Innovation is probably the main activity of any brand or market in the long term. If it is carried out following a series of guidelines, there is a greater chance of achieving success. And this translates into more profitability and growth for the … brands, as much as multiplying that growth by six. These are some of the reflections extracted from the new book by César Valencoso – he is Consumer Insights director of Kantar Worldpane -, ‘Decalogue of successful innovation’, which analyzes the 600 real innovations launched on the Spanish market in the last decade
-I’ll start with something obvious but it is necessary to remember: what role does innovation play for mass consumer brands?
-Actually, it is a good question, because I always start the talks with the question of whether we really have to innovate or not. We all talk about innovation and everyone explains that innovation is important, that it is growth, that it is in the DNA of companies… That’s fine, but when you really look at the focus we put on innovation, when, for example, You see where it has been cut in the last two years because you see that it has been in innovation. Yes, we have it in our DNA but then, when push comes to shove, it’s more of a pose. So I think the question is important: does innovation bring us or not? Is it important to put money there or not? That is the first question everyone has to ask themselves. It is true that you can grow without innovating. However, when you look at the data objectively it is evidence that the categories that innovate grow up to two and three times faster than those that do not innovate. And brands that innovate grow up to six times faster than those that don’t. It is not theory, it is data; so innovation does lead to growth.
-And why is there resistance on the part of some companies to assuming it? Or more than that to really believe in it because we have been talking about innovation for a long time.
-The fundamental reason is the failure rate, which is over 75-80%. Starting a business, putting in money and daring to move the company to a place where the failure rate is so high generates a lot of suspicion. For me the conclusion is that we have to innovate better. Failing eight out of ten times seems like too much to me because obviously we are making something wrong, that is the reflection. And for it to help you learn, you have to be monitoring the innovation and trying to understand it: why have you failed? what did you do wrong?
-And why does it fail? What are companies doing wrong?
-There is not a single factor, but many. It fails fundamentally because we are forced to launch things quickly and without much cost. I think philosophy has to be just the opposite. An innovation has to be born from a need of the brands, that is, what problem is it going to solve? And we have to have enough money to support that innovation not just the first year, but for three or four years. It has to make sense, be novel, it has to have all those things that are a bit of the content of the book… That philosophy that we call in vitro innovation. We must do initial work in which we all have to be convinced that we need an innovation to solve certain problems. It cannot be just launched because it looks good or because we want to put it in the marketing plan. There has to be a reason behind it and that makes the whole process easier.
«It can’t be just launched because it looks good or because we want to put it in the marketing plan. There has to be a reason behind it.”
-There are eight rules in the book, but what would be the main one?
-When we analyze the characteristics of successful innovation, you can get 10, 15, I don’t know… Every time I order it, a different number comes out! [bromea] Actually, if I stick with the absolutely essential, there are two. Innovation has to be novel, that is, for it to be successful you have to be providing something that is new and relevant to the consumer. And the second is that it has to be well distributed because the consumer has to be able to find it. If you meet those two, you enter the success rate.
-Sometimes we believe that they are innovations, but they are a derivation of an innovation and, therefore, do not have as much impact.
-It’s very complicated. In fact, we do a study every year called ‘Innovation Radar’ and we analyze how innovation is in Spain. The first filter we put is that, from the consumer’s point of view, what is being put on the shelf is new. And it doesn’t matter that my competition had it and now I take it out. So when you make that filter, you are left with 1% of what has come out, just about a hundred annual launches of the more than a thousand new products that are put on the market.
-With such a very low percentage, is Spain in the ICU of innovation?
-Yes, but it is not just a Spanish issue. The big problem that Spain has is that – and it is normal to understand it – most of the innovation comes from the large multinational brands, because they are the ones that have the most resources and can put in the most investment.
-In the book, and throughout your career, you have analyzed more than 600 real innovations in the market. It is difficult to select a case, but can we give an example?
-There are many… For example, one that comes to mind is ‘Apple Thief’, which generated a whole new category of cider. Or at the time when plant-based drinks were launched,
-Should companies innovate from within or from outside?
-From a purely innovation point of view, the more you open your innovation the better: involve startups, consumers, the ‘retailer’… What happens is that many times companies have difficulties doing this because you lose control. It’s much easier, more controlled, inside your home. But you have to find the model. Innovation comes from two things, putting in a lot of money and putting in a lot of work.
-Having a profile like César Valencoso, it is difficult for me not to ask him what 2024 will bring us in terms of consumption.
-It is super interesting because we are in a big change. We have been in a crazy crisis for four years, the last two in an inflation crisis that had never been seen before and that has meant that we have been talking only about price for two years now. And companies were trying to protect margins, trying to raise price awareness, and now all of a sudden we’re in a situation where inflation is starting to not be an issue. So we are convinced that we must grow again, gain share and volume. All this in a market with a much more sensitized consumer and with a lot of tension accumulated in the market. Inevitably we are going to change. The big brands are already beginning to change their discourse and are thinking again that they must invest in media, in innovation, in the brand.
