Foodservice New Product Benchmarks Product Innovation Best Practices Series

Product Innovation Best Practices Series
Foodservice New Product
Reference Paper #48
Scott J. Edgett and Devon Gerchar
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This article appeared in Prepared Foods
November 2012, pp. 39-42
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r&d manufacturing insights
New Product
Top Four Metrics Used to Measure
Innovation Program Performance
Net sales of
new products
Overall profits (annual)
generated by new products
Net incremental sales
Dr. Scott Edgett and Devon Gerchar,
Contributing Editors
Percentage of business’
net sales generated
by new products
he foodservice industry’s best perform0%
ers achieve 22% more sales and 20%
Percentage of Respondents
more profits from their new products
than their average performing counterparts.
Source: Stage-Gate International, International Foodservice Manufacturers Assn.
They also are seven times more likely to launch
commercial successes than poor performers.
These aren’t just pie-in-the-sky numbers; these
The benchmarking research, which is the second phase
are real performance results realized by real companies. These,
of work launched through CIE, uncovers a great deal about
plus many other innovation performance realities, are revealed
foodservice new product innovation and provides underin IFMA’s newest research publication, “Foodservice New
standing of what separates high performers from low
Product Development Process: Performance Benchmarks,” a
performers. Researchers learned that a purpose-built process
ground-breaking research initiative.
is key to successful innovation, especially a process that
The Center of Innovation Excellence for Foodservice
includes the “voice of the customer.”
(CIE) is a collaboration involving the International
Refer to Success Metrics, a “Playbook”
Foodservice Manufacturers Association; product innovation
To be successful in product innovation, processors need to
experts Stage-Gate International; and numerous founding
understand what success looks like. Most businesses use
member companies that are providing funds, time and talent
multiple metrics (the average company uses 2.5 different ones).
(see founding members list).
Center of Innovation Excellence: Founding Members*
Aryzta (Otis Spunkmeyer)
Basic American Foods
The Bama Companies Inc.
Bunge Oils
CH Guenther
Coca-Cola Foodservice & On Premise
ConAgra / Lamb Weston
CSM Bakery Products
FoodHandler (BarrierSafe Solutions Intl.)
General Mills Foodservice
Hobart (ITW)
Insight Beverages
International Paper
JM Smucker Company
JR Simplot
Kellogg’s Food Away From Home
Kerry Foodservice
Kraft Foodservice
Land O’Lakes Inc.
Lyons Magnus
McCain Foods
Nestlé Professional
PepsiCo Foodservice
Proctor & Gamble Co.
Rich Products Corp.
Sara Lee Foodservice
SCA Tissue
Schwan’s Foodservice Inc.
Surlean Foods
Sweet Street Desserts
Unilever Food Solutions
*Companies contributing funding,
committee personnel
November 2012
r&d manufacturing insights
However, a purpose-built
process–one containing
certain practices—indeed
separates the best from the
worst performers. These
Use formal NPD process
companies employ …
Clearly defined stages
… C l e a r l y d e fi n e d
a set of predefined
With identified activities
activities that are per3.0
Defined “Go/No Go” decision points
formed in each stage;
…Clearly defined “go”
“Go/No Go” criteria defined
“no go” decisions: Gates
Flexible, scalable process
where decisions are made
whether or not to continue.
Process used and understood
This requires management
Enabling process for teams
to meet with the project
team to review the project
Not at
and evaluate it on its merits;
much so
To what extent each NPD process element exists
…A process that is flexible
and scalable: An innoWorst performers
Middle performers
Best performers
vation process must be able
Significant differences between worst and best performers
to change based on the size,
Source: Stage-Gate International, International Foodservice Manufacturers Assn.
type, complexity and risk of
the project.
Sales-related metrics are the most popular, combined with a
It’s here that readers might say, “English please!” This
profit metric, as seen in the chart, “Top Four Metrics Used
translates to a process that is documented with clear metto Measure Innovation Program Performance.”
rics; is used and modified over time; and is best for the
So, a “commercial success” is defined as meeting or
entire organization.
exceeding the sales/profit objectives during a three-year
Stages, Gates and Flexibility
period. As mentioned earlier in this article, the best-performMost foodservice organizations employ a more rigorous pro­­
ing companies had seven-times-higher success rates comcess for high-risk products than for low-risk items. These
pared to their lower-performing counterparts. This means
processes include stages and gates; stages are where specific
more profit and sales, and fewer wasted resources.
information is collected and tested, and gates are where the execNow that the basic metrics are understood, it’s important
utive team makes decisions whether to “go,” “hold,” “recycle”
to talk about the practices top performers employ to drive
or “kill.” (See chart “Typical Five-stage Innovation Process.”)
better success rates.
