premium prices for a brand that had historically been tethered
to mainstream pricing. “Our strategy really played out,” Soukas summarized.
“When we first started speaking with retailers about gelato, it was a growing
niche category of maybe $150 million. Now it is nearly three times as large and
growing strong.”
“I think there are two important lessons our organization has taken from this
success,” concluded Soukas:
• “Focus on a category-expanding strategy, rather than a share-shifting
approach. The road might be tougher, but the rewards are much greater. We
are into our third year and have yet to be challenged by another mainstream
brand. That tells you something about how you create enduring competitive
advantage.”
• “Simply put, it is possible to transform well-established, mature categories
like ice cream.”
“It is too easy and too common to think that neither of these are possible—that
it’s all a battle for share of an existing market or that a category is ‘too mature’
for transformation,” said Soukas. “If you believe these things, uninspiring
innovation follows.”
But thinking differently is what leads to Breakthrough success.
Gelato Indulgences’ success accompanied renewed support for the base Breyers
brand, resulting in 7% core brand growth—3X the rest of the category. In 2015,
the Breyers Gelato Indulgences team won a Renaissance Effie in recognition
of a new-product launch that revitalized a mature brand. All in all, it was a
remarkable achievement, proving yet again that when conventional wisdom
suggests a category is “closed to growth,” innovators can find opportunity,
profit, category expansion and enduring competitive advantage. It’s amazing
what can happen when you expand the world of possibilities by asking a simple
question. n
FOCUS ON A CATEGORY-EXPANDING STRATEGY, RATHER THAN A SHARE-SHIFTING APPROACH. THE ROAD MIGHT BE TOUGHER, BUT THE REWARDS ARE MUCH GREATER.
SPOTLIGHT #3 | BREYERS® GELATO INDULGENCES™
Copyright ©2016 The Nielsen Company 53
S P O T L I G H T # 4
BUTTERFINGER® PEANUT BUTTER CUPSN O B O DY L AY A F I N G E R O N T H I S S W E E T B R E A K T H R O U G H !
IN 2011, NESTLÉ USA’S BUTTERFINGER BASE BUSINESS
was growing at 10%, the classic “Nobody’s gonna lay
a finger on my Butterfinger” tagline was back, and
Butterfinger’s marketing team was pushing the frontier
of digital marketing. “The base business was healthy,”
recalled Jeremy Vandervoet, the marketing director, strategy
and innovation for Confections & Snacks. “But there wasn’t
any innovation.”
“At the time, we were doing research to understand what
fuels the Butterfinger brand,” added Natasha Madan,
marketing director, Confections & Snacks. “A key finding
was that Butterfinger was beloved yet polarizing. Its
distinct taste and texture weren’t for everyone or all
occasions, and we challenged ourselves to leverage the
love to fuel innovation.”
“We knew that we needed to focus on innovation and do
it right,” Vandervoet continued, “so the first thing that we
did was step back and look at past insight work. When we
dusted off nearly a decade of past consumer research, we
uncovered an important clue to the opportunity. We found
a concept for Butterfinger Cups from 2004 that consumers
had loved.”
“There was clearly an opportunity here,” Vandervoet noted.
“In addition to the prior concept testing phenomenally
well, several other factors stood out:
• “Reese’s was the only peanut butter cup business in
town; there was no challenger brand. While we had no
interest in doing a me-too product, it was striking that
Reese’s owned the format outright. This was striking
because there are always multiple brands in formats,
and this is well over a billion-dollar brand.”
• “On Pinterest we found hundreds of recipes with
Butterfinger. I remember being struck by that and
thinking, ‘This brand has a lot of legs beyond the bar
THE NIELSEN BREAKTHROUGH INNOVATION REPORT54
format.’ Looking back, we were very biased internally,
thinking that Butterfinger is a candy bar alone.
Consumers clearly saw it as an ingredient.”
• “And finally, across the market, the Butterfinger brand
and peanut butter cups generated enthusiasm and
consumption.”
Carlos Velasco, the current president of Nestlé Confections
& Snacks, reflected on the keys to innovation success.
“In order for innovation to be bigger, bolder and better,
you have to have robust consumer insights. One of the
things that stand out with Butterfinger Cups is the clarity
that the team uncovered around the desired experiences
that consumers were seeking—in other words, a clear,
actionable consumer insight.”
“At the time, however,” related Bianca Suchter, then
marketing associate on Butterfinger and currently
marketing manager on Stouffers, “we were already down
the road developing and testing a double-decker bar for
Butterfinger. We tried manufacturing the bar twice, and we
failed twice. At that point, realizing that this wasn’t working
as a double-decker bar, we had to make the hard decision
to step away and look for something else.”
While Vandervoet and Suchter dove into the Butterfinger
Cups opportunity, the “minis” format was taking off within
the confection industry, and Nestlé capitalized on this. With
the launch of Butterfinger Bites, there was no doubt that
Butterfinger was meant to be expanded. Madan noted, “We
launched Butterfinger Bites and saw it just take off,” growing
from an initial $5 million in sales to $30 million today.
With Butterfinger Bites on its way to success, Vandervoet
and Suchter began their research on Butterfinger Cups.
“Initially, we were not all convinced that we should call it
cups,” Vandervoet noted. “Snickers Peanut Butter Squared
was just launching, and we were unsure about aligning
our product with Reese’s, a billion-dollar brand already the
leader in market. So we decided to test it with consumers
in our Nielsen research as ‘Butterfinger Crave,’ but
consumers didn’t know what ‘crave’ meant, and the testing
struggled.”
“Looking back, this is a situation where we should have
kept it simple,” Vandervoet reflected. But hindsight is
20/20, and it wasn’t until Vandervoet spent time away from
the project at leadership training when he had clarity. “We
had to get up in front of the class and discuss our biggest
brand challenge,” Vandervoet continued. “And mine was
this: We were sitting on a failed concept, Butterfinger
Crave, and we didn’t know what to do. I distinctly
remember presenting it, and I kept describing it like a
Reese’s Peanut Butter Cup or Snickers Squared. There was
almost a ‘duh’ comment—‘Why don’t you just call it a cup?
It looks like a cup, it sounds like a cup’—it was my big aha
moment. Were we overthinking this?”
“But then calling it ‘cups’ brought up all of the politics and
other questions. Could we go up against the number one?”
Vandervoet explained. “Initially, there was a lot of pushback
across the board. Even in my own mind, I wasn’t sure. But
the more that I spoke with people outside of Nestlé and
the project, the clearer it became.”
Suchter and Vandervoet engaged their advertising
team, simplified the message and got to work with the
tremendous group of food scientists at Nestlé, including
Andy Zamorski, who Suchter calls “the father of the
Butterfinger Peanut Butter Cup.” Suchter reflected, “We
must have had 100 different recipes. We tested every level
of inclusion; we tested every type of chocolate, just to get
to this final profile.”
“That process and that level of detail [were] the key to
success,” said Vandervoet, referencing the tremendous
number of forms, flavors and iterations tested to get to the
product available today. “So much strategy falls through the
cracks in terms of execution, and it is really had to nail this
design element, to know which levers to pull and what to do.”
‘WHY DON’T YOU JUST CALL IT A CUP? IT LOOKS LIKE A CUP, IT SOUNDS LIKE A CUP’—IT WAS MY BIG AHA MOMENT. WERE WE OVERTHINKING THIS?
SPOTLIGHT #4 | BUTTERFINGER® PEANUT BUTTER CUPS
Copyright ©2016 The Nielsen Company 55
“There had never been more research or thought put into a
launch; from start to launch, we spent three years. Did we
do too much? You could make the argument that we did,”
Suchter laughed. “But we built a sustainable three-year
support plan and crafted packaging and product design,
with everything consumer tested and clearly thought out.”
Now, as we’ve seen time and again, to launch true
innovation, you need both the idea—tirelessly researched
and developed by the Butterfinger team—and the support
and shared vision from leadership. So Suchter and
Vandervoet asked their leadership team—Doreen Ida, vice
president of marketing during the launch; Robert Kilmer,
president of Confections & Snacks during the launch, and
Paul Grimwood, CEO of Nestlé USA—for three things
to make sure that Butterfinger Cups’ potential became a
reality.
Suchter recalled, “Looking back, we really credit our
leadership team to getting this right. It was mid-2012, and
we were supposed to launch in early 2013. We knew that we
were on to something but had not cracked the code.
“We could make it bigger, but we needed more time to get
the insight and product shape right. We had a phenomenal
product, but the communication wasn’t fully resonating
with consumers, and further, when looking at the product,
consumers were disappointed in the size. And, remember,
it wasn’t as simple as pushing a date out; Doreen and
the team were counting on the year-one volume for
Butterfinger Cups in 2013, but in a huge vote of confidence,
they allowed us to delay and moved mountains to find the
sales from other brands.
“To go right after the opportunity, we needed internal
support to call it Butterfinger Cups and not worry about
aligning our product with competitors like Reese’s or feel
like we were going to be called a copycat. Everything that
Butterfinger does is different, so we knew that it would be
original.”
“And, finally,” said Suchter, they needed “a huge financial
investment to launch the product correctly.”
Suchter continued, “Now that we had the product figured
out, Jeremy went to leadership to ask them to make a very
large financial investment in the launch. Part of this was
the Super Bowl ad. I remember when Jeremy just casually
one day said, ‘What if we went to the Super Bowl?’ We both
laughed—what a ridiculous idea! But then he would bring
it up again, and again and again. I think that Jeremy just
wore Doreen out with bringing it up so much, but then he
provided the strategy behind it and rationale as to what we
would do. So we tested out the plan with Nielsen.”
Velasco noted, “We have great brands, but historically we
do not participate in the Super Bowl, and we didn’t know
if we could capitalize. Our brands are strong but so well
established that we wondered whether we would get the
incremental sales to justify such an expensive 30 seconds.
But here we had a great product with great awareness—
before, during and after the Super Bowl—paired with
strong execution, we had a winning product.”
“After all of this,” Suchter continued, “I remember getting
the updated results from Nielsen assuming a launch
with the Super Bowl ad. They were nearly three times our
original estimate. When I saw the results, I screamed and
started running down the hallway. Doreen came out and
wondered what was going on.
