Know when to hold ‘em, know when to fold ‘em

If you’ve ever pulled up a chair at a blackjack table, you may notice how the players around you approach the game differently. Some gamblers seem to signal for cards at random, enjoying the luck of the draw as if they were pulling levers at a slot machine. But experienced players know that no matter what hand they’re dealt, the right gameplay strategies greatly increase their chances of winning. They apply foundational blackjack strategies that give them the best odds of getting close to 21 without going over.

For manufacturers, reaching innovation vitality might feel like a gamble — but armed with the right insights and strategies, it’s more achievable than you might think.

Innovation vitality = business vitality

Innovation is the lifeblood of business growth. Manufacturers who grew innovation sales in 2022 were 1.8x more likely to grow overall sales compared to those with stagnant or declining innovation sales.

That’s because thoughtful innovation creates engagement with consumers and retailers. It’s a way to build relationships and address needs, whether it’s delighting consumers with a new flavor profile or launching a crowd pleaser that will fly off retailers’ shelves.

Brands don’t exist in a static world. Over time, core products can start losing buyers — see the “leaky bucket theory”— leading to sales declines. That’s where innovations come in. New and improved products can attract new buyers, create new usage occasions, justify a price increase, or simply keep your brand at the forefront of consumers’ minds. Year over year, your strong innovations become your core.

Innovation within reach

Despite the urban myth that 95% of all innovations fail, findings from NIQ’s Innovation Measurement database indicate that innovation vitality is not only possible, it’s worth the pursuit. After reviewing more than 60 thousand innovations across five countries over more than four years, we found that 52% of new items with national distribution show vitality, growing sales in their second year on the market.

Unsurprisingly, innovations with national-level distribution are more likely to grow. But distribution may or may not be the causal factor for growth. Typically, products with high distribution also have other advantages, for example, more funding and resources, or even brand clout, all of which can help support that growth.

Even so, vitality is still well within reach for innovations with limited distribution. When we lower the distribution threshold to include all new items, 31% show vitality. Both outcomes dispel the notion that innovations are destined for “failure” before they even get off the ground.

Achieve innovation vitality

To ensure your innovations have the power to endure, get back to the fundamentals. Finding the right concept and product, pairing it with the right activation, and proactively managing innovation performance in real time will help you drive sustained growth.

Find the right concept + product

Don’t cut corners during pre-launch planning and early-stage concept testing. Instead, invest in a rigorous screening and validation process. Our research found that top innovators, on average, spend four more months in pre-market prep than low performers.

That’s because a solid concept begins with solid research. We’re living in a time with more access to data collecting tools and resources than ever before — many of which promise speed and low-cost results — but not all data is quality data. And more importantly, you don’t have to sacrifice quality for speed and cost-effectiveness. In the long run, sub-par data results in missed opportunities and wasted time and resources chasing concepts that don’t produce desired results.

In fact, we recently analyzed 91 concepts for a major CPG manufacturer who had previously utilized a DIY supplier’s concept pass system. In running these concepts through our BASES Activation Profiles solution, we found that 62% of their concepts were misclassified. It’s important that, however you begin your concept design and testing, you are leveraging valid, reliable data.

Learn more in our recent article series on data quality.

Execute great activation

Don’t treat every innovation the same. While foundational principles still hold, there’s no one-size-fits-all approach. Execution may look different across categories, markets, and brand type and size. For instance, is this a Brand Grower that will bring new users to the brand, and therefore needs a broad reach of category buyers for advertising and distribution? Or is this a Targeted Play that requires a focused reach on core targets with advertising and distribution?

Support the right innovations in the right way by understanding your innovation opportunities based on strategic potential, evaluating tangible activation tactics and implications by looking at different pathways to success, and making better decisions using predictive analytics.

How you measure is key. Early and continuous monitoring of critical metrics that automatically refresh allows you to identify emerging trends and brands faster, make informed strategic investment and execution decisions by benchmarking innovation performance, and manage innovation performance post-launch in real time. Understanding the true potential of your innovations is crucial for success.

Proactively manage innovations in real time

Innovation is never a “launch and leave” project — the work doesn’t stop once you launch. Sustaining vitality requires ongoing monitoring and optimization. In our analysis, we observed critical milestones that have an impact on vitality.

Innovate with purpose 

Don’t gamble away your innovations. While your innovations aren’t doomed by default, manufacturers can greatly increase their odds of achieving and sustaining innovation vitality by finding the right concept and product, pairing it with the right activation, and proactively managing innovation performance in real time.