The COVID-19 pandemic caught us all off-guard. Many organizations have shifted focus to finding short-term responses to the disruption while assessing mid- and long-term priorities. Some industries are struggling to survive; others – like consumer packaged goods (CPG), also known as fast-moving consumer goods (FMCG) – are more fortunate and proving more resilient.
With the initial shock of the pandemic behind us, it’s time for consumer products companies to shift out of reactive mode and start normalizing how they operate through and beyond the pandemic. Staying focused on through-cycle growth is critical to survival, as evidenced by research from McKinsey and others.
Listen to Sopheon CTO Paul Heller speak to McKinsey research on previous economic downturns:
CPG organizations must consider how decisions made today, with all the uncertainties about consumer behavior and economic stresses in a post-pandemic world, will give them a better chance of success tomorrow. Here are five tips for consumer product manufacturers to navigate this unknown territory, incorporating our learnings from previous recessions as well as practices from Hain Celestial, one of our many forward-thinking customers.
1. Develop Learnings Faster
The traditional approach to product development used to be linear and looked something like this:
While the governance built into new product development methodologies like Stage-Gate® or Phase Gate still has its place, today’s environment requires speed and more business agility. To meet these needs, make sure to incorporate techniques borrowed from the Agile software development methodology into the stages of your gated process. By including constant, iterative feedback loops into the stages you can fail faster (yes, failing fast is a good thing!), react more quickly to new information, learn faster and then apply these learnings toward existing and future projects.
Below is an example of an Agile-Stage-Gate® process, borrowed from Integrating Agile with Stage-Gate® – How New Agile-Scrum Methods Lead to Faster and Better Innovation, written by the godfather of Stage-Gate® and Sopheon friend, Dr. Robert G. Cooper, along with Søren Kielgast and Tomas Vedsmand:
Hain Celestial – the natural and organic foods leader and Sopheon customer – has adopted this hybrid model and found that R&D specialists and engineers are learning powerful insights faster thanks to the iterative feedback loops. Using the insights, they can then refine new products throughout the development lifecycle to deliver products with more impact.
“Product development has changed dramatically in the last 30 years. Today, it starts with a highly collaborative, cross-functional team. … Most importantly, working with consumers from day zero of the project. Instead of a brief, the concept and the product are co-created with consumers… I can tell you, it's much more effective, and it's a lot more fun.”
2. Start with the end goal, then get customer feedback
First, establish a product’s end goal. It must align with company direction and strategic investments and should be expected to bring long-term value to consumers. Then, as discussed in tip number one, get customer feedback through every stage of the development process. While some may balk at these iterative loops and shy away from so much user input, due to fear of complicating the NPD process, in reality this feedback simplifies the process because it guarantees products that satisfy the customer. By the time you are ready to launch, you will be confident your product will resonate in the market.
Here’s an example, relayed by our friend Jeff George:
"One example that we have in our Celestial tea business is, we have a new product idea. Rather than spend weeks and weeks trying to guess at what consumers want, we actually intercepted some consumers that were scheduled to tour our facility in Boulder.
We pulled them aside. We told them about this idea. They gave us the feedback on the idea. We quickly mocked up some products, just using things we bought off the shelf at the store, to try to approximate what we thought the product would be. They gave us great feedback, and we actually had six or eight different small groups of consumers over the course of about 48 hours, that we tested product and concept. It evolved dramatically during that period of time.
The team had fun. They didn't have a lot of experience working this way in the past. At first, the cross-functional team was very reluctant to actually get in the same room with consumers and have a conversation. By the end, it almost looked like a group gathering, or a party. People were talking. Scientists talking to consumers. People back in the kitchen, whipping up a new round of prototypes. Marketing changing the concept on-the-fly. I stood back and said, 'Wow. This is really what co-creation and agile development looks like in practice.'"
PANDEMIC DISRUPTION 2020: How to get feedback from consumers amidst physical distancing barriers?
Meeting with consumers in-person today is not an option. But that doesn’t mean you have to stop gathering feedback throughout your NPD stages! Here are a few options to continue connecting with consumers virtually that will still give you product and delivery insights.
Establish an online community
Create a community that customers and targeted consumers can be part of. Connect via text and video conversations to ask questions, get feedback and grow consumer intel. Enable a broader conversation by allowing community members to connect with each other, effectively starting new discussions about new ideas and ways to solve problems to help guide your organization’s innovation efforts.
Send prototypes and products to customers’ homes. Or, show them off via video in a live conversation, demo or recorded setting.
Surveys are always a good “go to” when it comes to getting quantifiable data. Email or text surveys to customers, have them pop-up after an online sale or provide the option to give feedback during and after a customer service phone call.
Voice of Customer (VoC) programs
Many organizations run VoC programs like “Net Promoter Score” to check the pulse on how customer’s experience brands, products, services, etc. These programs may have been paused, but now is the time to ramp them up again and push full steam ahead. Understanding how consumers are interacting with your products amidst a pandemic will give you powerful insights when making product and portfolio decisions.
