anthropology tools.pptx

Transforming CPG Innovation Performance Ideation toolkit Introduction Anthropological tools Lead user methodology Product patterning Killer ideas Frameworks 1 Transforming CPG Innovation Performance Overview and use of anthropological tools Overview Multiple techniques, extended out of traditional c...

Transforming CPG Innovation Performance Ideation toolkit Introduction Anthropological tools Lead user methodology Product patterning Killer ideas Frameworks 1 Transforming CPG Innovation Performance Overview and use of anthropological tools Overview Multiple techniques, extended out of traditional consumer research vehicles (e.g., deep structured interviews and focus groups) and anthropology methods to get under what consumers say to identify what they feel and do in specific contexts Broad possibilities including: (i) Experiencing groups (ii) Clinical groups (iii) “Be the consumer” missions (iv) Van groups (v) Video ethnography Client context KSFs Organization interested in developing Willingness to commit real resources to breakthrough products Interest in cracking a particular “white space” or “need state,” but not sure how to do it Lack of insight into behavior/motivation of key consumer segments Lack of clarity into what meets a broadly stated consumer need, such as “convenience” or “health,” in specific segment/occasion contexts thorough anthropology approach Willingness to act on qualitative vs. quantitative insights Collaboration with Customer Insights and Market Research experts in Firm to identify which tools are most appropriate in client situation Skilled professional moderators/facilitators to enable and debrief experience 2 Transforming CPG Innovation Performance (I) Experiencing groups What is it? Participants activity shared by moderator and respondent, (e.g., pub visit for alcohol consumption, at-home TV dining for take-away pizza) Approximately 2-3 hour discussion following participatory activity among 7-10 people led by a trained moderator. Designed to allow the moderator to share, and be a participant in the experience of a group of people so that he/she is able to effectively live and describe the respondents' world When do you use it? When underlying reasons for behaviour are not well thought through by respondent How do you do it? Observation and participation helps to identify underlying rational Hire a moderator who “fits” with respondents Recruit participants Moderator “lives in participants world” prior to session, e.g, goes to the pub with the or hard to communicate clearly participants if researching alcohol consumption Identify core areas that need to be understood Run group as a natural interaction/conversation between respondents, not as question/answer session Videotape the groups Debrief moderator to determine the conclusions Edit video tapes to communicate conclusions What do you get out of it? A description of the day-to-day life and circumstances of the respondents and Approximate cost ~$6,000–$7,000 per group (dependent somewhat on how elaborate the underlying reasons for their behaviour experience becomes) 3 Transforming CPG Innovation Performance (II) Clinical groups What is it? Approximately 1.5-2 hour discussion among 7-10 people led by a trained moderator typically with expertise in psychology and sociology. Research is carried out scientifically based on the premise that a person's true motivations and feelings are subconscious in nature. Critically, the moderator probes and interprets under the level of the customers consciousness to reach a level of understanding and insight which is qualitatively different from the participant's understanding When do you use it? When you need to understand underlying reasons for behaviour and do not think How do you do it? Conduct focus groups Moderator interprets focus groups using a psycho-dynamic theory to interpret that respondents will be able to rationalise their actions (e.g., purchasing of luxury products) underlying behaviour, e.g., Freud, Jung etc. NB: it is critical that both the researcher and the team/client subscribe to the theory of behaviour before the groups are carried out What do you get out of it? Deep insight beyond anything that normal respondents may articulate – or nothing Approximate cost ~$7,000–$8,000 per group at all! 4 Transforming CPG Innovation Performance (II) Clinical focus groups – example output Clinical groups were conducted to understand why women were resistant to non-dairy coffee creamers The woman were asked to role-play in the groups. Half were asked to role play ”the coffee” and the other half “the creamer” When role playing the coffee they acted tough and strong, where role playing the creamer they were much softer, embraced each other more This was interpreted in terms of underlying masculine-feminine personality dynamics The recommendation was therefore to feminise