This often is employed for top-line innovations that are “new
Of specific importance is the process used to take intanto the world” or “new to the company.” The rigors and resources
gible, creative ideas and develop successful and profitable
used in this process yield a more thoughtful output and also will
new products. (See chart “Impact of Having a Systematic
provide the largest return of investment over time.
Product Innovation Process in Place.”)
Foodservice organizations also employ a three- or twoHaving an innovation process in place is a good start,
stage process with some projects, where stages and gates are
but not significant enough to truly impact performance.
Impact of Having a Systematic
Product Innovation Process in Place
Typical Five-stage Innovation Process
Business Feasibility
Generation and
of an idea
Detailed design and
feasibility of the
product concept
Development of the
product, imaging
and packaging
“Decision Points” or “Gates”
Source: Stage-Gate International, International Foodservice Manufacturers Assn.
November 2012
Customer acceptance
testing; final product
validation; supply chain
and forecast accuracy
Launch of the product
r&d manufacturing insights
High Degree of Collaboration
Achieved Higher Success Levels
Percentage of Respondents
Innovation is a big buzz word. In
a mature or struggling environment, it is the difference between
product life or death, and possibly
company sustainability. The quality of execution—from start to finish—matters. Moreover, those
companies that are flexible and
diligent in the new product process
will reap huge benefits, not only for
their organizations, but also for
customers and end-user consumers. Visit for more
CIE information and details about
upcoming work that will engage
IFMA’s members, industry suppliers and customers.
Dr. Scott J. Edgett is internationally recognized as one of the
Projects with a high degree of collaboration with customers achieved
world’s top experts in product
higher success levels than projects without collaboration (past two years).
innovation and is the pioneer of
portfolio management for prodManufacturer
uct innovation. Edgett is chief
Source: Stage-Gate International, International Foodservice Manufacturers Assn.
executive officer and co-founder
of Product Development Institute
Inc. and Stage-Gate International.
consolidated for low-risk projects, such as product enhanceHe is a former professor of the Michael G. DeGroote School
ments, modifications and line extensions.
of Business, McMaster University in Ontario, and is a facThis flexible approach enables the organization to more
ulty scholar at the Institute for the Study of Business Markets
effectively adapt to the needs of their various types of proj(ISBM) at Penn State University.
ects. Close to half of the manufacturers in the benchmarking
study (46%) said they flexibly tailored their processes to
Devon Gerchar is a foodservice professional with more
manage project risk and complexity.
than 20 years of industry experience in market research,
marketing, strategy and database analysis. She has worked
Collaboration as a Success Component
for branded foodservice companies such as Unilever Food
Foodservice innovation is different from retail models. Not
Solutions and Reynolds Packaging Group. In 2010, Gerchar
only does foodservice often drive new flavor trends and
joined IFMA as director, Member Value.
preparation techniques, it also has a level of complexity
regarding the customer.
In foodservice, the manufacturer makes a product that is
Research Methodology
distributed to the operator—then prepared, presented and eaten
IFMA sent an electronic, 60-question quantitative research survey
by the consumer. Thus, there is a whole other element to creatto U.S. foodservice manufacturers. A total of 128 businesses
ing a successful product in foodservice, one which has its own
responded. However, further refinement of the data led to a useable
brand identify, limitations and ideas regarding menu offerings.
sample of 106 respondents. Although these companies represented
Forward-thinking innovators realize effective collaboraa variety of categories (including foods, beverages, disposables,
tion is important in new product development. As seen in the
sanitation, equipment and other), 70% were in the food sector.
chart, “High Degree of Collaboration Achieved Higher Success
A majority of respondents (63%) reported sales in excess of $500
Levels,” top-performing manufacturers not only are more sucmillion, and 70% had 100 or more employees. In terms of title, 78%
cessful at collaborating with operators, but their innovation
of respondents were director-level, vice-president or higher. Another
projects are more successful as a result. Collaboration in this
quantitative survey of operator respondents also was sent during the
study concentrated on operators. But overall, communication,
same time period. These results are not highlighted in this article.
ideation, and collaboration with suppliers and trading partners are
beneficial for all parties, as long as good governance is employed.
November 2012
Not at all
Very much so
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