New product innovation works best without boss, Nielsen study finds

LAS VEGAS As the Consumer 360 Conference continues, market research firm Nielsen has unveiled a study that investigates why some manufacturers see more success from their consumer packaged goods products than others.

Nielsen’s research of the innovation processes at 30 large CPG companies operating in the United States revealed that companies with less senior management involvement in the new product development process generated 80% more new product revenue than those with heavy senior management involvement. Companies that employ this and other best innovation practices derived on average 650% more revenue from new products compared with companies that do not.

Nielsen’s evaluation showed that CPG companies with the most successful new product innovation records tend to have:

• Two to three stage gates that are followed strictly across the organization. The first stage gate typically is designed to identify ideas that then will be developed into a concept and prototype, while the last stage gate usually is designed to determine whether a product should be committed to production and market;
• A focus on growing brands, not ones acquired or designated by senior management;
• A development focus two to three years out;
• A formal scorecard to provide structure to organizational learning;
• A standardized and required post-mortem on all new product development efforts; and
• A knowledge management system to retain learnings from previous product launches.

“New product innovation is a top priority of every major company CEO, yet success varies so widely that it’s absolutely critical to understand what drives successful innovation and what undermines it,” said Tom Agan, SVP and managing director for Nielsen. “Once you understand it, then you need to ask yourselves, 'Are we living it?'"

“One of the keys to successful new product innovation is to manage new ideas lightly,” Agan added. “While we don’t dispute senior management’s strengths and good intentions, they are often too quick to get involved in the creative process, especially when things are not going well, and their mere presence can stifle free-thinking and boundaryless ideas -- which can doom the new product development process to failure.”