the creamer packaging and show male-female interactions in the advertising 5 Transforming CPG Innovation Performance (III) “Be the consumer” missions What is it? Focused virtual consumer experiences, where skilled, cross-functional task force assigned to understand a certain issue (e.g., convenience needs in on-the-go dining situations) take on the activity of the consumer and report back learnings When do you use it? When you need to understand what consumers mean when they How do you do it? Assign task force Give mission (e.g., get breakfast on your way to work) and homework express a certain need (e.g., convenience) to help translate it into product specifications (e.g., portability, not messy to eat) (report on the aspects that were convenient and inconvenient to you personally) Moderate a debriefing session to find key takeaways What do you get out of it? Insights into true, and often unarticulated, need in specific occasion Approximate cost Can be done with existing team resources 6 Transforming CPG Innovation Performance (III) Example “be the consumer” mission: convenient on the go breakfast occasion Define the mission Execute the mission Procure and eat breakfast on your Team composed of brand way to work Look for the type of thing that would normally appeal to you Note the convenient and inconvenient aspects of the experience to bring back to the group managers, R&D, sales and manufacturing personnel executed Through natural choices, hit a number of channel/product choices, e.g., – Biscuit sandwich through Quick Service Restaurant Drive Thru – Muffin and coffee through local coffee shop – Granola bar brought from home Key takeaways: Portability, ease of eating are key to the occasion Opportunity to penetrate with healthy, yet good tasting, option Debrief the mission Brought learnings – and breakfast! – back to offsite location for debriefing Primary advantage noted was ability to maintain/ streamline morning routine Number of disadvantages noted: – Lack of “real” portability (packaging not easy to handle or use while driving or walking) – Messiness of eating from packages provided (loose wrappers, things that had to be peeled back) – Bad taste of some items; health/convenience tradeoffs 7 Transforming CPG Innovation Performance (IV) Van groups What is it? Approximately 5-6 hour sessions when participants travel to different locations for a real-time experience (e.g., visit 2-3 different stores) and discuss each experience in the van. Typically each experience is up to 30 minutes, followed by a 30-minute van discussion This is followed by a 1-1/2 to 2 hour end-of-day focus group at a facility When do you use it? When immediate experience is essential to generate rich feedback on the likes, dislikes, reactions to atmosphere, service elements, etc., influencing a purchase decision How do you do it? Recruit 6-7 respondents willing to participate in a long session (typically need to provide attractive monetary incentives) Gather at a facility and drive along a predetermined route to visit target locations. Choice of locations and facility must be optimized to reduce dead travel time Moderator and observers accompany participants in the van and at location visits (optional) Traditional focus group with back room viewing at the end of day What do you get out of it? Bonding among participants due to length of time spent together results in Approximate cost $13,000-$14,000 per van group more candid feedback Real-time experiences refresh memories and result in more insightful comments and suggestions Tries to replicate the actual purchase/decision process 8 Transforming CPG Innovation Performance (IV) Van groups – example output Description Van groups were organized to assess a computer retailer’s strengths and weaknesses relative to competitors Background situation was the store performed well in service and selection but poorly in store organization and pricing Focused on four key segments: savvy and non-savvy hardware and software buyers Strengths Weaknesses Helpful, knowledgeable, nonpressuring salespeople Wide and deep selection and unlikely to be out of stock Logical merchandising within departments facilitates easy Cluttered, junky feeling to store due to overstocking and comparisons as does consistent product signage Very larger software department displays in aisles Poor directional signage Pricing signage is inconsistent and prices are not marked on packages Prices are perceived to be okay, but not the best Lighting level is too low Not a fun, exciting, inviting store atmosphere Samples of specific reactions Samples of specific reactions “They seemed to know what would work for me. I was “The rows of software were okay, but those piles in the impressed with the Service.” – Non-savvy hardware buyer “I don’t have to be anxious about being targeted by sales people. I can take my time in deciding. I didn’t