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Is your Consumer Packaged Goods (CPG) innovation engine running on empty?

It wouldn’t be, if you had two engines rather than just one.

Overview

Most CPG innovations are really only renovations: incremental brand refreshes that fail to satisfy the consumer clamor for better products and consume far too much of R&D teams’ time.

Leading companies know they need to renovate better to innovate better. So they’ve built two complementary innovation engines, one focused on production renovation, the other on true innovation, and both powered by digital technologies.

By transforming their R&D processes into accelerators of both more efficient product renovation and more effective product innovation, they’re driving new value for customers and new growth for themselves.

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Key Findings

Leading companies have recognized three key things:

  • The single-engine approach to innovation is unfit for purpose. 67 percent of CPG companies are maintaining market share by making incremental changes to existing products. Consumers have had enough of these brand refreshes. They want not more products, but better ones.

  • To innovate better you need to renovate better. Digital technologies help streamline and simplify renovation processes. P&G’s 3D store environments have halved both the cost and time required for physical shelf designs, for example.

  • Two engines are better than one. Both aim to maximize return on innovation investment while building competitive advantage. But in their approach to speed, risk, the measurement of efficiency and effectiveness, and how they manage their portfolios, each functions rather differently.

Recommendations

With CPG revenues slumping, getting breakthrough innovations off the ground is becoming an urgent necessity. So take steps now to get started.

  • Take a good hard look at the performance of your current innovation engine and identify its failings.

  • Decide which of your innovation activities are renovations and which drive true breakthroughs. Could digital technologies help improve one or both?

  • Think about how you could balance the efficiency of a renovation engine with the effectiveness of an innovation engine. Could you overhaul your operating model to optimize their complementarity?


Authors

Adi Alon
Strategy, Managing Director

Adi Alon is a managing director in Accenture Strategy. Adi has more than 20 years of experience helping clients to increase the returns they realize from their innovation and R&D investment by improving their innovation capabilities and processes, optimizing their operating models and developing high value innovation pipelines. Adi was educated in Economics (summa cum laude) at the Hebrew University of Jerusalem and holds an MBA from the Sloan School of Management at MIT. He is based in Boston and can be reached at adi.alon@accenture.com.

Brian Doyle
Consumer Goods, Managing Director

Brian Doyle is a managing director in Accenture's Consumer Goods practice and serves as the global lead for Innovation, Product Development and PLM within this industry. He specializes in working with clients on opportunities ranging from creating new revenue generating business models to implementing effective and efficient global R&D operating models. Brian holds a Bachelor of Science degree in Business Administration from the University of Rhode Island, has completed an executive program in strategy and innovation with MIT Sloan and is certified as a New Product Development Professional by the PDMA. He is based in New York and can be reached at brian.c.doyle@accenture.com