This is an excerpt from the new book Innovation is Ugly: Practical Advice to Help You Succeed Against the Odds by Tina Lambert. Lambert has spent more than 25 years as a marketer and innovator in both Fortune 500 and smaller, high-growth companies. She has run an “agile growth lab” for Tyson Foods, overseen a marketing center of excellence at J.M. Smucker, and currently serves as Chief Marketing Officer for Tropicana Brands Group.
The book, she writes, “is about how hard product innovation is. It’s about how many executives don’t understand innovation and think it’s things like ‘fun’ and ‘soft’ and ‘optional.’ Most importantly, this book is about how to overcome the most painful parts of innovation … based on over 25 years of me screwing it up and learning the hard way.”
In this excerpt, she calls the idea of an innovation funnel “very unrealistic,” and proposes an alternative.
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So, you want to build a smart portfolio investment approach to innovation? Don’t we all?! It’s not easy. How do you pick the right mix of projects you need to be successful long-term and pace them out in your calendar? How much innovation is enough? And how big should your ideas be? Innovation mix refers to the number of small, medium, and big bet projects you are working on.
To set the target for innovation pacing and mix in your business, start by evaluating your internal and external innovation requirements. Look at your category in terms of business growth, competitive edge, retail pressure, and innovation timelines.
Ask yourself these four questions:
1. How much growth are you trying to drive on the business in question?
Is it a high-growth business? If so, you will probably want innovation every year and more big innovations thrown into the mix. Is it a slow, steady-growth business, or a lower-priority business for you? If so, you will probably want innovation every other year, or even every three years, and mostly simple, smaller innovations.
2. How much competitive innovation is launching in your business’s category?
I find it is often very helpful to look at the biggest and/or fastest-growing brands in my category and analyze how often they are innovating. If you want to keep up, you’ll need to match their pace. If you want to lead, you’ll need to beat it. You can look at this in terms of the number of items your competitors are launching or the amount of new revenue they are generating from those items. Either way, you can use their activity to set a target.
3. Are you getting pressure from your distributors, retailers, or operators for innovation? How often do they expect news?
I usually show a picture of Walmart next to this question. If you work in consumer goods, you know why. Often, our internal team may be okay with less innovation, but our external customers – like Walmart – are not. That’s because they are under pressure to constantly grow the overall category and to justify the shelf space, warehouse slots, or truck space your products are taking up. That means there will always be a batch of products not performing that will be discontinued each year by retailers and/or distributors. This creates churn in the category, and the need to replace those items drives a need for innovation. You may be lucky enough to have a DTC (direct-to-consumer) model without any intermediates, and if so, this consideration won’t apply. For the rest of us, think about what your role is in the category and whether there is an external expectation for a certain level of innovation. If you are a category leader, you are likely expected to bring innovation every year in order to replace your own items that are being discontinued.
4. What are the standard timelines in your business for innovation? How long does it take you to go from idea to market?
The answer could be six months … or it could be six years. It could also vary based on how big the innovation is. If you are just getting started on an innovation pipeline, you may only be able to do a lot of small things in the short term. Big things need to be started well in advance because they usually require more development time, capital execution time, and consumer testing time.
Now you need to bring all this reflection together to create an ideal innovation calendar.
Try to fill in a three-year calendar matrix with your project slots, like the one below. If you work in areas where it takes six years to bring innovation to market, like many pharma or major technology categories, you need to extend this calendar out that many years versus the three I’ve shown.
What are project slots? They are the empty spaces where a project needs to go. I call them slots to highlight that they are empty because we don’t know what the ideas are yet, and that’s okay. We are trying to think through pacing separately from ideas. If you create an innovation calendar by just filling it with what you are already working on, you may not pace it out appropriately. This is about applying a strategy to your innovation timeline before innovation begins.
In the example above, this innovator wants to launch something new and big. They know their lead time to market is two years, so they put that slot in year two (since they haven’t started it yet). I’ve written that slot in gray to make it stand out to you because it is the anchor of this whole plan, and we will work our way up from our big bet. Since this example won’t have big innovation until year two, in the meantime, the team will need something at least medium exciting next year and then again in three years when they are gearing up for another big innovation, presumably in year four.
However, those couple of items won’t be enough to satisfy their big retail partners, so they have also added four small innovations to the plan for every year. This number was based on an analysis of how many of their own items are discontinued every year. This innovator estimates they need about five new things per year to maintain or grow their category share. If you add all the innovations up in each year, you’ll see how they are able to deliver those five things.