feel like someone was following me around.” – Savvy software buyer “I like the way I can look down the aisles and see how the products vary by price and features.” – Savvy hardware buyer aisles made me feel like I was at a swap meet.” – Non-savvy hardware buyer “Not everything was clearly marked.” – Savvy software buyer “Their prices are about 10% higher than Best Buy.” – Savvy hardware buyer “It wasn’t fun like Best Buy, it was all business.” – Non-savvy hardware buyer 9 Transforming CPG Innovation Performance (IV) Van groups – example output (CONTINUED) Resulting changes from the Van Group Improve in-store directions by using a store map at the entrance Short-term and large, colorful signage to key departments Reduce clutter by removing in-aisle pallet displays Integrate more hands-on experience Create bright, inviting store atmosphere Improve price labels Consider creating a cutting-edge technology section to generate Longer-term excitement Expand the customized “build you own” section Expand product offerings only within core competency of computer expertise – do not extend into popular home electronics (e.g., boom boxes, entertainment centers). Acceptable extension options suggested included WebTV, rewritable CDs Consider integrating price – value more strongly in all communications 10 Transforming CPG Innovation Performance (V) Video ethnography What is it? Much like van groups or experiencing groups, but conducted/captured on videotape to enable review and new learnings after the fact When do you use it? When you need to identify occasion-based needs and behaviours that How do you do it? See van groups and experiencing groups What do you get out of it? Insights into true, and often unarticulated, need in specific occasion Approximate cost See van groups and experiencing groups customers/consumers are unaware of or can’t articulate 11 Transforming CPG Innovation Performance Ideation toolkit Introduction Anthropological tools Lead user methodology Product patterning Killer ideas Frameworks 12 Transforming CPG Innovation Performance Overview of the lead user process Overview Most companies focus on users at the center of their target market when developing products Lead User Process (developed by 3M) is grounded in the fact that many commercially important products were stimulated by insights from – or even initially prototyped by “lead users” – companies, organizations, and individuals that have needs on the “extreme” and are well ahead of market trends Needs of lead users are so advanced and beyond those of the average user that they are often forced to “jerry rig” solutions to their problems – thus highlighting opportunities for manufacturers The process uses a mix of anthropological techniques (e.g., real time customer interaction and observation) and joint exploration with customers to uncover radical improvement opportunities It relies heavily on “cross-pollination” of knowledge/experience between experts in disparate fields, leading edges of company’s target market and from markets that face similar problems in more extreme form 13 Transforming CPG Innovation Performance Appropriate use of the lead user process Client context KSFs Organization interested in Willingness to embrace and include developing better and/or cheaper products Industry environment where customers or consumers can help improve and develop new products Often easier to apply in more complex, engineered product categories or where product provides a solution to a very strong need (e.g., allergy prevention, as opposed to the consumption of candy for a treat) external constituencies throughout the process Ability to tap large network, across academic, VC, technology and corporate arenas, as well as broad customer base, to find the key individuals on the cutting edge of use and design Inclusion of knowledge experts in tangentially related industries – who may not be product users, but understand issues surrounding technology and design and will have insight into the possible Longer time frame for exploration 14 Transforming CPG Innovation Performance What is the lead user process? What Who Fast-paced way to get users and experts who are ahead of the market actively engaged in concept development Lead users are innovators often operating in face of extreme needs not faced by the average customer who have, through necessity, come up with their own “solutions” before they are commercially available How 4- to 6-person cross-functional team of marketing technical and manufacturing personnel working collaboratively with lead users for intensive ~6 month period When Exploratory phase or “fuzzy front end” of concept development 15 Transforming CPG Innovation Performance Stages of the lead user process Key activities Phase 1 Phase 2 Phase 3 Phase 4 Lay the foundation Determine the trends Identify specific lead users Develop the breakthroughs Identify