VYPR brings you the latest thinking from pioneers in FMCG product innovation. This week, we review the latest research from think tank Newton Europe that finally puts a staggering £3bn opportunity cost on branded and own label product developers from ineffective development processes. According to Newton, the wasted cost is largely determined by an accumulation over time of 1000s of product changes – and failing, antiquated processes – that incrementally add production cost with little value added to either the business or customer.

Moreover, Newton found that research that sets out to prove a company’s own hypothesis right, rather than to truly understand the needs, motivations and behaviours of the end consumer is more likely to fall into the category of “innovation for innovation’s sake”, resulting in leading brands investing poorly in research and losing out to more agile, entrepreneurial players who innovate quickly and flexibly.

In order to ensure that new products deliver additional value to consumers, a more scientific and data-driven approach to the NPD funnel must be taken, with Newton citing 3 core areas:

Collaboration: “we consistently see decision making based on opinion. It’s due to a belief that the best and most innovation decisions are made on gut feel. This is fundamentally flawed.” In short, we need to get better at sharing information and insights across research, development and commercial teams.

Production: “It’s vital from the very start of the process there’s an understanding that what you agreed to in negotiations is deliverable and will meet a genuine customer need.” For instance, how confident can we be that a preference for provenance in a focus group will translate into sales and preservation of margin?

Iteration: “Businesses need to adopt a “fail fast” mindset whereby unworkable ideas are weeded out at an early stage… Let’s say you have 100 new product concepts, 50 of which are successfully realised in the development kitchen, with 20 going forward to a small scale trial and 10 to full production. Only one ever ends up on the supermarket shelf. Now imagine if, out of the same 100 products, 90 can be rejected before you even make it to the kitchen based on consumer insight and an analysis of the capabilities of your production process.

Adopting this kind of approach across hundreds of suppliers and thousands of products is too large and complex to achieve with existing practices. That’s where VYPR comes in, as Mark Fielding, CCO at VYPR, explains below.

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