Remember that you need a mix – small projects have their place.
The example above is pretty typical of what pacing and mix look like for a high-growth brand or category. Indeed, I often see a project mix similar to: 80% small, 15% medium, and 5% big bet innovation. Your revenue mix will be different and could skew higher toward big bets, given their size.
If you are looking at this mix and saying things like, “That’s so much small stuff!” or, “Do we really want to have all that churn in our business?” or, “Why wouldn’t we just do more big things?” …This is a deeply flawed strategy. Yes, small innovation often only lasts in the market for 18-24 months. But small projects play an important role. In many categories, consumers are not brand loyal and can be attracted by the newest thing. These small innovations provide the news to keep your brand relevant and your consumers engaged with you. Brands with a lot of news are viewed as more modern; those without it are seen as sleepy. And in innovation, some churn is just part of life. Small innovation is usually necessary.
Critically, with our innovation calendar, we need to start early.
This is going to sound counterintuitive, but the advice I always give is that you need to go slow to go fast. The further in advance you are working on innovation, the easier it will be for you to pivot when necessary or to pull up a project if one fails in development. Having an innovation calendar that is scheduled for at least three years in advance is best in class.
In my 25+ year career, I’ve found the idea of an innovation funnel to be very unrealistic.
The cliché you’ll hear on this topic is “funnel not tunnel,” implying it’s better to have more ideas in the hopper, so that some can naturally fall out. Inexperienced innovation leaders will try to sell you on the idea that if you only work on the number of projects you need, you won’t have enough that actually launch. But in my 25+ year career, I’ve found the idea of an innovation funnel to be very unrealistic.
If I’m being honest, I think it’s an example of something executives learn from consultants who don’t live in the real world. Saying you will create a funnel implies you have the internal resources available to double, triple, or quadruple the work needed to launch a single innovation; and, on top of that, you will plan for the internal failure of most of those projects in the development phase, before they ever launch. Just to warn you, I’m going to rant now. First, very few organizations can afford to resource more projects than they need to launch. Second, if you work in an organization where everyone knows you don’t need all of the projects you’re developing, it creates a cancel culture. People look for reasons to throw a project out the window the moment things get hard rather than ways to pivot around project barriers. Innovation is always hard, so you can’t give people a brightly- lit, easy-to-find emergency exit every time they get scared. It’s a bit like suggesting you should have spare children. Horrifying idea, but it is a joke we told in my family of seven kids.
In contrast, a three-year pipeline does the work of the funnel … but it’s more practical. That’s because when you start projects sooner, you have both more information and more options. You know which projects in your pipeline are more likely to be “sure things” further in advance and which are riskier. If something fails during development, you can shuffle the chips on the board to fill the hole.
I want to be clear, I’m not anti-funnel because I want to work fewer innovation projects, although that might be one of the impacts of this choice. I get nauseous when people say “fewer, bigger, better.” But working on more projects in a chaotic way, where things are constantly cancelled, trains the wrong behaviors in the organization. It will keep you from getting the biggest and best ideas to market.
Knowing your spares helps too.
If you are running an effective innovation machine, once a year, you should test a big slug of ideas to populate the new third year of your calendar that is rolling into your plan. As part of that batch of ideas, I highly recommend making sure at least around 20% of them are things you have high confidence in your ability to execute. This doesn’t mean they have to be small and dumb ideas. But you should have high confidence in your team’s ability to execute them.
Then park those ideas as “spares” in your mind. Keep them in your pocket, and don’t tell anyone about them; otherwise, they’ll immediately become more attractive than the bigger, trickier ideas you’ve tasked people with producing. If people are working on projects with multiple barriers and they want to give up rather than pivot, they will look like a bright emergency exit sign. Don’t add them onto your official project list, creating an unrealistic funnel.
In a real emergency, these spare projects can be the secret to success. When projects get off track and nothing else in the pipeline can move around, you’ll need something to pull out of your hat on a now-crunched timeline. With an idea pulled from your spare list quickly, you’ll look like the inspired innovation professional you are.
Now, back to your calendar! Do your analysis, and create your slots timeline. Then you can start filling it in with projects. You’ll soon be on your way to building a healthy innovation engine to drive growth for your company.
Tina Lambert is Chief Marketing Officer at Tropicana Brands Group, and has worked for more than 25 years in the consumer packaged goods industry.
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