BUSINESS

Home > Business > Innovating with yogurt (and outpacing the market)

---

Innovating with yogurt (and outpacing the market)

January 24, 2007

The verdict is in: conservative management is out. Top-line growth is in. And with that comes a renewed interest in innovation as a key strategy.

"Innovation has become the mantra for business growth in nearly every industry and geography," writes Gartner analyst Kathy Harris. "Businesses can no longer improve the bottom line through cost controls. They need the top-line growth (and increased employee spirit) that comes from new processes, competencies, products and services."¹

An essential capacity: Accenture

Companies want to be seen as innovative. It's a major factor in setting company value, gaining market success, and edging the competition.

"Innovation is an essential capability in achieving high performance," say Tim Breene and Paul Nunes at Accenture. It's how companies create and sustain distinctive capabilities as well as product differentiation.²

Some organizations raise the bar by inventing something completely new or different – consider microwave ovens, cell phones, or Google. But innovation doesn't have to mean finding "the next big thing." It could mean discovering new customers in existing markets; creating new delivery methods; or repositioning products or services.

Consider Yoplait, for example. The dairy company increased its market share by reinventing yogurt as a whipped dessert. It also launched a vitamin-enriched yogurt drink for health-conscious consumers. Sales of the two products grew four times faster than the yogurt category as a whole. And it accounted for almost 20 percent of the company's total sales in 2005.³

Balance big breakthroughs with continuous improvement: HBR

Managing innovation is less about one-off initiatives or serendipity; and more a measured approach. To make it happen consistently, companies must "turn penetrating insights into products, services, and experiences that appeal to customers, and then combine them with sophisticated development and commercialization capabilities," says Accenture.⁴

Another Accenture study suggests that the best companies "put in place the structures, processes and conditions that increase the likelihood that innovation will occur in the long run."⁵

Coupled with that is the need to balance the "big breakthrough versus the everyday work of continuous improvement," says Rosabeth Moss Cantor of Harvard Business School. So new initiatives come not just from R&D and venture projects. But people in the mainstream part of the business also have the opportunity to innovate in their own areas.

Seek ideas in every part of the business: Gartner

But where do innovative "insights" come from? They pop up more often when ideas flow freely through the organization, encompassing as many people and perspectives as possible.

"In a mature innovation program, organizations seek ideas in every part of their business and beyond-from customers to competitors' press releases to vendor mergers to MTV," writes Gartner.⁶

Rosabeth Moss Cantor suggests companies need "multiple modes" of innovation. "Collecting a large number of ideas, opening the company to brainstorming sessions, and listening to voices inside and outside the company is a great way to spot trends."⁷

Information and analytics are the core capabilities

In other words: a collaborative, information-rich environment is more likely to bear fruit, more often. And technology plays a key role.

This according to Gartner: "The ability to discover, track, collect and analyze relevant market and business events or activities and to effectively employ this knowledge is the core capability of an innovator; therefore, intelligence and discovery, and their associated technologies and applications, are foundational capabilities in innovation programs."⁸

With a performance management system, businesses can leverage this kind of information on a broad scale. A strong analytic orientation allows them to aggregate data and ideas from anywhere, analyze them, discover patterns, and unveil innovative solutions. While extranets and reporting extend the reach outside the organization.

In essence, an insights network built on performance management lets organizations add different elements, "shake up the box," and see what comes out. Scenario modeling and scorecards provide the opportunity to further analyze whether those new insights have differentiating value and business potential.

The relentless pursuit of customer insight: Harrah's

Harrah's is one of the world's largest and most profitable casino and hotel empires. The key to profitable expansion, according to Accenture, has been its ability to bring innovation to the casino business.⁹

"Traditionally in the casino industry, the way to grow revenues has been to build newer, bigger, better casinos," says Clai Seldon, Director of Customer Marketing and Product Application Support. "Harrah's decided not to go into that very capital-intensive game. Instead, we decided to focus on customers; much like a retail-oriented method of same-store sales growth."

With the help of Cognos business intelligence, Harrah's leverages information about its customers to shape the market. For example, data from its total rewards program has allowed management to offer incentives that encourage the most profitable customers to spend more dollars.

Through the "relentless pursuit of customer insight," the company has been able to enrich the consumer experience. And it has built a nationwide portfolio of casino holdings full of loyal clients. According to COO Tim Wilmott, "I think the toughest thing [for our competitors] to replicate is the level of intensity we have regarding our customers. Our customer focus is inherent throughout the entire organization, and it's world-class."¹⁰

Maximizing the benefit to customers: Bank of Ireland

In the banking industry, the customer experience presents a key opportunity for banks to differentiate themselves, says IBM. Leading innovations in this area include loyalty programs, branch enhancements, and customer relationship management and personalization.¹¹

Bank of Ireland has implemented IBM Cognos 8 Business Intelligence to analyze and report on customer profitability. The solution provides greater consumer insight and improves customer relationship management decision-making.

The key benefit is managers' ability to roll up the data in much more meaningful ways – not just customers or sales, but branch, market, and other dimensions – to gain a fuller picture of the business.

"Customer relationship management to me is about running your business from a customer perspective," says Eugene McCarthy, Head of Profitability Measurement in the Bank's Retail Division. "If you understand customer profitability, if you know what transactions and interactions they do and how much it costs, you know an awful lot about your business. Then you can start to run the bank to maximize the benefit to the customer and the organization."

Summary

Innovation is the new mantra for business success. Companies that foster a collaborative, information-rich environment will likely produce more innovative ideas. Performance management can help them make the most of each opportunity.

Find Out More The innovative organization: Are CIOs the new enablers? The agile CFO: Enabling the innovation path to growth

---

Sources

¹ Kathy Harris. Driving Innovation: A New Business Imperative. Gartner Symposium/ITxpo 2006, October 2006.

² Tim Breene and Paul F. Nunes. Going the Distance: How the World's Best Companies Achieve High Performance. Outlook Journal, Accenture, September 2006.

³ Sharon M. Flanagan and Carl-Martin E. Lindahl. Driving Growth in Consumer Goods. Research in Brief. The McKinsey Quarterly. October 2006.

⁴ John F. Engel, Anita M. Thompson, Paul F. Nunes and Jane C. Linder. Innovation Unbound. Outlook Journal, Accenture, January 2006

⁵ Toni Langlinais and Bruce Bendix. Moving from Strategy to Execution to High Performance. Outlook Point of View, Accenture, October 2006.

⁶ Kathy Harris. Driving Innovation: A New Business Imperative. Gartner Symposium/ITxpo 2006, October 2006.

⁷ HBR Ideacast 16: Innovation Traps and Managing Urban School Districts. Harvard Business School Publishing, 2006

⁸ Kathy Harris. Driving Innovation: A New Business Imperative. Gartner Symposium/ITxpo 2006, October 2006.

⁹ Walter E. Shill and Robert J. Thomas. Exploring the Mindset of the High Performer. Outlook Journal, Accenture, October 2005.

¹⁰ Ibid.

¹¹ Sunny Banerjea, Robin Kahn, Cormac Petit, John White. Dare to be Different: Why Banking Innovation Matters Now. IBM Institute for Business Value, September 2006.