“With all of this—the messaging, the phenomenal product
and the launch plan—we saw that this could be larger
than anything we had ever done with Butterfinger and
more sustainable—a big win for a brand with a history of
in-and-out innovation. Doreen was sold, too, and helped us
gain buy-in from everyone else. And that was it. We got the
money, and we launched!”
Butterfinger Peanut Butter Cups is a case that illuminates
how doing right by the research and the consumer
unequivocally pays off. In this case, it grew a strong idea
to one with more than 350% greater sales than initially
projected. Nestlé was also right that there was room in
the peanut butter cup category for Butterfinger; both
Butterfinger and Reese’s grew at the same time.
We’re excited to see where else “a dose of Butterfinger”
pops up in the future, but its debut was clearly Super
Bowl worthy, and there’s nothing polarizing about a
Breakthrough win! n
SPOTLIGHT #4 | BUTTERFINGER® PEANUT BUTTER CUPS
THE NIELSEN BREAKTHROUGH INNOVATION REPORT56
S P O T L I G H T # 5
CHOBANI FLIP™“C R AV E T H E G O O D ”: R E D E F I N I N G T H E YO G U R T E AT I N G
E X P E R I E N C E—A N D T H E C AT E G O R Y
“WE SEE CHOBANI AS MORE THAN A YOGURT
company. We’re a natural-food company, on a mission
to make better food for more people,” said Chobani’s
chief marketing and brand officer Peter McGuinness.
“Our mission is central to Chobani, and we believe it’s
the future of food. We’re driven by a very strict food
philosophy that we call our DNNA: delicious, nutritious,
natural and affordable. If you look around the supermarket,
you’ll find plenty of products with two or three of these
characteristics, but very few nail all four. That’s always been
the specialness of this brand and the food we make.”
“We’re still very much an entrepreneurial company—and
that’s a word that gets thrown around a lot and is almost
said in an aspirational way. For us, it’s real, and it’s
important. Hamdi, our CEO and founder, is the central
component to product and business decisions. He gives
the company a distinct personality and reinforces a
meaningful, authentic brand that resonates with customers
and consumers.”
“Historically in the U.S., yogurt has been a breakfast snack
and something Americans often feel they should have but
Copyright ©2016 The Nielsen Company 57
rarely crave. We want to change these perceptions and
redefine the role that yogurt, and specifically Chobani, plays
in consumers’ lives,” explained Senior Brand Director Scott
Bacco. “When it comes to new products like Chobani Flip,
we take our inspiration from the broader world of culinary
trends.”
“We always look to more developed yogurt markets, such
as Canada and Europe, where yogurt is used in more
diverse ways and across a broader range of dayparts.”
McGuinness added. “Through this lens, we saw a growing
presence of add-ins that were addressing consumer desires
for varied textures and taste experiences, as well as making
yogurt eating a more meal-like experience. Hamdi knew
this trend was coming to the U.S., and he wanted Chobani
to be the first and to do it right.”
“The way we practice R&D [research and development] is
completely different from other food companies,” explained
Kai Sacher, vice president of global R&D. “I have been
in the industry for decades with a number of companies
and across a range of countries, and the difference with
Chobani is that we are focused on creating amazing food.
We have a culinary—not a yogurt—orientation. That
translates into having an executive chef on our team and
working with a diverse array of ingredients and immersing
ourselves in the food service world for inspiration and
ideas. We also look at rituals and traditions and draw
inspiration for how we can incorporate them into the food
we make. We keep a close eye on restaurant and food
service trends in ‘high-food-IQ markets,’ looking for new
approaches to recipes and dining experiences that might
inspire us or signal an opportunity for innovation that we
wouldn’t have otherwise identified. For example, the trend
toward deconstructed desserts popping up on menus in
many popular restaurants influenced the development of
our Flip Key Lime Crumble. Nostalgic snacks and treats
such as pies and chocolate candies translated into our
PB&J, Chocolate Haze Craze, Pumpkin Harvest Crisp, and
Peppermint Perfection Flip varieties. Growth of bolder,
ethnic flavors inspired our Sriracha Mango and Chipotle
Pineapple spicy Flips. These flavor combinations excite our
consumers and help take Chobani outside of breakfast in a
very natural way.”
“We also have our Chobani SoHo Café in New York City
that functions as a real-world laboratory for us. We can
constantly try new creations, interact with people and
get real-time feedback. This translates into the products
that we create and ultimately the experiences that our
consumers enjoy,” McGuinness illustrated. “Flip is a great
example. Is it the first yogurt with ‘sidecar’ mix-ins? No.
They’ve been important in Europe for years, and there are
a couple versions here in the U.S., but it’s generally yogurt
and a scoop of cereal. And that’s the eating experience as
well: yogurt and some cereal. Compare that with Flip: a
totally unique food form and eating experience. Almond
Coco Loco is a low-fat coconut Greek yogurt with dark
chocolate and honey-roasted almonds. It provides an
elevated, highly curated eating experience that is nothing
like anything else in the category. Generally, Americans
don’t crave yogurt, but we’re changing that with Flip.
Consumers crave these tastes and textures.”
“At our Twin Falls, Idaho, R&D facility, we have a
‘Flip room,’ which is just walls of ingredients, and we
experiment constantly. We really focus on making great
food. We have a 25-person team representing eight
different countries of origin, so we bring diverse palates,
cultures and traditions into our work, which is a powerful
source of inspiration.” Sacher continued, “It’s worth noting
that R&D reports to Hamdi and not up through marketing.
COST COMES IN VERY LATE IN OUR PROCESS. WE DON’T EDIT OURSELVES AT THE BEGINNING, SAYING, ‘WE’D BETTER NOT USE THAT DARK CHOCOLATE BECAUSE IT’S EXPENSIVE.
SPOTLIGHT #5 | CHOBANI FLIP™
THE NIELSEN BREAKTHROUGH INNOVATION REPORT58
Hamdi really pushes us to make spectacular food, and
when we have it, he says, ‘And now we have to make this
affordable.’ But cost comes in very late in our process. We
don’t edit ourselves at the beginning, saying, ‘We’d better
not use that dark chocolate because it’s expensive,’ or,
‘Let’s use a crunch rather than a nut to cut costs.’ We just
don’t think or operate that way.”
“Kai and his team developed some amazing products
with Chobani Flip, but we definitely had some challenges.
As Kai alluded, the magic is creating amazing foods that
also deliver great nutrition at an affordable price. We are
cross-functionally integrated, aligned in our values and
priorities, and incredibly agile even as we have grown to a
billion-dollar company. These qualities are core to Chobani
and obviously instrumental in the success of the Flip line,”
Bacco summarized.
“What’s particularly exciting about Flip isn’t just that we’re
succeeding, but how we’re succeeding,” said McGuinness.
“Flip is bringing new consumers to the Greek yogurt
category: 46% incremental purchasers. Flip is encouraging
folks who perhaps rejected Greek yogurt initially to try the
category, and once they do, we’re actually seeing very high,
50%, repeat rates and buy rates are increasing over time.
In other words, people try it and like it and then discover
additional circumstances in which they’d like to have one,
and so they’re purchasing more units on subsequent
shopping trips. Additionally, we are still growing at better
than 100% with very little cannibalization of our core line
of Chobani Greek yogurt products; this is an additional
purchase or a new consumer. All of this is obviously terrific
for Chobani as well as our retail customers.”
“After our initial launch of Chobani’s original cup in 2007,
it’s been important for us to prove that Chobani is not a
one-trick pony,” McGuinness declared, “and generating
our second Breakthrough Winner is a huge affirmation of
what we’ve built. We never want to lose our entrepreneurial
spark and agility, and we want to compete and win against
much larger competitors. We’ll do that by continuing to
redefine the marketplace and innovating in ways that
address what consumers want—and we’ve got a strong
pipeline of big initiatives in coming years.”
“We redefined the yogurt industry over the past nine years,
and we just recently launched our new line of Chobani
Meze dips that deliver an unbelievable food experience
with 80 percent less fat and 65 percent fewer calories than
the leading hummus,” McGuinness noted. “Chobani is a
company that will continuously seek to reimagine—and
then redefine—the culinary landscape in order to create
delicious, nutritious, natural and affordable foods that
consumers love. There is tremendous change in the
industry right now, and we see a world of opportunity.” n
SPOTLIGHT #5 | CHOBANI FLIP™
Copyright ©2016 The Nielsen Company 59
S P O T L I G H T # 6
DOLE® CHOPPED SALAD KITS
T R A N S F O R M I N G B A G G E D S A L A D I N TO A “C R AV E A B L E ” E X P E R I E N C E
“CHOPPED SALADS HAVE BEEN AROUND SINCE THE
1930s without receiving much attention from consumers
or inspiration from chefs,” said Dole’s vice president of
marketing, CarrieAnn Arias. “Something changed, though,
in the early 2000s in the world of restaurant chopped
salads. Recipes evolved, ingredient variety soared, menu
offerings increased and new dressings proliferated.
“Not only were popular mainstream restaurants such as
California Pizza Kitchen and Cheesecake Factory putting
more creativity into their salads, but consumers were
gushing about the experiences. One of the things that
struck us in our conversations with consumers was how
much they loved chopped salads.”
“These people weren’t eating salads because they were on
a diet or because they felt they had to,” Arias continued.
“Salads were the star of the mealtime show for many
consumers, and this was a valuable discovery for us.
“Fueling this trend, at least in part, was the creativity
and innovation that restaurants were bringing to their
salad offerings. You could see why consumers ordered
these at restaurants and how hard these recipes would
be to recreate at home: shopping for a long list of
fresh ingredients and then a considerable amount of
washing, peeling, chopping and cleanup. If you wanted a
phenomenal chopped salad without major planning and
prep production, there was ample incentive to go to a
restaurant.”
THE NIELSEN BREAKTHROUGH INNOVATION REPORT60
“The net result was a widening gap between the chopped
salads that consumers ordered and loved at restaurants
and comparable offerings that were available at retail to
prepare in their own homes,” Arias explained. “One of
our practices at Dole is to keep a pulse on food service
trends as a source of advance intelligence and inspiration
for the types of products and experiences that consumers
might want to create at home. The surge in chopped
salad demand and the gap between home and restaurant
offerings framed an opportunity for our innovation team.”
