Top 5 Innovation Killers - #1

#1: An intolerance of failure. The #1 top tactic for innovation, according to expert innovators, is to ‘experiment fearlessly’. Nothing works first time, so you may as well get it wrong as soon as you can. If you cannot accept failure you are unlikely to see too much innovation, no matter how much money you throw at it.

General Mills Analysis -- simply put, we are not currently set up to 'experiment fearlessly'. We don't have a mindset nor a structure that supports true incubation. Furthermore, when truly transformational opportunities are pursued within our operating division construct, they are somewhat doomed the start, as they are held to the standards of the Division New Product launch hurdles, which have been developed based upon the categories in which we ALREADY compete. As a result, the chances of emerging opportunities (which often have lower volumes and potentially lower margins at first) meeting these hurdles are very slim. We definitely have pockets of disruptive thinking in the organization.....now is the time to put it all together and create the structure and processes required to truly incubate ideas that will ultimately either go away or achieve enough scale to be incorporated into the broader matrix.

Consumers -- will they exist 20 years from now??

The term 'consumer' is such an ingrained part of our culture. There's even an entire industry built around that term -- Consumer Packaged Goods. Yet, the term consumer implies certain behaviors that may not be as relevant down the road. Even though 'consumers' today have much more of a voice than ever in the past, there is still a fairly one-way relationship between the vast majority of manufacturers and these 'consumers'......at a simplistic level, manufacturers make something (yes, with some input from consumers), they tell consumers about it, they make it available, they tell people about it with the hopes that these people will 'consume' it, purchase it again, and tell others about it.

'Consumer' is inherently a passive concept. We talk about getting closer to the consumer, but at the end of day, we (the manufacturer) make the call on what is made and where and when we will make it available (assuming the retailer wants the product).

As society gets more and more comfortable with instant information and instant gratification, what happens to this traditional CPG model? What happens if consumers, not manufacturers, are truly calling the shots and are at the center of the business transaction? Will the term 'consumer' even be relevant? And, as a result, will the Consumer Packaged Goods industry even exist years from now?

Top 5 Innovation Killers - #2

#2 - An excessive customer focus. Professional managers are great at using customer research to improve existing products and services. But, faced with a radically new proposition people are poor predictors of their own future behaviour. In a recent posting on this blog, Italian designer, Alberto Alessi described how he eschews market research and evaluates new ideas in order to help take informed risks and not as a simple yes/no exercise.

General Mills Analysis -- in terms of getting 'close to the consumer' and understanding their needs, General Mills has improved dramatically over the past few years......BUT these efforts are primarily focused on sustaining innovation, not disruptive innovation. We have a strong suite of Consumer Insights tools at our disposal to better understand how consumer view existing products and categories. This allows us to develop and launch successful close-in new products. When it comes to disruptive innovation, however, we have yet to crack the code on fully understanding consumers' latent needs and future behavior. The one potential downfall of our strong Consumer Insights tools is that we tend to rely too heavily on them to answer ALL new products/innovation questions, when in reality we need to introduce an element of intuition and judgment when evaluating transformational/disruptive ideas. The use of these tools to answer all questions is a way to make decisions more objective, which is symptomatic of a risk-averse culture. Can we begin using judgment more often to make key innovation decisions, or does our culture need to first be more open to risk-taking and experimentation before the decision-making changes? Chicken or the egg??

Top 5 Innovation Killers - #3

#3 - A desire for a magic pill, not a daily exercise regime. This requires innovation as a way of life rather than as an isolated change programme. 3M is the avatar of this approach, allowing its developers to spend a proportion of their time on their own development projects as a way of encouraging a stream of bottom-up ideas.

General Mills Analysis -- currently, the word 'innovation' is most often used in reference to new product development. As a result, the idea of innovation is considered to be a separate activity from the core business and functional responsibilities. We currently have a culture of executional excellence, as opposed to a culture of innovation. In other words, while there are pockets of real innovation (primarily driven by our technology organization), innovation is not part of General Mills' organizational DNA (i.e. innovation isn't considered to be part of everybody's responsibilities). Furthermore, we often lack patience when it comes to innovation. When teams do not deliver big results right away, there is a tendency to disband teams, or at the very least, adjust the scope of the team. We need to start inching towards the 3M example above, in which innovation is a way of life.

This is not an insurmountable challenge. As current initiatives continue to gain traction and continue to deliver tangible benefits, Senior Leadership will begin championing (and perhaps mandating?) more innovation across the company. Once that senior leadership support is in place, we will execute against it in a big way. After all, we have a culture of executional excellence......when we align around a goal or objective, we make it happen!

Top 5 Innovation Killers - #4

#4 - An unwillingness to cannibalize sales. The only way to prolong success is, paradoxically, to destroy it and create something even more valuable. Technology companies know that they must consistently add new features at lower prices if they want to stay ahead in the market. The same principles are true in other markets. Gillette has consistently strengthened its leadership in razors through its willingness to make its existing ranges redundant and introduce new, higher performing products and brands.

General Mills analysis -- Apple is the most obvious example of a company that isn't afraid to cannibalize sales with its new products (e.g. Iphone, Ipod, etc.). At General Mills, we factor both margins and incrementality into our go-no go decisions for new products -- the higher the expected incrementality, the more willing we are to 'lean in' on margins. The implied opportunity for Mills is to be more aggressive and intentional in developing offerings that, on one hand, will make current offerings redundant or obsolete, but on the other hand, will keep consumers in the Mills family and away from competitor offerings.

Top 5 Innovation Killers - #5

A recent article by Sterling Performance outlined 5 common 'innovation killers', or things that prevent companies from developing true breakthrough innovation. It's often more interesting and insightful to examine barriers, as opposed to best practices. Over the next few posts, I will share the top 5 list and thoughts on the relevance at General Mills. Let's get right to it with #5:

#5: A reliance on a small cadre of innovators. Relying on a small development team to identify, create and deliver game-changing innovations is unrealistic. You have to cast your net much wider. In the past five years Procter & Gamble has dramatically increased its willingness to work source ideas from and work with external organisations and now aims to develop at least half of its new growth ideas through these external networks.

General Mills analysis - while General Mills has recently been implementing terrific open innovation initiatives, the whole idea of innovation continues to be treated as separate from the core business. Within the operating divisions, there are some 'new products' teams, as well as some 'transformational new products' teams. These teams, in many cases, are isolated from the broader business. Also, the term 'innovation' is primarily associated with new products. As a result, the ITQ group is considered to be the real innovators in the company....and rightfully so! Under PE's leadership, that group has 'done' while other groups continue to 'talk'. We're making strides, but there's continues to be huge upside. For us to continue being a top-tier player, the definition of innovation needs to be broadened beyond new products, and innovation needs to be part of the organization's DNA, not a separate activity worked on by a few teams and functions.

What makes the most innovative companies so innovative?

The recent BCG report that I mentioned in a previous blog post lists the 50 most innovative global companies across industries and the primary reason they were selected to be on this list. Interestingly, only 4 of the top 10 and 17 of the top 50 were cited for 'breakthrough products'. The other common reasons for being on the list are 'innovative processes' (14 out of 50 companies), 'unique customer experiences' (15 out of 50), and 'new and differentiated business models'. So while 'breakthrough products' is still the most common reason for being considered innovative, it is by no means the only reason, nor is it the reason for the majority of innovative companies.

Studies like this help to reinforce the notion that innovation is so much more than just new products.

I wonder...if General Mills were to put as much focus on 'innovative processes', 'unique customer experiences', and 'new and differentiated business models' as it does on product innovation, what types of game-changing innovation could be unlocked??