3. Keep innovation front and center
Continuing new product development efforts is more critical than ever. Your initial response might be to "hunker down," but stopping innovation altogether might put your organization at risk of falling behind the competition when things return to “normal.” Listen to an example from the history books about IBM accelerating out of a time of deep economic depression:
Employ research professionals to listen to customer service calls to understand consumer sentiment. Up your digital feedback game by collecting all forms of feedback via text and analyzing the data, possibly with research professionals or automated text analysis, or both.
Interested in more on product innovation continuity in times of crisis, with examples of how to get feedback remotely and leverage scorecards? Watch Sopheon CTO Paul Heller’s presentation from the 2020 Innov8rs virtual conference.
Innovation scorecards increase visibility, maintain simplicity
Scorecards should contain the key elements around consumer problems to solve, customer acceptance, and point of view on distribution. Key financials, critical cross-functional risks, ability to win, and timeline information should all be in one place, with trusted, cross-functional data, so decision makers have the crucial information they need to make the best decisions.
By imposing governance and the disciplines around consumer engagement, financials, and the ability to produce on a regular basis, scorecards provide transparency and trusted data to ensure confidence in the success of new product commercialization.
When discussing Hain Celestial’s “project on a page” scorecard during a recent podcast, Jeff George told the host that instead of a massive PowerPoint presentation, executives can have all of the information they need in one place. To which the podcast host replied:
“The idea of a one-page presentation instead of a 50 page-presentation, it makes me weep sweet tears of joy.”
Get executive level buy-in
The role of the innovation function is to provide leadership with information to guide direction and decision making. Historically, this has been a C-suite or board level decision, "We're going to go into this market or we're going to go after this particular type of product." Things have changed. Now, the innovation function has a different perspective and can direct leadership with pointers like, "Hey, this is the way we're seeing it. This is what we're dealing with. This is what we think we can do." Executives are looking for input from people “on the ground” and working with customers, backed with trusted data.
To keep focus, innovation needs to be kept front and center. It needs to be understood at all levels in the organization that innovation initiatives are key growth drivers. One way to do this is to meet weekly, monthly or quarterly – yearly is no longer enough if your organization is expecting to exercise business agility. Set up a private forum where innovation and R&D teams can share test results and insights and provide updates on their projects with cross-functional leaders to confirm that they are moving in the right direction. Getting feedback early and often leads to more innovation conversations between empowered cross-functional teams and senior leadership and helps align teams on the ground with executives at the top. Frequent touchpoints keep executives engaged and connected.
4. It’s all about value: consumer value, portfolio value
Simplify investment decision making. Take a top-down, macro look at your portfolio of ideas to make it clear that projects align with corporate strategies and consumer needs.
Consumer behaviors are changing. This means a nimble approach to managing a portfolio, with visibility and control to reprioritize projects, reassign resources and maintain innovation velocity is a necessity.
Consumer behaviors aren’t the only things changing rapidly. The nature of how organizations are doing business has changed, and will continue to change. Disruptions in the supply chain, manufacturing, distribution channels, safeguarding the health of employees with new social distancing and PPE efforts, and many other factors need to be taken into account when evaluating portfolio projects.
More is not necessarily better: focus on something that will give your organization sustainable profit. Will it achieve an acceptable velocity to sustain growth? While there will be fewer new products launched, the ones that do make it to market will have a larger impact and will be successful for longer, creating a positive cycle and building momentum to drive growth through innovation.
For the short-term, COVID-19 needs require more focus, perhaps requiring redeployment of resources to meet these short-term needs and hitting the “pause” button on longer-term plans. However, now that the initial shock of the pandemic is behind us, it’s time to start focusing on mid- and long-term plans. They should be adjusted to focus on the trends that were born of or accelerated by the onset of the pandemic. Focus on value while lowering risk. This means NOW is the time to put the pedal to the metal and make calculated moves forward with innovation and new product development investments.
With the economic duress showing little sign of abating soon, people are more and more conscious about their financial stability and ensure that they get the most value for the products that they buy. It's important for organizations to ensure that all products, current and new, provide the best possible consumer value and are delivered as efficiently and effectively as possible.
5. Transparent, cross-functional, trusted data is a must
When there is a clear line of sight to trusted data, tough decisions can be made with more confidence. To scale up innovation activities that are aligned with strategy, organizations need to aggregate NPD and consumer information in a systematic way. As an organization you want to really look at the information you are generating from deep consumer interaction and evaluate what ideas should be pushed forward. Organizations need to make difficult decisions about where to allocate resources and which projects or products to push forward. Taking a macro look at the portfolio of ideas and really helping facilitate that decision process enables a nimble portfolio. As consumer wants change and companies’ strategies shift to meet new needs, you need to have the visibility and control to reprioritize projects, reassign resources and maintain innovation velocity.
With a clear line of site to trusted data, your leadership can be more confident when making:
- Portfolio decisions
- In-flight risk assessments
- Go/kill decisions
Looking for more on how consumer goods organizations can thrive? Explore some of these resources:
- Topic hub: Product innovation continuity
- Webinar: Accelerate out of the turn
- Podcast: Agile food innovation at Hain Celestial
- Case study: Land O'Lakes
- Webinar: Crisis response – innovation leaders share
- Webinar: Hershey’s digital transformation journey
- Web page: Innovating in consumer goods, food and beverage organizations