“So we had this working hypothesis,” Arias reflected, “that
a restaurant-quality chopped salad experience available
at home held promise, but we needed more detail. What
exactly were the defining elements of the ideal consumer
experience? We dug in, literally. We ate hundreds of
salads at any number of restaurants. We probably went to
California Pizza Kitchen—which was a chain very much on
the vanguard of the movement 10 years ago—20 times or
more. And we spoke with dozens and dozens of chopped
salad aficionados.”
“You know,” Arias continued, “I don’t know if we realized
at the time how valuable this immersion work was, but
in retrospect, it was absolutely indispensable, and I think
it’s one of the huge lessons from this launch. If we had
skipped this messy, unstructured, costly, time-consuming,
uncertain work, we would have missed seemingly small yet
essential details.
“For one, we learned how truly craveable a great chopped
salad could be, and it gave us a very high standard for our
product development work. If we were going to offer the
promise of a restaurant-quality experience at home, it had
to be ‘craveable,’ not just good.
“Second was to focus on the consumer experience, not
the ingredient combinations, as the essential unit of
our innovation effort. Again, a seemingly small shift in
perspective, but one that created a much more expansive
view of the consumer’s end-to-end experience: capturing
the way that the planning, shopping, prep, eating and
cleanup tasks all enter the flow of consumers’ lives. If you
strip away all the context and flow of daily life, you really
lose the critical context in which your—or any—product
lives.
“Third, in discovering the visceral enthusiasm that
consumers felt for their favorite restaurant salads, we made
a subtle, important pivot in our frame of reference. Instead
of coming at the opportunity from the perspective of the
produce section or bagged salads, we approached the
challenge as one of enabling a restaurant-quality experience
at home. This shift set us apart from competitors and fueled
our success. Remember, we were not the first with bagged
chopped salads in the grocery store, but the offerings that
preceded us were clearly derivative of the manufacturers’
bagged greens and vegetable legacy business.
“As a consequence, many early prototypes were rejected
as ‘not memorable.’ They were good, but they weren’t
‘craveable.’ We were experimenting with 50 to 60 different
ingredients and an even greater variety of dressings, so
you can imagine how complex this product development
process was.”
“There was clearly a precise target to aim for: a salad
experience that was indulgent (and consumers actually used
that word to describe their salads) but not unhealthy. There
has been plenty of media coverage,” Arias cautioned, “about
salads with more fat and calories than fast-food burgers, and
that is not where we ever wanted the Dole brand to live, and
that’s not what our consumers wanted either. So yes, it was a
‘craveable,’ indulgent salad, but it was healthy and made you
feel good emotionally as well as physically.
“Once we settled on our final ingredient formulations, it’s
one thing to produce something in a test kitchen, but it’s
another challenge entirely to do it at scale. This where all
the devilish details that consumers only notice if you get
them wrong start cropping up like weeds. For example, one
of the signature elements of a chopped salad is that every
bite offers complexity and balance in tastes, textures and
crunch. Interesting aside: Paul Newman, who played a role
in reviving the chopped salad in his iconic Westport, Conn.,
Dressing Room restaurant, pronounced that a proper
chopped salad should be consumable with a spoon. You
shouldn’t have to wrestle with a knife and fork, and you
could never get perfect bites that way. A central idea of the
chopped salad is that every bite is perfect.
“Well, all of this presents sourcing and supply chain
challenges. There are then increased production costs
SPOTLIGHT #6 | DOLE® CHOPPED SALAD KITS
Copyright ©2016 The Nielsen Company 61
associated with the finer dice. And when all the ingredients
are smaller piece sizes, they aggregate more densely in
a bag, so the standard pillow bag really didn’t look good,
and the visual is a huge part of the salad purchasing and
eating experience. It turned out that a narrower bag worked
to keep the ingredients better distributed vertically, making
for a much better at-shelf visual. But these are the details
that can either make you crazy but you get them right, or
they make you crazy and you cut corners, and that leads to
failure in the marketplace. We knew we had to deliver fully
and perfectly on the experience.
“One other challenge is that there are ingredients, such
as a fresh diced tomato, that
you simply cannot do in a
bagged salad. And yet that’s
the experience that consumers
want. Well, it turns out that
with creative dressing work,
you can create the experience
in a different way. This is
another example of focusing
on a restaurant-quality profile,
to deliver a one-of-a-kind
consumer experience.”
“Ultimately, we developed a set
of outstanding products that
we could cost-effectively source
and assemble that were ready to
go to market,” Arias described. “Now,
it’s essential to note that we began the retail
customer conversations more than a year before we had
products ready to ship. And we rolled out our chopped
salads in a way that was unprecedented for Dole.
“Historically, we have done national, blanket launches, but
in this case, we went customer by customer at the store
level, providing customized campaigns developed jointly
with each customer. First, we shared our research with them
and showed them the nature and size of the opportunity. We
also shared our business case analyses, which showed that
we could price at a considerable premium to the existing,
widespread Caesar salad kits and bagged greens. Third, we
invested in their stores and social media outlets in addition
to the national campaigns. We leveraged our extensive field
sales organization to develop plans for individual stores that
were both grassroots and high tech.”
“For example,” continued Arias, “we did a huge amount
of targeted couponing using Catalina and other retailer
platforms so that we could convert trial into repeat and we
could identify lookalikes at the individual store level based
on loyalty card data and/or basket contents to generate
targeted offers. We also did co-branded advertisements
in the printed circulars and digital platforms of our retail
account partners. The point is that we jointly invested,
jointly created and jointly benefited in the Dole Chopped
Salads success.”
“This is another huge piece of learning
from this launch,” Arias concluded.
“There is enormous potential to be
much more targeted than in the past,
and there are also great opportunities
to partner with retailers who have
huge motivation to generate additional
traffic, sales and profit. When you bring
them a great story, business case and
product, as well as a willingness
to partner and co-create,
we learned that our key
accounts can be invaluable
collaborators in creating
breakthrough success.
“We have now created a runaway success that is
transforming the produce section—selling over $100 million
in its second year and growing strong at more than 115% in
the past year. One of our biggest challenges is to keep up
with growth, not run out of kale (no joke!), and continue to
innovate to address consumers’ increasing demand for more
and different ‘craveable’ salads. We will continue to stay
close with our consumers, who are extremely active on social
media, collaborate with our retail partners, and monitor
evolving trends in the restaurant scene.”
The satisfaction of a perfect salad, like the taste of a
breakthrough win, has a way of fueling the hunger for
more. That’s where the Dole innovation team is setting
their sights: on the lookout for a healthy shot at the next
transformation. n
SPOTLIGHT #6 | DOLE® CHOPPED SALAD KITS
THE NIELSEN BREAKTHROUGH INNOVATION REPORT62
S P O T L I G H T # 7
MILK-BONE® BRUSHING CHEWS®
C AT E G O R Y C R E AT I O N P O W E R S B R E A K T H R O U G H I N N O VAT I O N
“IF OUR DOGS ARE PART OF THE FAMILY, HOW COME
we don’t take care of their teeth like we do for the rest of the
family?”
When I think back on our successes,” reflected Geoff
Tanner, senior vice president of growth and innovation
for the J.M. Smucker Company (which acquired Big Heart
Pet Brands in March 2015), “every one of them had this
very specific ‘epiphany moment’—and I can remember
them—when someone on the team framed a question in a
way that just made the room stop. It was this instant sense
of ‘That’s so obvious, but we’ve never quite framed it that
way.’
“In the case of Brushing Chews, we had worked to develop
a robust demand landscape that revealed the opportunity
around oral care generally, but it was this pivotal question
that really focused our efforts.”
“A great question reframes how you see the market and
the opportunity,” Tanner explained. “In this case, we
quickly realized that the $400 million that Americans were
spending on dog oral care represented only a fraction of
the potential market, if we could get pet parents to apply a
similar mind-set and a routine that they have for their own
oral care to their four-legged family members.”
“For the innovation team,” added Sarah Miller, director
of strategy and insights, “The consumer tension to solve
was very clear: ‘I love my dog, and to care for my dog’s
teeth, I’m supposed to brush them daily, but that’s just not
realistic.’ The questions we challenged ourselves with were
Copyright ©2016 The Nielsen Company 63
clear: How might we make brushing a treat? Can we make
a dental chew that’s as effective as brushing?”
R&D director Steve Bautista, noting that the Veterinary
Oral Health Council (VOHC) recommends daily brushing,
stated, “Fewer than 5% of owners brush their dog’s teeth
regularly, let alone daily. Consequently, over 80% of dogs
suffer from periodontal disease by the age of 3. It is the
No. 1 health-care issue for dogs. People love their pets
like never before, but few of them do anything about their
dogs’ need for brushing.”
“The facts posed a perplexing riddle,” added Nicole
Massey, director of pet snacks innovation. “Dogs need
oral care, and owners genuinely want to do what is best
for their dogs’ health. Yet few dog parents are addressing
oral-health needs proactively; instead, most are relying on
costly veterinary solutions after their dogs are suffering.
There were a few preventive products on the market, but
adoption was low, and there was latent demand for a great
product at an accessible price.”
“We confronted two big challenges,” Tanner reflected,
“one technical and the other a commercial-positioning
challenge. The technical challenge was to meet the claim
that whatever new product we developed would be as
effective as brushing. The positioning challenge was to
reframe dog oral care in a human context. If we could do
both of these things, we saw the chance to transform the
marketplace.”
“This was not going to be easy,” said Bautista. “For
starters, it turned out that while the VOHC recommended
daily brushing, there was no benchmark for what that
standard was. In other words, if we wanted to develop
a product that was ‘as effective as brushing,’ we had to
establish how effective brushing was first and do it with
clinical validity.”
“I need to underscore that what happened next would have
been impossible in our company five years ago. We simply
would never have taken on such a mammoth challenge,”
Tanner emphasized. “Five years ago, we set out to build
a world-class innovation capability. Milk-Bone Brushing
Chews demonstrated the power of that integrated, cross-
functional approach. Every function played a critical role to
shape the final proposition.”