target Collect basic data Begin Hold lead user markets/ categories Confirm type, level of innovation desired Build internal stakeholder alignment/buy-in Source: “Creating Breakthroughs at 3M” on market, channel, category, segment performance and trends Interview experts in field who have broad view of emerging technologies, enduser needs, and leading edge tech applications in area being studied networking process to identify and learn from users at leading edge Gather information/ insights from users Participate realtime in user activity to deepen insights Begin idea generation workshop to design concepts that match user needs and company strategy Further refine concepts 16 Transforming CPG Innovation Performance The lead user process is a cornerstone of 3M’s approach to innovation Invested in developing lead user as core capability – Sent a veteran scientist to MIT for a year to learn from technique developer, MIT Professor Eric von Hippel – Leveraged Corporate Marketing and Public Affairs to publicize new technique – Built cadre of trained facilitators to enable spread across divisions – Now penetrated into MedicalSurgical, Performance Chemicals and Fluids, Packaging Systems, Telecom, Commercial Graphics, Medical Products, Filtration Products, and Stationary Products) “This is the best process I have seen for replicating what originally made [3M] great. What made 3M was our people going out and creating solutions with leading edge customers…It’s very hard to create a process that will do it. But this is the closest I’ve seen…I’m glad that it’s being adopted across the company” -Bill Coyne, former 3M SVP of R&D Used to drive introduction of 70% of major new product lines since 1997, stimulating highest rate of major product line generation in last 50 years Source: Management Roundtable 17 Transforming CPG Innovation Performance VS. PROJECTS USING TRADITIONAL METHODS Review of 3M’s lead user experience shows real results Development time Indexed Average sales after 5 years $ Millions 67% reductio n Old methods Lead user ~7X greater Old methods Average market share after 5 years Percent Lead user Average number of major new product lines introduced per 4year period >2x greater Old methods Lead user Source: The Management Roundtable 2001 >4x increase Pre-LU With LU Plus, dramatic increase in degree of “innovativeness” reported 18 Transforming CPG Innovation Performance While a relatively new technique, lead user has a strong pedigree Products Companies High performance camping gear Medical devices Proven cross industry applicability 19 Transforming CPG Innovation Performance Ideation toolkit Introduction Anthropological tools Lead user methodology Product patterning Killer ideas Frameworks 20 Transforming CPG Innovation Performance Overview and appropriate use of product patterning Overview Technique based on research on patterns of creativity, conducted by Russian engineer Genrich Altshuller* Research led to recognition of 5 patterns of creativity that underlie most successful product innovations and can help predict the emergence and success of new products before there is any consumer/customer pull or visible market demand Client context KSFs Searching for new product ideas and open Rigor in up front planning and cataloging to broad search Especially useful in understanding how to leverage existing platforms, extending them in a meaningful way of product components and attributes Thoughtful application of 2-3 pattern tools Suspension of disbelief during generation of new product ideas Commitment of cross-functional team to further elaborate, refine, and evaluate ideas * Eventually developed into “ARIZ” (Algorithm for Inventive Problem Solving) and “TRIZ” (Theory of Inventive Problem Solving) techniques Source: Goldenberg, Horowitz , Levav, and Mazursky, “Finding Your Innovation Sweet Spot,” HBR 2003 21 Transforming CPG Innovation Performance Definition of the 5 patterns of creativity Subtraction: Remove components or attributes, particularly those that seem most essential or attractive, from an existing product. Useful in combating “feature creep” and in freeing up developers to replace removed feature with something new and better Multiplication: Make one or more copies of an existing product component, but alter those copies in an important way to go beyond a mere quantitative change to achieve a qualitative change Division: Divide an existing product into its component parts, then reconfigure these parts in unexpected ways or keep them separate in a manner that delivers unforeseen benefits. Division can be a physical division (product is divided along some physical line), a functional division (separation into different functional components), or a preservational division (product is subdivided in such a way that each part preserves characteristics of the whole) Task unification: Assign a new task to an