CGT article on product innovation challenges in the consumer goods area

The recent study on product innovation in the consumer goods area (CGT & Sopheon) indicates that only half of the products launched in the last five years achieved profit goals.

The study blamed lack of product differentiation and poor market analysis as the key causes. The study findings are derived from a global survey examining innovation practices, performance and execution impediments among companies across the consumer goods sector (including food & beverage, apparel & footwear, nonfood consumer packaged goods, consumer durable goods and consumer electronics).

The survey pointed out that only 20% of new ideas generated were considered innovative – the rest were extensions to existing products. It proposes introducing innovation governance best practices to kick-start new growth and resuscitates innovation efforts into organizations.

Though all of this seems plausible, the study recommendations focus more on process driven solutions as opposed to people driven solutions. There are plenty of alternative conjectures that may support the results of the survey.

Perhaps the reason why market research is poor is because for these new products, it may be very difficult to get good conclusive market data. In retrospect it may be obvious but not during the early stages of the development.

Perhaps the reason why these new products get low priority could be the incentive structure within the organization – it may encourage people to meet their near term objectives at the expense of long term “vision”.

Perhaps the reason why execution suffers is because it IS always the most difficult stage of product development – having the idea is easy.

Perhaps the executives have no ability to make decisions when faced with lack of information and hence stick to the tried and true.

By jumping the gun and recommending an “innovation process” solution, the study essentially underwhelms.

Ironically, this study is a perfect metaphor for describing the problems in the area of innovation in consumer goods. I would borrow from a comment in this same article and say that this study is like a linear extension of existing ideas and a repackaged version of similar studies.

In this sense, the study may have succeeded spectacularly in highlighting the problem of innovation overall, but in a manner that the author(s) may not have intended.