Bautista explained, “In order to establish the baseline
efficacy of daily brushing, we fielded a clinical study where
we had clinicians brushing a very large number of dogs’
teeth daily for weeks, even though we had no idea if it
was even remotely possible to meet the standard with a
nonbrushing alternative that dogs and dog owners would
accept. These are the things that only happen when you
have a company with proven innovation ability, a culture
geared for transformation, and total C-suite support,”
Tanner added.
“Given that we needed the dogs to buy into this as well
as pet parents, we focused on the idea of a chew as the
WE QUICKLY REALIZED THAT THE $400 MILLION THAT AMERICANS WERE SPENDING ON DOG ORAL CARE REPRESENTED ONLY A FRACTION OF THE POTENTIAL MARKET, IF WE COULD GET PET PARENTS TO APPLY A SIMILAR MIND-SET AND A ROUTINE THAT THEY HAVE FOR THEIR OWN ORAL CARE TO THEIR FOUR-LEGGED FAMILY MEMBERS.
SPOTLIGHT #7 | MILK-BONE® BRUSHING CHEWS®
THE NIELSEN BREAKTHROUGH INNOVATION REPORT64
vehicle for the brushing-like experience,” Bautista continued. “Once we had
our target set in terms of daily brushing effectiveness, we set out to develop
a ‘brushing chew’—an idea that didn’t exist in the minds of dog parents. This
took several years and a deep understanding of dog ‘ergonomics’ to get right.”
“This time-consuming, difficult work is hugely important context,” Tanner
underscored, “particularly when you recognize that this was uncertain work: We
didn’t know what we’d discover or if we could ever develop a viable commercial
product. An essential lesson from Milk-Bone Brushing Chews’ experience is that
we failed many, many times before we ultimately succeeded.”
“Something we have learned from our Silicon Valley neighbors is to embrace
failure as not simply acceptable but essential. If you’re not failing, you’re not
learning, nor are you trying hard enough to create something thoroughly new
and transformational,” Tanner continued. “We did not have that culture five
years ago. It was extremely hard to develop and will always be challenging to
sustain.”
Miller elaborated, “In order to keep the momentum going month after month
and keep a team energized and motivated, you need to reframe failure as
progress. Innovation is a journey of discovery as much as of creation, and
before you find the way that works, you need to embrace the discovery of many,
many ways that do not work.”
Thanks to some incredible technical persistence and ingenuity—such
as building a 75-degree twist into the chew so it would move around the
dog’s mouth and mimic the effect of actually brushing the teeth—Massey
summarized, “we had a product that met the claim ‘as effective as brushing.’
We then faced the marketing challenge of framing a dog-oral-care concept in a
human context, so it was intuitive and compelling to dog owners that pet family
members deserved preventive oral care, just like the rest of the family.”
Critical to the success of Milk-Bone Brushing Chews was strong CEO and
board support. As Tanner noted, “From the very start, the proposition was a
top priority for the company, not just the innovation or brand teams, and the
necessary resources were committed across the company. Further, the executive
team stayed very close to the project and helped clear a path through the
inevitable obstacles and constraints.”
“Commercial success required far more than solving the technical problem,”
explained Covahne Michaels, who headed the marketing efforts. “We had to
create a category that basically did not exist in the minds of many dog parents
and to develop a brand and messaging that brought the core insight to life. We
wanted consumers to experience our brand the same way we experienced the
‘epiphany moment’: My dog needs this!”
INNOVATION IS A JOURNEY OF DISCOVERY AS MUCH AS OF CREATION, AND BEFORE YOU FIND THE WAY THAT WORKS, YOU NEED TO EMBRACE THE DISCOVERY OF MANY, MANY WAYS THAT DO NOT WORK.
SPOTLIGHT #7 | MILK-BONE® BRUSHING CHEWS®
Copyright ©2016 The Nielsen Company 65
“Some of the main things we focused on in this phase
were package, brand and messaging,” Michaels continued.
“We looked at the heuristics of the human oral-care
category—from color to packaging shapes to symbols to
understand the ‘language’ of human oral care. What we
learned through our research in this phase was important:
The pack should evoke a high-quality, human toothpaste
box.”
“This would be significantly more expensive than typical
pet packaging, and there were certainly pressures to
economize,” Michaels observed, “but this just illustrates
one of the many opportunities that always arise to cut
a corner when you can’t. False economies—save now,
pay much, much more later—doom many innovation
initiatives. In any event, what you can see today on the
shelf is a pack that looks nothing like anything else in
the pet aisle and more like an item from the neighboring
human-oral-care aisle.”
“As far as the brand,” Michaels noted, “we believed
that our strong Milk-Bone equities would resonate with
consumers, given its level of trust, quality and oral-
health orientation. Research validated this belief, and the
Brushing Chews launch leveraged these elements while
also extending and strengthening the Milk-Bone brand.”
“Our consumer work,” Michaels explained, “confirmed
our ingoing hypothesis that the right tone was to
emphasize the emotional connection between
dog and owner and not to make too much of the
technical aspect. The job of clinical efficacy could
be done at shelf and with the simple claim ‘as
effective as brushing.’
“In short, less was more on the technical
side when it came to advertising voice.
We led with a very effective TV
ad that just showed a guy, Ted,
with his dog, Rudy, in a simple
segment that underscored their
connection that laddered up
to the ultimate benefit of the
product. This was something
every dog parent related to, and
it worked to drive awareness,
interest and purchase.”
“On the retail side,” noted Todd Nettleton, who
at the time had been vice president of the market
development organization, “we’d been through these
category transformation conversations before, both
with Milo’s Kitchen (2013 Breakthrough Winner and
featured Spotlight), which created a category of dog
treats with human-quality ingredients, and with Meow
Mix Tender Centers (2014 Breakthrough Winner and
featured Spotlight), which resolved the historic trade-off
of wet versus dry cat food. With Milo’s, we had to send a
number of senior executives to key accounts and convince
customers that our company, with no innovation history,
could actually deliver a new-to-the-world brand and
dramatic category expansion. This time around, we still
had to make a compelling business case, but it was much
easier to get buyers to take the meeting.”
“None of this happened overnight,” added Nettleton.
“We sent full cross-functional teams to begin these
conversations with retailers two years before we actually
launched, because we knew this was an idea that would
take time to sell through. This was a totally new category
and concept, but we had the research and fact base to
SPOTLIGHT #7 | MILK-BONE® BRUSHING CHEWS®
THE NIELSEN BREAKTHROUGH INNOVATION REPORT66
make a convincing case for the incrementality of our
offering and to ensure we had the optimal retailer support
programs in place to launch the idea.”
“One of the biggest differences between this launch and
our prior launches—and this is as much a comment on
the state of technology as it is about our company—
was the precision and data-driven intelligence of
our commercialization strategy,” Michaels reflected.
“Marketing communications have historically involved a
fair degree of guesstimating and accepted uncertainty, and
while it’s hardly a perfect science, I marvel at how much
we knew versus how much we believed in terms of our
allocations and decision making.
“Having a unified data and analytics system enables us
to integrate addressable in-store couponing with targeted
digital advertising, for example. This was not possible a few
years ago—certainly not with the scale and seamlessness
that is possible today. We were not only able to target
certain consumers in-store, but we learned that buyers of
Milk-Bone Brushing Chews were generally heavy buyers of
human-oral-care products—an actionable insight for us
and our retail partners.”
“Looking back,” Tanner reflected, “five years ago we had
zero innovation capability and no successful track record.
As a smaller player in the industry, we knew we would
never be able to outspend the big guys, and we committed
to winning with innovation. Over this time frame, we have
built a robust innovation capability that has generated the
majority of our growth and three Breakthrough Winners. As
important, we have cultivated a culture from the top down
that embraces Demand Driven Innovation as a cornerstone
of who we are and how we operate.”
“I think there are two things that I see many organizations
get wrong or underestimate,” continued Tanner. “The first
is that an innovation system is synonymous with a stage
gate process or having a bunch of tools or analytics in
place. Strong and weak innovation performers alike all
have many of these same tools and analytics. If I look at
what changed the most at Big Heart Pet, the difference
maker was cultivating a culture—from the CEO down—
that embraced both the art and science of Innovation.
That culture translated into more rigor and precision
that dramatically reduced waste, on the one hand, while
also accepting the uncertainties and risks inherent to
innovation.”
The second mistake, Tanner said, is “believing that
innovation somehow gets easier over time. It does not.
You may have a great system, but innovation is never
automatic. It’s not something you can allow to run on
autopilot, because the forces of conformity will always work
to bend the ‘new’ to adjust to the ‘old.’
“We have to stay vigilant and stay hungry, because
innovation strength is fragile and under constant pressure
to do the easy thing or the quick thing. But ‘quick and easy’
isn’t how you win, and we aim to keep winning.” n
SPOTLIGHT #7 | MILK-BONE® BRUSHING CHEWS®
Copyright ©2016 The Nielsen Company 67
S P O T L I G H T # 8
NASACORT®
ALLERGY 24HRP R O V I N G T H AT A “C R O W D E D C AT E G O R Y ” C A N S O M E T I M E S
O B S C U R E A H U G E O P P O R T U N I T Y
CONTRARY TO A COMMON ASSUMPTION, SWITCHES
from prescription to over-the-counter (Rx-to-OTC) are no
sure thing. There are far more failures than successes,
and the laws of Demand Driven Innovation still apply. At
the outset, the initial indicators for Nasacort indicated an
uphill struggle:
• Crowded OTC allergy-relief category across all price
points
• Low brand awareness for Nasacort
• Low number of prescriptions at the time of the switch
• Undesirable form (pervasive consumer dislike of nasal
sprays)
Nonetheless, mastering the challenges of Rx-to-OTC was
one of the main motivators behind Sanofi’s acquisition of
Chattem, so the team had expectations to fulfill.
This would not be the first time Chattem embarked on a
Breakthrough mission into a market crowded with large,
well-known brands. Allegra Allergy earned the honor in
2013 by resolving the symptom-relief trifecta of efficacy, fast
THE NIELSEN BREAKTHROUGH INNOVATION REPORT68
action and non–drowsiness, enabling many sufferers to “live in the moment”
with allergy relief within an hour, without the side effect of drowsiness.