existing element of the product, thereby unifying the two tasks in a single component Attribute dependency change: Alter (by introducing new relationships where none existed, eliminating, or changing) the dependent relationships between attributes of the product and attributes of its immediate environment Source: Goldenberg, Horowitz , Levav, and Mazursky, “Finding Your Innovation Sweet Spot,” HBR 2003 22 Transforming CPG Innovation Performance Choosing the right patterning tool Product development objective or situation Appropriate patterning tool Working with a highly Start with subtraction and look for features complex product Trying to control costs Trying to drive step-change in product performance Trying to create new markets that may no longer be necessary or may detract from the product’s appeal for a significant group of users Task unification, which encourages efficient use of existing resources Subtraction, which can eliminate costly product components and reduce complexity Multiplication, to help lead out of “more of the same” trap endemic to extending products Attribute dependency change, division, or subtraction, which can open up product to previously overlooked segments and occasions Source: Goldenberg, Horowitz , Levav, and Mazursky, “Finding Your Innovation Sweet Spot,” HBR 2003 23 Transforming CPG Innovation Performance Applying the patterns Key actions Step 1 Step 2 Step 3 Break down the product Apply 2-3 patterns to generate new product ideas Evaluate and shape ideas Break down essential Choose appropriate Brainstorm potential physical components List product attributes Detail physical and other KSFs aspects of the environment in which the product is used If applying the dependency pattern, create a matrix with a half-dozen columns of internal attributes aligned against those internal plus external attributes, noting presence and absence of dependencies Thoroughness pattern, depending on goal Systematically apply to product to develop “virtual new products” Non-evaluative application of tools Source: Goldenberg, Horowitz , Levav, and Mazursky, “Finding Your Innovation Sweet Spot,” HBR 2003 function of these new products – Any conceivable needs it might satisfy in the new form? – Benefits it could offer that existing product does not? – Drawbacks vs. current product? – Challenges to alleviating these shortcomings? Identify market potential and ability to deliver to market Cross-functional input Iteration 24 Transforming CPG Innovation Performance Patterning tool example – mobile telephone ILLUSTRATIVE Product breakdown Attribute dependency map Physical components: microphone, keypad, speaker, plastic facing for unit, head set accessory, wires and other components to connect these pieces, Product attributes: comes in four colors, lasts ~1 year given product lifecycle Physical environment attributes: carried in purse or briefcase, or worn attached to person Ideas generated Introduce feature that lets consumer assign special ring to particular callers, such as boss or spouse Remove relationship between battery power and information displayed on LED screen by introducing special battery dedicated solely to providing power to let consumer know number of caller who is trying to reach them, regardless of primary battery status Introduce replaceable fashion plates to update look and match purse or attire Introduce a solar unit in facing to provide backup power when battery expires 25 Transforming CPG Innovation Performance Ideation toolkit Introduction Anthropological tools Lead user methodology Product patterning Killer ideas Frameworks 26 Transforming CPG Innovation Performance What is a killer idea? Examples E-bay Significant and highly valuable departures from current offerings or practices that are (preferably) difficult to imitate Jiffy Lube Federal Express overnight delivery SAP software systems Swatch watch Amazon.com Disposable contacts Frito-Lay distribution management systems IKEA furniture self-assembly Southwest Airlines 27 Transforming CPG Innovation Performance The killer idea framework Set of questions used to generate new ideas within an organization using moderated workshop sessions to ask questions leading to insights and ideas Product opportunities Based on database of 50 real-world, highly Search for Killer Ideas successful and revolutionary innovations which were backwards engineered to identify what questions, if asked, would have led to development of the winning ideas Process opportunities Industry structure and conduct opportunities Led to identification of hundreds of killer idea questions, which can be tailored and modified to pose industry specific opportunities, now codified in proprietary database Backed by methodology for execution at any given client Transforming CPG Innovation Performance Example of the killer idea framework at work Product opportunities Develop new