Company Background In the News Press Investor Relations Awards Imaginatik Events Imaginatik Communities Conferences We Attend Contact Us

Beverage World - "Eureka!?! - Beverage companies are looking for the next big idea and are putting systems in place to ensure they find it"

Eureka!?!

With innovation on their minds, beverage companies are looking for the next big idea and putting systems in place to ensure they find it.

By Andrea Foote, March 15, 2003

Enter a stairwell or step onto an elevator at the Stamford, CT, USA headquarters of Mott's, and you're likely to see a list of the Top 5 contributors to the company's Idea Exchange.

idea central intro The signs are not the work of a feel-good vigilante, but rather part of a company-wide program designed to encourage innovative thinking in every one of its employees. The goal is to get everyone "thinking outside the box" to uncover ideas that will improve the company's operations, product portfolio and, ultimately, stimulate organic growth.

Innovation is in the air—and on the walls—at Mott's, and the juice company is far from alone in its focus. Today more and more beverage marketers are focused on meeting the demands of what Michael Bellas, chairman of Beverage Marketing Corporation and Beverage World research editor, has dubbed the "innovation imperative."

Sluggish economies and increasingly fickle consumers have combined to create a marketplace where beverage companies are looking at innovation—in processes as well as products—as no longer an option, but a necessity.

The imperative is especially strong in mature markets like the US, Western Europe and Japan where beverage companies can find little volume growth in increased distribution—they are already available everywhere—or increased per caps.

INTO THE MAZE

But deciding to innovate and actually doing it—successfully—are two very different things.

George Russel, president of Bywater Inc, points out that new product innovation is a "systemic weakness in many large corporations." And, Russel says, the problem has been particularly acute in the beverage market. "If you apply some tough criteria to what you define as 'new,' you'll soon find that there is really very little new in beverages," he contends. "And, most of what has been new has come from suppliers in the form of packaging or sweetener innovation."

One problem, according to Russel is that very few beverage companies are applying their resources to the kind of long-term R&D that facilitates true product innovation. Beverage companies, says Russel, need to be focused on meeting changing customer and consumer needs and they need to concentrate their innovation efforts in that direction.

Jay Terwilliger, a senior consultant with Creative Realities Inc, a Boston, MA, USA-based firm that has worked with companies like PepsiCo, agrees that many companies apply too many resources—people, time and money—on what he calls "incremental innovation."

"The need to always have something new going on can mean that incremental innovation can get in the way of substantial innovation, overloading the system," he explains.

Although Terwilliger acknowledges that some incremental innovation—things like packaging upgrades and minor improvements—is necessary, he stresses that companies not allow themselves to be fooled into believing that those projects are business drivers. To be successful in the long-term, says Terwilliger, companies need to have teams whose focus is "away from the day to day, thinking about down the road and looking for significant innovation."

To make that process a success, Russel says it is essential for a company to build both external and internal channels for innovation. That means being receptive to ideas from other markets, the academic community and even competitors, but it also means tapping into internal resources. Russel points out that people in functions like sales, operations and logistics are often overlooked in the innovation process even though they "are closest to how the product works and how customers respond to it."

RIGHT TURNS

When it comes to innovation, the bright idea is often the easy part. It's what comes next that gets in the way of successful innovation. There are several dangers that lurk in the path of good ideas, says Terwilliger, who lists unresponsive managers, lack of strategic alignment within organizations and that old foe status quo among the culprits.

Managing the innovation process so that the right ideas become commercial realities, says Andy Michuda, CEO of Sopheon, maker of software systems designed to do just that, is "a complex balancing act" between the immediate excitement and benefits that come with brand innovation and the reality that only about one in five new product introductions are successful.

The flip side of that reality is nearly half of all R&D resources—literally hundreds of millions of dollars—are being wasted on products that will never go to market or on products that ultimately fail commercially.

Key to improving those odds and saving those dollars, says Michuda, is creating visibility across the organization so that an idea can be tracked—and measured critically—from ideation to commercialization. "That visibility creates an environment where companies can innovate out of the box, but still maintain a strategic focus on where they are innovating and to what end."

INTO THE LIGHT

Mott's may not be unique in its search for innovation, but the company does stand out for its commitment to the process. Focusing on substantial innovation while managing risk across its product portfolio are main priorities at Mott's and the company has invested a great deal in making sure that it avoids typical innovation pitfalls.

"As a company we are trying to make sure that our focus is on organic growth and innovation is a central plank in that platform," says Rose Grabowski, vice president of value development process at Mott's. Another important factor in Mott's focus on innovation, according to Grabowski, is the excitement that innovation can bring in the marketplace. "It helps us to keep retailer and consumer attention."

Beyond implementing a stage gate process for new product development, Mott's also addressed practical changes that would make it a more innovation-oriented organization. That included changing the corporate culture and even the physical space in which they worked. According to Grabowski, the company created new conference rooms and collaborative workspaces that would be conducive to teamwork.

The software that is the basis of Idea Exchange [Imaginatik's Idea Central] was developed to create an internal channel of communication so that everyone at Mott's—no matter the job function—could participate in the innovation process. "One of the success criteria is to make sure that you have a ton of ideas coming in," says Grabowski. "With Idea Exchange we ask people at every Mott's location to come up with ideas around a specific challenge." Participants get feedback from the system, recognition—those signs on the stairwell and elevator walls—and even monetary rewards.

In order to improve decision making on how to prioritize and assign resources to projects, Mott's added a portfolio management tool from Sopheon. The result, says Grabowski, is that senior management can make more informed decisions because they look at their brand portfolio in a new way—noticing opportunities and challenges.

Mott's has found people receptive to the process across its organization. The five names listed on those signs in the stairwells and elevators are in good company.

The industry norm for participation in a program like Idea Exchange is 10.4 percent of employees. At Mott's the goal was set at 35 percent participation with the hopes of generating 2,000 ideas from employees. The company has already far surpassed that goal with 46 percent of employees having submitted more than 6,000 ideas.

Even better, says Grabowski, is that these ideas came from inside. "These are people who know our products and understand what our goals are," she says. And, while not all of the ideas will be implemented, they are archived for future reference. Mott's has already introduced a handful of new products this year, and, says Grabowski, there are more in the pipeline.

While the ultimate success of these new products remains to be seen, Mott's, at least, is confident that is has a system in place to manage innovation to the extent that it can be.