While Nasacort also plays in the allergy category, it fulfills a different “job
spec”—one focused on the struggles of more-severe-allergy sufferers.
These people not only endure more debilitating symptoms but also tend to
experience them throughout the year, not just in typical “allergy seasons.”
“If we were going to succeed,” began Shermon McMillan, director of
marketing, “we would need a deep understanding of the struggles consumers
were facing with current options and what would motivate consumers to use
a nasal spray. Engaging with relevant consumers, we found that nasal-spray
users were overwhelmingly those suffering from moderate to severe allergies.
For them, antihistamines provided only inconsistent and incomplete relief.
It was these severe sufferers who needed more than what an antihistamine
provided. Both the science behind allergies and physicians supported nasal
allergy sprays as the most effective medicine one could get.”
“While allergies are almost always bothersome for any sufferer, they can be
debilitating for the moderate-to-severe sufferer,” McMillan elaborated. “We
found that consumers were going to great lengths to combat their symptoms:
ripping up carpets to rid pollen and allergens, vacuuming pets, avoiding
outdoors in the springtime and generally withdrawing from desired activities.
In short, severe allergy symptoms exact a significant quality-of-life toll from
their victims.”
“Our consumer research identified a clear gap in the market, as well as an
understanding of why this gap existed and what the solution would deliver in
terms of a user experience,” McMillan continued.
“This is where our knowledge of the science intersected with our understanding
of the consumer.”
• The science: “Antihistamines only address one of the chemical responses
that can cause allergy symptoms, while Nasacort addresses more.”
• The consumer insight: “These moderate-to-heavy symptom-sufferers are
extremely engaged with category. They research the underlying drivers of
symptoms as well as the efficacy of varying remedies. Generally speaking,
our target customers are information hungry.”
“In short,” said McMillan, “Nasacort ‘stops more of what makes you
miserable.’ This simple phrase constitutes a fact, an insight and our tagline
all in one simple set of words. Putting the pieces together produced this
aha moment among our team, when we all were like, ‘That’s it!’ The product
truly spoke for itself, and it became immediately clear to these consumers
SPOTLIGHT #8 | NASACORT® ALLERGY 24HR
OUR LAUNCH MESSAGING ACHIEVED THAT ‘YOU GET ME’ RESONANCE A WELL-CRAFTED BRAND MESSAGE CAN STIR WITHIN TARGET CONSUMERS.
Copyright ©2016 The Nielsen Company 69
why their antihistamines worked only some of the time
and that Nasacort could offer them an improved quality
of life.”
“The challenge,” McMillan explained, “was, given the low
equity and awareness of Nasacort, how to nail the message
and connect with consumers right from the start.
“We partnered with our Nielsen Innovation colleagues
to determine the best way to communicate. While most
positionings we came up with tested well, our winning
message relied on more science than we would normally
reference in a marketing campaign. We framed the
underlying science, delivered by Nasacort, as the enabler of
a better quality of life.”
“Sharing the science behind allergies gained credibility,
and showing how the science enabled desired life
experiences created the emotional connection with
severe-allergy-symptom sufferers.
Our launch messaging achieved that
‘you get me’ resonance a well-crafted
brand message can stir within target
consumers,” McMillan affirmed.
“Our tagline, ‘Stops more of what
makes you miserable,’ was brought
to life in our TV spots,” said Holly
Sisson, senior marketing manager.
“The creative featured a spokesperson
interacting with actual physical
renderings of the words identifying the
causes of allergies. Needless to say,
these are unfamiliar words, but the
effect was to humanize the science in
a way that made the how of Nasacort’s
effectiveness clear: Nasacort addresses
a much broader array of the chemical
responses that can cause allergy
symptoms than antihistamines. Our
positioning was ‘approachable science,’
and it worked. We saw some of our
best-ever testing scores for the ad,
which also helped establish equity for
the Nasacort brand.”
“Since awareness for Nasacort was nearly nonexistent,
we knew we needed more than just ads to educate and
drive awareness; in-store execution was fundamental
to success,” Sisson continued. “In addition to having
displays, we also created an in-store video. We partnered
with retailers to secure placement of video boxes next to
our product. Consumers could press play and watch a
60-second video on how Nasacort works, how it is different
and how it stops more of the chemical responses to
allergens that can make you feel bad. We also had a strong
partnership with pharmacists. Since Nasacort was the
first of its kind, we knew consumers would have questions
and rely on their pharmacists for answers. We equipped
the pharmacists with talking points and coupons, so they
could help consumers make their choice and choose
Nasacort.”
“Getting retailers on board was not an easy task,”
McMillan reflected. “They were wary of dedicating space to
SPOTLIGHT #8 | NASACORT® ALLERGY 24HR
THE NIELSEN BREAKTHROUGH INNOVATION REPORT70
an unknown brand and a ‘less-preferred’ product format. It helped that we were
coming off of the successful Allegra launch, but we still needed to work closely
with retailers to show them the strong potential of Nasacort. When presented
with supporting data and BASES forecast numbers, retailers bought in; we had
cleared another hurdle on the pathway to success.”
“To bolster awareness, Nasacort also had to pop at shelf,” McMillan noted,
“not an easy task for a new brand in a small, skinny box. This hadn’t been a
concern when Nasacort was available as a prescription but proved to be both
a marketing and engineering challenge when launching over-the-counter. We
had to strike the right balance between creating a package that had strong shelf
impact yet wasn’t wasteful and bulky. In finalizing the design, we worked very
closely with the engineers and the product supply team, who were responsible
for producing the product and packaging. The packaging changes combined
with the dramatically increased production volumes required strong teamwork,
communication and collaboration to surmount.
“First year out of the gate, our focus was on maximizing household penetration.
We ramped up distribution quickly, didn’t waste any time turning on media,
and offered incentives for consumers to buy Nasacort instead of or in addition
to what they were currently using. We knew the product was outstanding and
lived up to the claims we were making; once consumers tried Nasacort, we were
confident they’d be back. And our research and forecasts proved correct: very
strong trial and repeat rates in-market.”
“It’s important to underscore,” McMillan emphasized, “that the success of
Nasacort could not have been achieved without absolute commitment from
management. Leadership asked us the right questions and gave pushback
when necessary. Everyone had a can-do attitude. It was rare that we heard ‘no’;
instead, there was a spirit of ‘How can we make this happen?’ or ‘How can we
make this as big as it can be?’ We had to demonstrate to management that we
were on the right path, but we definitely had a supportive audience. This senior-
level engagement—not just permission, but active engagement—emboldened
us to go out with an advertising approach that was nontraditional for both the
industry and Chattem, resulting in an exceptionally strong launch.”
All the time and energy paid off with first-year sales of $136 million and growth
in year two. Despite competitive entrants, Nasacort continues to thrive—
reaffirming that “crowded categories” can be fertile innovation grounds when
the current options to fulfill the underlying consumer needs provide only
imperfect, inadequate and incomplete solutions. n
SPOTLIGHT #8 | NASACORT® ALLERGY 24HR
IT WAS RARE THAT WE HEARD ‘NO’; INSTEAD, THERE WAS A SPIRIT OF ‘HOW CAN WE MAKE THIS HAPPEN?’ OR ‘HOW CAN WE MAKE THIS AS BIG AS IT CAN BE?’
Copyright ©2016 The Nielsen Company 71
S P O T L I G H T # 9
OSCAR MAYER P3S E R I O U S E N E R G Y F U E L I N G B R E A K T H R O U G H R E S U LT S
“P3 NEEDS TO BE EVALUATED FROM THREE ANGLES,”
began Joe Fragnito, who oversaw the development and
launch of P3 as vice president of marketing for Oscar
Mayer. “First, its success as a stand-alone innovation
initiative. Second, its capacity to be an extendable platform
for protein snacking. Third, its ability to strengthen the
relevance of the Oscar Mayer brand to young adults. The
reason this is such a great story at Kraft Heinz is that it
performed on all three of these ambitious objectives. The
team that led this did a phenomenal job from insight to
launch and beyond.”
“Habits were changing, with fewer sit-down meals and far
more on-the-go snacking, and this posed a challenge to
refrigerated-meat categories—one that we wanted to frame
as an opportunity,” continued Geoffrey Feil, senior director
of marketing, Lunchables, P3 & Claussen. “Back in 2010
and even earlier, we were seeing a number of mutually
reinforcing macro forces in the context of young adults’
snacking habits”:
• “As noted, snacking was increasingly displacing
traditional meal occasions.”
• “Natural, ‘better for you’ snacks with simple
ingredients were all on the upswing.”
• “[There was] growing interest in the quality of calories
THE NIELSEN BREAKTHROUGH INNOVATION REPORT72
and the idea of ‘calories that work for me.’”
• “Protein, as a source of sustained energy, was
pervasively relevant to consumers.”
• “Greek yogurt’s explosive growth was kind of the
metaphor of the day.”
“One of the interesting paradoxes we uncovered was
that if you asked consumers for foods high in protein,
you’d consistently hear about meat, but in the context of
protein snacking, the refrigerated meat case was rarely
mentioned. Meat was an outsider at the protein snacking
party, but there was a potential ticket to entry for a brand
that brought together the three ‘original’ proteins while
having the credibility as a trusted brand of meat. This was
a job that Oscar Mayer could uniquely do, given its equity
as the trusted brand for meat coupled with its access to the
robust product portfolios of its sister brands, Kraft [cheese]
and Planters [nuts].”
“Our Breakthrough win with Lunchables Uploaded last
year strengthened our use of Jobs Theory and grounded
us in deeply understanding the desired progress that
consumers are trying to make in given circumstances,”
Feil continued. “Jobs [Theory] has helped us focus on
specific circumstances of struggle, apply a very wide frame
for category definition, and address emotional and social
requirements in addition to the functional aspects.”
“To help identify potential opportunities,” detailed Kaz
Gunay, the head of consumer insights and strategy, “we
maintain continuous conversations with consumers in key
groups. To underscore Geoff’s point, these conversations
reveal nuances that might not emerge from more general
trends research. They allow us to explore the edges of
consumer preferences and behavior, as well as to form
hypotheses for further consumer validation.”