products Find new ways to meet existing needs Search for Killer Ideas What makes the product hard to use? Eliminate the difficulty · Ready to drink Gin · Gin ice cubes Alleviate the difficulty · Low calorie gin Convert the difficulty · Mix your own gin strength Transforming CPG Innovation Performance Appropriate use of killer ideas Client context KSFs Organization looking for new ideas for Ability to translate “generic” questions into growth and product development Exploring possibility of radical innovation Open to industry restructuring, new business building, etc. incisive questions specific to the industry that will draw out ideas Client’s top management buy-in – Enthusiasm for innovative thinking and belief in process – Clearly communicated expectation of real results and accountability (e.g., monitoring number of ideas generated and followed-through) – Readiness to make resource commitment to good ideas Evaluating ideas real time to ensure action Insulated situation with subgroup of organization receptive to change and known for “quality” of thinking Pre-selected champions to take ownership CST has time to conduct 2-3 full day workshops at at least a week to tailor the questions used in the workshops 30 Transforming CPG Innovation Performance Key differences among idea generation techniques Traditional product development “Killer idea” process Traditional brainstorming Preparation and Fact base and process Minimal or no preparation planning are significant Narrow focus preparation Theme and opportunity-based Unfocused focus Highly specific constraints on idea space Long-term orientation Meaningful constraints on idea space Time frame flexible to user’s No constraints on idea space No defined time frame needs Target users and target Logical explanation of sets of Market and competitive competitors defined early potential users and competitors emphasis rarely part of process Accountability often Accountability is project-specific Lack of accountability for reinforces tendency toward incrementalism and enforced common follow-through 31 Transforming CPG Innovation Performance Approach to using killer ideas Internal runSetup through Work-shop (1-2 days) Postworkshop Recommended 30 days 14-21 days 7-14 days n/a n/a Accelerated* 14 days 4 days 1 day n/a n/a Actual days 2-4 days 1 day 1-2 days 1-2 days 1-2 days Prework Lead time before workshop of work 6-11 days of actual work days * Accelerated schedule applies especially to clients and facilitators already accustomed to the killer idea tool from previous workshops 32 Transforming CPG Innovation Performance Search for killer ideas through product opportunities tree Creative bundling to eliminate complements Radically modify existing products Radical distortions of key value equation components Unexpected users New uses for existing products Search for killer product ideas by exploring opportunities to... Heavy users Generate radical increases in existing product sales New users for existing products Develop new products Potential users blocked by one obstacle Potential users who differ in one way from current users New ways to meet existing needs Stimulating new needs 33 Transforming CPG Innovation Performance Search for killer ideas through process opportunities tree Radically modify the manufacturing process Search for killer process-related ideas by exploring opportunities to... Radically modify the sales/delivery process Shift activities up and down the delivery chain 34 Transforming CPG Innovation Performance Search for killer ideas through industry structure and content opportunities tree Creating or exploiting external shocks Search for killer industry structure and content ideas by exploring opportunities to... Radically modifying industry structure Radically modifying industry conduct Radically modifying assumptions about industry performance 35 Transforming CPG Innovation Performance Ideation toolkit Introduction Anthropological tools Lead user methodology Product Patterning Killer Ideas Frameworks 36 Transforming CPG Innovation Performance A note on frameworks to stimulate idea generation Frameworks included here are representative sample of frameworks developed by the Firm to help stimulate idea generation Not all of the frameworks are necessarily conducive to new product/package ideas Many of the frameworks are helpful in finding “fishing holes” but are insufficient to drive to a new product concept in and of themselves As such they should be used to spur client thinking but not be the primary vehicle to stimulate idea generation 37 ce Transforming CPG Innovation Performance Overview of frameworks (page 1 of 2) Tool Framework Source of framework How it works KFS Teams generate set of strategic options by thinking along all potential profit sources in a value chain Mappable value chain Portfolio of strategic actions along each dimension Strategy 7 degrees