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Failing fast central to General Mills’ innovation strategy

May 30, 2019
Food & Drink

New products are a key component of General Mills, Inc.’s growth strategy. Innovation accounted for 3.8% of company sales in fiscal 2017 and 5% in fiscal 2018. In fiscal 2019 the company is looking to continue the trend but has had to adapt its innovation strategy to changing market conditions.

“We’re much more iterative on how we do innovation,” said Jeffrey L. Harmening, chairman and chief executive officer of General Mills, during a May 29 presentation at the Sanford C. Bernstein Strategic Decisions Conference in New York. “We studied how entrepreneurs do innovation and we do a lot more innovation like they do.”

As an example, Mr. Harmening pointed to the company’s Oui by Yoplait product line. Introduced in 2017, Oui by Yoplait is a French-style yogurt packaged in a glass jar. It features a simple ingredient list and is positioned as a premium yogurt offering in the marketplace. The product line generated $100.5 million in first-year sales, according to Information Resources, Inc.’s 2019 New Product Pacesetters report.

Initial Oui prototypes did not feature many of the attributes included in the final product, most notably the glass packaging or the yogurt’s texture, said Mr. Harmening.

“Over time we iterated on that offering and really listened to what consumers wanted and actually made a pretty quick turnaround on that business,” he said.

General Mills now has a dedicated cross-functional team that includes representatives from such different organizational functions as marketing, R.&D., finance and others. The teams do nothing but work on new products.

“So, the team will come up with an invention in yogurt,” Mr. Harmening said. “Let’s talk about Oui. They come up with something and they’ll actually go out and try to sell it in store. It’s a humbling experience.

“But what we’re able to do is, based on consumer feedback, we can then go back to our R.&D. labs and overnight change the packaging or change the product or change the name, and they’ll go back out to market the next day and try to sell it again. And we’ll find out we got some things right (and) we got some things wrong. And then we’ll do things overnight, we’ll come back the next day and try to do it again.”

Mr. Harmening said the company calls the process consumer first design and it allows innovation teams to fail much faster and less expensively. He added that is also allows the company to succeed faster and less expensively.

“The key to innovation, I think, is going to be you’re going to have some misses when it comes to innovation; it’s inherently more risky.” — Jeff Harmening, General Mills

“The key to innovation, I think, is going to be you’re going to have some misses when it comes to innovation; it’s inherently more risky,” he said. “The key is when you have something big that you really ride it. And we’ve had that with Oui. We’ve had that in some of our cereal launches.

“And when you have something that doesn’t work, you call it, and you don’t keep throwing good money after bad. Because you just realize that innovation is a fundamentally tougher business. But a few successes in innovation pay off wildly, and the key is to make sure you limit your losses on the things that are not working.”

The Greek yogurt trend and General Mills’ slow response to it underpins the company’s innovation strategy, Mr. Harmening said.

“Part of the reason we’ve formed 301 Inc., which is our equity firm, is to make sure we make investments in businesses that we think might be attractive, but also because it gives us a lens to what’s happening externally.

“I don’t think we saw what was going on with Greek yogurt fast enough, but I can guarantee you we do now. Whether that’s in Greek yogurt or whether that’s in bars or whether that’s in cereal, we see things a lot faster than we did before.”

By Keith Nunes

Source: Food Business News

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