“Trends and macro info are great,” Gunay explained,
“but they’re too broad-brush to reveal idiosyncrasies and
surprises. Also, you can be sure with trend research that
every competitor is seeing the exact same thing. The one-
on-one conversations provide an essential complement to
the more general information.”
“Several years before launching P3,” Gunay continued,
“we’d been spending more and more time with Millennials,
because we recognized the opportunity for the Oscar
Mayer brand to endear itself to this important cohort.
We wanted to understand their priorities and, in parallel,
identify a growth pathway for the brand. Importantly, we
kept a broad aperture for our discovery. This perspective
allowed us to make some encouraging discoveries that
we would have missed had we framed the marketplace
through a narrow lens such as ‘meat’ or ‘protein’ or
‘refrigerated.’”
Feil said, “One behavior we frequently witnessed was
the extent to which many consumers were mixing and
combining ingredients to create snacks that met their
requirements. An individual might put a handful of nuts
in a plastic baggie, some pieces of cheese in another and
pack a piece of fruit, for example. This behavior suggested
that there really wasn’t a perfect solution for the many
snacking occasions of the millennial consumer.
“Not only is there a hassle factor associated with this DIY
[do-it-yourself ], multiproduct behavior, but we saw how
it frequently led to suboptimal, frustrating outcomes. ‘I
forgot to cut up cheese this morning, and we didn’t have
any fresh fruit in the fridge, so I ended up eating a whole
can of nuts,’ or ‘I’m bored eating the same better-for-
you snack every day, so I’ll have a bag of chips just this
one time’—these are less than ideal trade-offs from a
consumer point of view.”
HABITS WERE CHANGING, WITH FEWER SIT-DOWN MEALS AND FAR MORE ON-THE-GO SNACKING, AND THIS POSED
A CHALLENGE TO REFRIGERATED-MEAT CATEGORIES—ONE THAT WE WANTED TO FRAME AS AN OPPORTUNITY.
SPOTLIGHT #9 | OSCAR MAYER P3
Copyright ©2016 The Nielsen Company 73
“Through additional qualitative work, we
discovered the multifaceted consumer
criteria that made sense of the cobbling
and dabbling behaviors,” Fragnito
added. “From a functional dimension,
consumers were looking for energy—but
energy that sustained them, not the type
of jolt they’d find in an energy drink or
candy bar. There was a marked preference
for real, whole foods, and this is where
most of the bars fell short: They were too
processed, engineered, and performance-
oriented for people who wanted whole
foods. And while there were certainly
some consumers who required organic
and perceived superfoods, this was not
a mainstream requirement. We found a
broad spectrum between candy bars and
wheatgrass smoothies, and that’s where
we zeroed in.”
“Consumers were also looking for a degree of satiety that would power them
through but not fill them up,” Feil said. “Great taste was nonnegotiable, of
course, and texture variety was a game changer. An important detail here is that
the consumers we engaged liked having a variety of food forms in their snack
because of the enhanced taste and textural experience—making the snack
more fulfilling. A combination of meat, cheese and nuts has an advantage over
bananas and yogurt in this aspect, because it delivers a multisensory experience
(taste, texture, bite) that better emulates a (more substantial) meal-like
experience.”
“The challenge,” Feil continued, “was to deliver the multiple real, simple foods
in a portable format that enabled quick consumption with no cleanup.”
“Our experience in lunch and snack kits with our Lunchables brand provided
valuable expertise in the complexity of multiform assembly,” Gunay added,
“so we began to experiment with combinations that would resolve the current,
pervasive practice of cobbled-together solutions. We were optimistic that if
we could integrate all of the ideal protein-bearing foods into a single pack—
delivering the taste, texture and performance that consumers wanted—that
we could help consumers perform the job with far greater convenience and
satisfaction.”
“As we worked to refine the components of our snack kits, we faced some pretty
major operational hurdles,” Gunay elaborated. “These are the challenges that
no consumer would ever see but that you have to resolve. For example, bringing
SPOTLIGHT #9 | OSCAR MAYER P3
THE UNPRETENTIOUS PROTEINWhen you’re the real deal, you don’t need artificial hype. You have real workouts, because they keep you on track and moving forward. You don’t go to the gym to tweet about it. And you’re not looking for some magic elixir.
P3 IS AN ORIGINAL PROTEIN.No pretense, no overpromise and certainly no science project.Just meat, cheese and nuts.That’s 13 grams of protein from a source you actually recognize—food.
P3 delivers serious protein...without taking itself too seriously.
THE NIELSEN BREAKTHROUGH INNOVATION REPORT74
an allergen, such as nuts, into an otherwise nut-free facility
creates challenges. We worked with the USDA to create a
‘plant within a plant’ that would be the first USDA-certified
facility that handled nuts, cheese and meat all under one
roof. Investing in the ‘nut house,’ as we call it, reflected a
major vote of confidence on the part of senior leadership
and was essential to our success.”
“Once you start changing supply chains and making big
capital investments and developing a new brand and
working with a new pack form, it’s easy to let cost get the
better of you and wind up with a product that flies off the
shelves but is ultimately bad for the business,” cautioned
Fragnito, who is now the president of Beverage and Snack
Nuts. “Breakthrough Innovation poses a challenge that
requires a balancing between taking a long-term view of
the business case and also being really smart about costs.
We had a great cross-functional team and were able to get
this right, producing a highly incremental product from a
business perspective that also tested fantastically well with
consumers.”
“However, all of this upfront work still left a myriad
of decisions and challenges to address in taking this
innovative product to market,” Fragnito continued. “I can
think of at least 10 initiatives I’ve been involved with over
the years where there was a great insight and a seemingly
terrific product, but somehow we tripped up in taking it to
market. Many of the missteps are explained by two causes.
“First, there are so many seemingly small details that need
to be right: Where should we be in the store? What’s the
right pack form? What’s the right pack copy? Do shoppers
need to be able to see the actual food elements? Does a
glossy pack finish attract eyeballs or create a glare? Do we
have the right shelf set? Knowing that variety is important,
should we launch with a mixed-SKU multipack? You really
need to get a ton of things right, and I think it’s easy to
overlook these details.
“Second, and this may sound contradictory, but you can’t
run the business from a spreadsheet. One of the things
I encouraged the team to do was get out in the field and
work with retailers and watch consumers. There’s a small
store near one of our plants where we’re friendly with the
owner, for example, and we’d literally take a bunch of test
product over to the store and start trying stuff—with the
retailer and the consumer. It may seem crazy, but I think
you need both—sophisticated optimization tools as well
as . . . a bit of entrepreneurial grit. Maybe it’s my military
background, but I believe in getting out into the field and
seeing what really works—and what doesn’t—with your
own eyes. You experience something, and you remember
it, but it is easy to forget the conclusion shown in a chart
or a spreadsheet.”
“There are challenges that, at some level, all new products
face,” Gunay added, “but given the novelty of this item,
there were few reference points to navigate or benchmark.
Knowing all of this, it was important to prototype and
experiment, as Joe said. For similar reasons, we engaged
our creative and design agency partners early in the
process, so that we would have maximum degrees of
freedom for change, and we iterated our ideas to get all
pack elements and price aligned and optimized.”
“We knew we needed to work very closely with our retail
customers,” Fragnito recalled, “to explain the product
strategy and to make the launch successful.” He pointed to
two specific challenges:
1. “Consumers were not in the habit of shopping for
I THINK YOU NEED BOTH SOPHISTICATED OPTIMIZATION TOOLS AS WELL AS A BIT OF ENTREPRENEURIAL GRIT. […] I BELIEVE IN GETTING OUT INTO THE FIELD AND SEEING WHAT REALLY WORKS—AND WHAT DOESN’T—WITH YOUR OWN EYES.
SPOTLIGHT #9 | OSCAR MAYER P3
Copyright ©2016 The Nielsen Company 75
snacks in the refrigerated meat section.”
2. “It’s a small pack, and we needed it to pop visually.
How do you command shoppers’ eyes with an item
that is much smaller than neighboring SKUs?”
“This required a combination of patience, good
communication with our retail customers, bold pack
design, and strong media support. We knew we had a great
product that really fit the circumstances and requirements
of our target consumer.”
Gunay continued, “Print, TV and online advertising played
huge roles in introducing P3, giving meaning to the brand
and linking it to the target job. Our creative executions all
featured the pack, the P3 brand and the punchy messaging.
We contrasted P3 to lab-generated, engineered snacks that
many consumers were abandoning. Featuring the clear
pack with simple, whole ingredients informed consumers
of what to look for and why P3 was the ideal snacking
solution. Messaging was direct, witty and edgy: ‘Serious
protein that doesn’t take itself too seriously.’ P3 is real,
good food, and it is also good fun. ‘Unpretentious protein’
really fits the brand.”
“We launched with four SKUs and have continued to
support and expand, so that now we are up to 12 SKUs,”
Fragnito summarized. ”This is not just variety for variety’s
sake. The variety allows us to fill a broader portfolio of
consumer jobs but all within the brand’s range of protein
snacking.”
Feil reflected, “At the outset of the innovation journey, we
had a clear sense of the consumer’s ‘job spec,’ and then
we set to work to build the product ‘résumé’ in the hopes
of getting hired. When we found that things really were
playing out as hoped, it fueled our energies to double
down on P3. You could see this affirmation in the source-
of-volume data. The consumption was very incremental
to the refrigerated-meat section: P3 was getting hired over
imperfect and partial solutions.
“This business is on trend, and it is nailing an important
consumer job. We’re working with retailers to build a
snacking category in the refrigerated-meat case. P3 is
playing a valuable strategic role, and we’re really looking to
support its continued growth. It is a great start, but we’re
just beginning.
“And as with any launch, we’ve been learning and
optimizing as we go. Even with the most successful launch,
we know that we have some things right, some things to fix
and plenty more to do. In year three, we are working with
our retail partners to ‘mainstream’ the category; we are
adding new combinations, expanding into new channels,
further optimizing graphics and adjusting where and how
we communicate.”