of strategic freedom Teams generate thorough list of strategic options by systematically thinking through every “degree of freedom” available to client Thorough knowledge of Growth 3 horizons Teams generate list of strategic options by thinking explicitly about near Medium, and long term opportunities Ability to imagine Market place 5-7 Capture consumer surplusCreate new demand 3 Concentrate surplus from channels 2 5 Cs 4 Costs Compete for surplus Costs Client Concentrate surplus from channels al suppliers Costs 1 Cooperate to capture surplus 2 5 Practice Volume current client situation along each dimension Portfolio of tactics/tools to aid in idea generation along some dimensions (e.g., innovation, industry structure) Practice Growth Practice years out Portfolio of tactics/tools to aid in idea generation for each horizon 38 Transforming CPG Innovation Performance Overview of frameworks (page 2 of 2) Tool Forces of attack Framework Consumer/ brand Customers/ outlets Internal capabilities Aspirations Competitors Channels KFS Teams consider 6 forces of attack areas to brainstorm options for clients to meet aspiration Intimate understanding of client’s current standing along each attack vector Marketing Practice Teams leverage defined capabilities of client to generate growth opportunities Accurate mapping of real client capabilities – Superior – Sustainable – Value creating Growth Practice/ Growth Alliance Teams uncover emerging business opportunities by focusing on external factors Superior ability to spot external opportunities through market intelligence Growth Practice/ Growth Alliance Amass facts to establish industry “base case” Identify trends Drive trends to future extreme outcomes Synthesize plausible scenarios Draw implications and develop options Correct understanding of trends Accurate extrapolation and breakpoint identification Strategy Practice Regions Business specific competencies Capabilities platform Source of framework How it works Growth-enabling competencies Privileged assets Special relationships External opportunity drivers Major discontinMajor trends uities Opportunity Value chain restructuring Scenario analysis drivers Unmet customer needs Industry level Industry base scenario Identify industry trends Drive existing trends to the extreme Understand impact of trend/ scenario on client Identify options, safety nets, preemptive moves for client Create consistent scenario Emerging industry scenario Company level Client’s strategy as is Create consistent strategic reaction for client Alternative strategic option 39 Transforming CPG Innovation Performance 7 degrees of strategic freedom Existing customers Existing products and services Existing value delivery system Existing industry structure Existing geography Existing competitive arena Current busines s vs. vs. vs. vs. vs. vs. New customers Innovation in products and services Innovation in value delivery system Improvement of industry structure Expansion into new geographies Moves into new competitive arenas 40 Transforming CPG Innovation Performance 7 degrees of strategic freedom – Gillette example Current busines s Existing competitive arena vs. Moves into new competitive arenas Existing geography vs. Expansion into new geographies Improvement of industry structure and profits generated outside U.S. Dominant and profitable positions in most emerging markets Innovation in value delivery system consolidation of stationery industry with acquisitions of Papermate, Waterman, and Parker Acquired Wilkinson Sword outside U.S. and EC in 1991 Innovation in products and services Successfully Use of dual Drove 70% of sales Toiletries, stationery, small electrical appliances, oral care, and now batteries Existing industry structure vs. Existing value delivery system vs. Existing products and services vs. sales channels with Oral-B and Braun both selling electric dental care system Sale of Waterman pens through Parker’s corporate gift channels migrated consumers to newer, higher-margin shaving products Leveraged Gillette brand in adjacent products Existing customers Massive brand and volume building through advertising and promotion vs. New customers Built female customer base with Sensor technology 41 Transforming CPG Innovation Performance Growth capabilities framework Businessspecific competencies Growthenabling competencies Capability platform Privileged assets Special relationships Definition Examples Specific competencies that Sales/marketing Manufacturing are required to run your business Capabilities that allow you to M&A Financing take action on growth Risk management opportunities Deal structuring Tangible and intangible assets required for your business Relationships that convey access or supply complimentary capabilities required in the value chain Brands Networks Infrastructure Relationships with suppliers, customers Government relationships 42