With over $75 million in retail sales and a 65% growth rate,
P3 is off to an energetic start, and the team is fueling up
for sustained, successful growth. P3 illustrates how a new
subbrand can energize a trusted, established parent while
connecting with younger consumers and expanding an
important retailer category—a Breakthrough Winner all the
way around. n
SPOTLIGHT #9 | OSCAR MAYER P3
THE NIELSEN BREAKTHROUGH INNOVATION REPORT76
S P O T L I G H T # 1 0
SALLY HANSEN® MIRACLE GEL™
D E M O C R AT I Z I N G S A L O N-Q U A L I T Y N A I L S
“STRATEGIC CONTEXT IS IMPORTANT,” SAID JEREMY
Lowenstein, vice president of global marketing. “One of
the reasons Coty bought Sally Hansen in 2008 was the
opportunity to take a great, trusted technology brand,
infuse it with more emotion and expand it on a global level.
“The . . . acquisition was well timed because the recession
actually drove a steady stream of downshifting from salon
manicures to DIY [do-it-yourself ], fueling steady growth
2009 to 2011. Things plateaued in 2012, and it was clear
that we would need innovation rather than external macro
forces to drive growth. We launched into this with two
simple organizing questions:
• “What makes our brand tick?”
• “What are the experiences and outcomes that women
are struggling to achieve as it relates to their nails?”
“The first question had a ready answer—albeit a less
than totally satisfying one. Sally Hansen was a well-
established brand with a trusted reputation for products
that work, based on leading technology and robust science.
Consumers trust that Sally Hansen brands will deliver
on claims, which is worth a lot in the cosmetics industry.
Consumers are often skeptical about the relationship
between price and quality and the credibility of claims.”
Copyright ©2016 The Nielsen Company 77
“On the one hand, this trust is a great base for innovation,” Lowenstein
reflected, “but it’s just a base. We saw an opportunity to engage at an emotional
level and to create experiences, not just deliver cosmetic utilities. This is where
our thinking dovetailed with the second question about circumstances of
struggle: What were the desirable feelings and experiences we could create,
taking inspiration from consumer insights?
“Market trends presented some clues. Just as the retail nail business plateaued
in 2012, UV/LED-curable gels began to grow significantly in nail salons. Gels
offer the advantage of a more durable and longer-lasting application, but
they have some significant downsides, which we found to be keeping many
women on the sidelines. It wasn’t hard to see why: Curable gels required a
time-consuming five-or-more-step process and cost around $35. Furthermore,
when you wanted to remove the gel, you had to soak your nails in acetone for 15
minutes and then scrape off the residue. In short, the finished look of gels was
great, but the application, removal and expense added up to major barriers for
many women.”
“The opportunity to ‘democratize’ gels was not hard to spot,” Lowenstein said.
“There was clearly a major opportunity to expand the category by addressing
the big market of non-consumers and intermittent consumers. That said, the
barriers that depressed demand existed for a very simple reason: There was no
alternative technology available.”
“Sally Hansen’s scientists and product engineers are the best in the industry
and embraced the challenge,” Lowenstein added.
“But for us, this was always about more than a technical challenge and
a commercial opportunity. The reason most of us are in this business is
because, when we create great products, they enable great experiences for our
customers. At our best, we help women feel special every day. When women
pull our products into their lives because it makes them feel special, that
translates into strong commercial performance, and it’s also what makes our
work so rewarding.”
“We set out to develop a revolutionary new technology and introduce an
amazing product,” Lowenstein reflected, “but the focal point for our innovation
effort was not the technology or the product. It was the experiences we could
enable for the women who buy Sally Hansen.
“We had our innovation brief: salon-quality performance, hassle-free application
and removal, and price-accessible to mainstream women.”
“But first we had to solve the technical challenge, and that really was a
challenge,” Lowenstein acknowledged.
THE FOCAL POINT FOR OUR INNOVATION EFFORT WAS NOT THE TECHNOLOGY OR THE PRODUCT. IT WAS THE EXPERIENCES WE COULD ENABLE FOR THE WOMEN WHO BUY SALLY HANSEN.
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THE NIELSEN BREAKTHROUGH INNOVATION REPORT78
“A great part of Coty is that we work cross-functionally
all the time. It’s not like the R&D team do their thing and
flip it over the wall to marketing, who try to put a story
to it and then ask the sales force to get the product on
shelves and into consumers’ hands. I think this company
decided a long time ago that we had no interest in being a
commodity cosmetics company. We want to win in all four
segments of color cosmetics with great products, but our
enduring success is a function of enabling experiences that
make women feel special. That’s the secret to customer
loyalty and competitive advantage, and core to those
outcomes is an organization that is all aligned with the
same goals and integrated across functions to deliver. All
of our functions integrate around the same thing: enabling
customer experiences that make them feel special.
“Once we cleared the high hurdles, what we really wanted
to do was bring nail color and care to life—infuse joy and
positive energy into a segment of color cosmetics that was
experienced as more ‘chore’ than ‘fun’ by many women.
When you see how we ultimately brought Miracle Gel to
market, you see how serious we were about bringing the
product to life, not just to market.
“What our R&D team was able to achieve is right there in
bold on our home page”:
• 2 steps—rather than 5—color and topcoat
• No UV light required (as is used in the salon)
• Up to 14 days of color and shine
• Easy removal
“This was a transformational product,” Lowenstein
underscored, “enabling millions of women to access the
same quality of nail treatment historically reserved for
the salon and with far greater convenience, ease of use
and lower price. In order to match every moment and
need, we also introduced a far wider palette of colors
than other polishes, further separating ourselves from the
mainstream.
“I think it’s important to note how easy it would have been
to stop there: to bring an amazing product to market and
let the retailer and the customer take it from there. After
all, we had created an amazing product that was sure to
succeed, so why spend more? Why make it harder? And the
reason, as I‘ve said before, goes back to our acquisition
rationale and our ambition at the outset of this initiative,
which was to bring life, emotion, storytelling and great
experiences to nail care. So how to do that?
“In tandem with Miracle Gel, we launched Miracle Match
online. The idea was not only to help women find the right
color for them, but to bring each color to life through the
stories and personalities of seven different personas. In
print, we developed nine ad units to introduce the models
and the collection along with the breakthrough technology.
Through the Sally Hansen website, women could take a
quiz that would help find the right match and introduce
the seven women who personified our initial colors. Also
online, each of our seven ‘color girls’ had 15- to 30-second
vignettes that surrounded the products with stories and
personalities.”
“All of this enabled customers to make the experience more
their own,” Lowenstein noted, “and to express themselves
on their social platforms and have some fun with the
amazing colors and the stories and the quizzes that, in
total, brought a huge amount of energy to a category that
had been more hassle than fun historically.
“And we really made a splash at retail. We had a great
consumer story for them. We had a great product story for
them. And we had a great brand story for them. We spent
a lot of time with our key retail partners, and they really
bought into the vision: why this would bring incremental
traffic and margin into their stores, why this was such a
powerful product, and how it would energize the biggest
brand in nail care with an unprecedented emotional energy.
“Typically, new products are launched during the end-of-
year holidays, but both because of our desire to get to
market as fast as possible and also to avoid the noise of
numerous other launches, we decided to launch off cycle
and introduce the product in July. We went all out to have
‘stopping power’ in the store: large displays, models, great
color, gorgeous pack and compelling price strategy, along
with easy-to-understand product education.
“We worked really hard on all of these activation details,
and setting the right price was a big part of the formula. At
the high end of the spectrum was the $35 salon gel price.
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At the low end was the historic Sally Hansen price ceiling
of $6.99, which was already considered a premium price
point. Where we landed was $9.99 for color and $9.99
for the top coat, or $15 for a dual pack—so you had the
two-step process in one pack—providing a $5 discount to
consumers.
“Across all media, including in-store, we had huge success
with our ‘OMGel’ copy and engagement activities that
consumers picked up and
distributed through their own
social channels, sharing their
colors and styles with the
OMgel tagline. We have over
1 million likes on the Facebook
page and a very engaged
customer base.”
“Summarizing the Miracle
Gel launch,” Lowenstein
concluded, “it has been great
for the company. Miracle Gel
has also transformed and
reenergized the Sally Hansen
brand, as discussed, bringing
much more emotional energy
and storytelling to the brand,
making it far more engaging
to our customers. And finally,
the consumers: we know we
have made millions of women
feel special. We know we
have helped create special
moments—personal and
social experiences for our end
customers.
“It’s a great achievement,
but it’s just a great start. We
have introduced follow-up
launches that have been very
successful, and this is an
industry that never sits still,
so there’s not much time to
celebrate individual successes.
Miracle Gel is a great platform,
though, and will provide a base of innovation for years to
come.”
With first-year sales of $104 million and strong growth
in year two, Miracle Gel is creating great outcomes for
Sally Hansen, as well as for millions of customers. It is a
miraculous story of a tremendous breakthrough success—
definitely earning an “OMG!” celebration. n
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THE NIELSEN BREAKTHROUGH INNOVATION REPORT80
S P O T L I G H T # 1 1
SKINNYPOP® POPCORNB O OT S T R A P S TO B R E A K T H R O U G H
IF YOU’RE FORTUNATE ENOUGH TO SIT DOWN WITH
SkinnyPop cofounders Pam Netzky and Andy Friedman,
you’ll notice one word used over and over again to describe
the atmosphere during their meteoric rise: mayhem. From
selling the first bag in August 2010 to selling the company
in July 2014, “it just never let up,” Friedman recalled
wistfully.
“Three o’clock in the morning, we’d be thinking of things
and texting each other and trying to solve unfamiliar
problems,” Friedman continued. “We were eating, sleeping
and breathing this business nearly 24 × 7 × 365. We didn’t
hire our first employee until September 2012, and we sold
$18 million in that year and were at a much higher run rate
by the time we finally hired some help.”
“It was Andy and I generating sales, making the popcorn,
hand-sealing each bag, making all the supply orders. It was
insane,” Netzky added.
Copyright ©2016 The Nielsen Company 81
Popcorn is a classic snack that has enjoyed centuries of
popularity—hardly with the makings or markings of a
21st-century superfood. So where did this Breakthrough
barnstormer come from, and how did Netzky and
Friedman make it happen?
“Pam and I met in 2007 and shared a love for popcorn,”
Friedman recalled. “In our hometown of Chicago, Garrett’s
is an institution, and as much as we loved their popcorn—
and the cheese and caramel flavors particularly—we had
this idea that maybe we could make something even
better.”
“No research,” Friedman continued, “just the two of us
trying to make amazing popcorn. Through a ton of trial and
error, we developed some fantastic flavors. Great popcorn
is so simple from an ingredients perspective, but the kernel
and the oil you choose actually make a huge difference. It
took quite a while, but we loved what we’d developed and
decided we’d give it a go.”
“Neither of us had any CPG [consumer packaged goods]
or food experience,” Netzky added. “Andy was a banker,
and I was an entrepreneur—but in the world of salons and
nothing related to this business.”
Before there was SkinnyPop, there was Wells Street
Popcorn. “We opened our first retail store in 2008, and by
the end of 2009, we had three stores in the Chicagoland
area and distribution of bagged popcorn to a handful of
local grocery stores,” said Friedman. “We were doing well,
and customers raved about our flavors. But as much as
folks loved our caramel and cheese varieties, they’d say
things like, ‘This is the best popcorn I’ve ever had. See you
in a month!”
“It wasn’t terribly hard to figure out,” Netzky
acknowledged. “The cheese corn and caramel corn were
amazingly delicious, but they were seriously indulgent and
not something our customers were going to pick up every
couple of days.”
“If this was going to be a bigger business,” Friedman noted
bluntly, “we needed a better business model, and that
would require a new, healthier product.”
“Almost as soon as we started experimenting with better-
for-you options, we realized we couldn’t promote them
through our existing Wells Street stores alongside the
cheese and caramel corns, or people would start asking
about the fat and calories in those products, and they’d
flip,” Netzky said. “So it was a pretty straightforward
decision that we should develop a different name and sell
wholesale rather than retail.”
“We spent about five minutes sitting in a room discussing
names until we had SkinnyPop—and we loved it. We
hired a graphic designer, who developed the logo and bag
design, which is the same one you see today—very clean
and distinctive. We ordered bags and minimal equipment
to get us started, but we had no retail game plan,”
Friedman acknowledged.
“The minimum order was 25,000 bags, and we were like,
‘What are we going to do with all those bags?!’” said
Netzky. “And then the day the bags arrived, it was just the
two of us, so we fired up the poppers and started filling
bags.”
And that’s when the ‘mayhem’ really got rolling . . .
“I remember just running into stores, shoving bags onto
the shelves, and running out and onto the next account,”
Netzky laughed. “We really had no idea what would
happen, but we really believed in the product, and sure
enough, store managers were calling us back the next day
to reorder. We were on to something but had no idea how
WE WERE ON TO SOMETHING BUT HAD NO IDEA HOW TO SCALE THE MANUFACTURING OR
DISTRIBUTION. WE HAD NO SYSTEM.
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THE NIELSEN BREAKTHROUGH INNOVATION REPORT82
to scale the manufacturing or distribution. We had no
system.”
“It’s really pretty funny how little we knew,” Friedman
laughed, “when it came to building retail distribution. Our
strategy was Google. We started googling for distributors
of natural foods and coming up with a list of unfamiliar
names and just calling people. We didn’t get many
returned calls, and those that did said, ‘Sounds great. Call
me back when you get into some stores, and we’ll help
you.’ And we’re thinking, ‘The whole reason we’re calling
you is to get into these stores in the first place!’”
“At the same time, we started going to some open buying
calls where local chains take ‘walk-ins’ pitching new
products, and we were up at Sunset Foods in northern
Chicago suburbs, and the guy in line in front of us is a
regional distributor with some bags of potato chips, so
we start talking to him. He agreed to come by our Oak
Park office, which was a single room behind the original
Wells Street store with one desk that Pam and I shared,”
Friedman continued. “When he arrived, we popped some
corn, and he loved it.”
“He said he thought he could help get us into the 17
Whole Foods outlets in the Chicagoland area,” Netzky
remembered. “Well, for us that was too good to be true, so
we signed up and started popping and praying! Norman
Distributors were true to their word and got us into Whole
Foods and a bunch of other critical early accounts.”
“Things took off,” Friedman summarized. “Early 2010, we
had the idea for a better-for-you popcorn. August 2010, we
sold our first bag of SkinnyPop. In the final months of the
year, we sold about $90,000 and were in 85 stores.”
“We exited the Wells Street retail business as of the end of
2010, which at least allowed us to focus on one brand and
business model,” Friedman noted. “We also outgrew our
limited production capacity almost immediately, and so we
were able to secure contract manufacturing by the end of
2010. This change solved our manufacturing constraint,
but all of the sales, distribution, procurement and financial
challenges were just multiplying.”
The ‘mayhem’ was just gathering steam . . .
“It just kept going,” Friedman continued. “In 2011, we
sold $3.5 million. [In] 2012, we sold $18 million. We were
exploding because we didn’t hire our first employee until
September 2012, so it was literally just Pam and I running
around like maniacs. Even in 2012, we had private-equity
investors calling all the time, offering life-changing deals,
but none of them really valued the growth potential we saw
for the brand, and we didn’t really need the money as much
as we needed distribution help.”
“Another key milestone came in 2013, when we sold a
minority stake to an entrepreneurial investor who brought
a six-person sales team. These guys definitely upgraded
the ‘Pam and Andy Show’ from a sales perspective, but
all the other operational challenges just mushroomed as
sales continued to soar,” Friedman noted. “2013 finished
with $70 million in sales and growing strong. In July 2014,
when we finally did sell the majority of the business to the
private-equity firm T.A. Associates, we were on about a
$150 million run rate. It was almost four years exactly from
the sale of our first bag to the sale of the company, and it
was basically one breathless, amazing ride.”
IT’S THE CLASSIC CASE OF ENTREPRENEURS BREAKING ALL THE ACCEPTED INDUSTRY AND CATEGORY RULES BECAUSE THEY DON’T EVEN KNOW WHAT THE RULES ARE. THEY START WITH AN IDEA AND A FRESH MIND THAT ANYTHING IS POSSIBLE.
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“Looking back on it,” Netzky reflected, “I think one
important thing to the SkinnyPop story is the Wells Street
experience, because that’s really where we made most of
our mistakes and learned the hard lessons. It was before
we really started growing, so it was much easier to pivot,
fix and move on. We hadn’t planned it that way, but that
learning phase occurs in any new venture, and far better to
do it before you start investing in scale and growth.”
“They make it sound straightforward,” concluded Tom
Ennis, CEO of Amplify, the newly named entity under
T.A.’s ownership. “The reality is that nothing they did was
easy. For example, while the snacking industry is moving
to bolder, ethnic flavors, one of the keys to SkinnyPop is
that it is lightly seasoned yet delivers great flavor. What
this means is that you don’t get ‘mouth fatigue.’ You want
to eat the whole bag, and you know what? You feel good
physically and emotionally when you do. There is no guilt
associated with SkinnyPop eating.”
“I grew up in ‘big food’ CPG companies,” Ennis continued,
“and when I look at Pam and Andy’s story, it’s the classic
case of entrepreneurs breaking all the accepted industry
and category rules because they don’t even know what the
rules are. They start with an idea and a fresh mind that
anything is possible.
“We’ve really tried to preserve that culture at Amplify
to create a totally different kind of food company. Our
products are different, but that’s just a part of it. Our
employee culture is totally atypical of the CPG industry. We
have terrific benefits, all kinds of extra programs, unlimited
vacation, minimal hierarchy and great pay.”
“Our relationship with our consumers is different, too,”
Ennis continued. “Consumers love our products and
brand and want to share their experiences online and
engage with the brand. We do this in the physical world
as well—attending all sorts of events and festivals around
the country where SkinnyPop enthusiasts convene. This
really works for the brand, because what we’ve learned
about consumption is that consumers use SkinnyPop to
make good times even better: to ‘plus up’ already-positive
experiences. So if we join them in the settings where they
want and expect SkinnyPop to be, it just reinforces the
sense that we get you and want to be part of your life.
“This year, we’re introducing new chocolate and jalapeño
flavors, and we think the future of SkinnyPop and the
future of a totally new kind of food company couldn’t be
brighter. Pam and Andy remain very involved; they’re on
the board of directors and [are] key advisers to the ongoing
business.”
It’s as exciting an entrepreneurial story as any we’ve seen
in the course of the Breakthrough Innovation Project,
and it underscores that outsize success is possible even
for undersize firms. We’ll be looking forward to more
Breakthrough Winners—if not quite so much mayhem—
from Amplify in the years to come. n
SPOTLIGHT #11 | SKINNYPOP® POPCORN
THE NIELSEN BREAKTHROUGH INNOVATION REPORT84
Learn more about the Breakthrough Innovation initiative at www.nielsen.com/breakthrough.Explore more content on a variety of innovation topics at www.nielsen.com/innovation.
FOOTNOTES1. At a 1971 meeting at Xerox PARC, Kay said, “The best way to predict the future is to invent it.” Deborah
Wise, “Experts Speculate on Future Electronic Learning Environment,” InfoWorld, April 26, 1982, p. 6.
2. Nielsen data.
3. Christensen, Clayton M. “Assessing Your Organization’s Innovation Capabilities” Leader to Leader. 21
(Summer 2001): 27-37. Harvard professor and innovation authority, Clayton M. Christensen, developed
this capabilities model, initially referring to it as “Resources, Processes, and Values” in 2001. He
has published on this framework multiple times, subsequently revising the wording to “Resources,
Processes, and Priorities” to eliminate potential confusion over the interpretation of the word “values.”
4. For valuable thinking on these topics, see Shunryu Suzuki, Zen Mind, Beginner’s Mind (Boston:
Shambhala, 2011).
5. For more information on the Demand Driven Innovation system, see the 2013 U.S. Breakthrough
Innovation Report.
6. Calpino left Kraft Heinz in Q2 2015 and then consulted until joining Mondelez in Q1 2016.
7. McGauley retired from AB InBev in 2015 but is still actively engaged as a consultant to the company.
8. To read Clayton M. Christensen’s work on the theory of interdependence and modularity, see
claytonchristensen.com for links to various books and articles.
9. Marc de Jong, Nathan Marston and Erik Roth, “The Eight Essentials of Innovation,” McKinsey Quarterly,
April 2015, www.mckinsey.com.
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.
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