foodservice new product development process: performance

PRODUCT INNOVATION IN FOODSERVICE

Foodservice New Product Development Process: Performance Benchmarks

Written by Dr. Scott J. Edgett In collaboration with leading IFMA Foodservice Manufacturer Members


Dear Reader,

Welcome to the Center of Innovation Excellence!

This is the second published work derived from IFMA’s Center of Innovation Excellence (CIE)*. This

initiative began in 2010, and we have progressed from foundational understanding to a clear picture of

the innovation process benchmarks that are used in foodservice, specifically in the area of Products to

Launch.

None of this would have been possible without the support of our Founding Member companies;

forward-thinking IFMA members who provided time, talent and financial support to make this vision a

reality.


Many other foodservice professionals completed the Phase 2 survey, and although those respondents

are anonymous, we would like to take this moment to thank them as well. They made this research

representative of the industry as a whole.

We would also like to thank our partner, Stage-Gate International. Their expertise and guidance has

made this process, one which could have been tedious, an exciting and vibrant initiative.

As you will read in the attached white paper, this benchmarking data is the mid-point in our three-phase

process. We look forward to our third phase where we will apply what we’ve learned into practical best

practices. One of these best practices will certainly focus on COLLABORATION. This is a true definer of

successful product launches. In addition to the chain accounts that supported Phase 1 and 2, we look

forward to bringing more trading partners into the Phase 3 work.

Thank you for your purchase of this information. I hope it adds texture to your existing process, gives

direction for your developing process or provides a foundation for your fledgling process. Regardless of

your company’s level of sophistication, CIE is a resource for all of foodservice!

Sincerely,

Larry Oberkfell

President & CEO

IFMA

* The first published work “Product Innovation – A Framework for Foodservice” is attached for your

reading pleasure in Appendix A.


I have the pleasure of being the 2012 Chairman of the Center of Innovation Excellence (CIE)

committee. I would like to thank my Vice Chairman, Doug Allison (Vice President of Industry

Relations, PepsiCo Foodservice) and fellow IFMA committee members for their support.

I urge you to consider becoming a member of CIE and other committee’s that drive IFMA’s portfolio

of offerings. The engagement and knowledge you gain from your peers, customers and other

trading partners will reap benefits for your company and you personally.

Sincerely,

John Schmitz

VP/GM Foodservice

Land O' Lakes, Inc.


Authors

Dr. Scott J. Edgett is internationally recognized as one of the world’s top experts in product innovation

and is the pioneer of portfolio management for product innovation. Dr. Edgett has extensive experience

advising large multinational clients in a variety of industries, principally focusing on issues affecting

innovation leadership and capability. He has spent more than 25 years researching and developing

innovation best practices in product innovation; co-authored eight books; and published more than 60

academic articles and papers. Dr. Edgett is Chief Executive Officer and co-founder of Product

Development Institute Inc. and Stage-Gate International. He is a former professor of the Michael G.

DeGroote School of Business, McMaster University in Ontario and is a Faculty Scholar at the Institute for

the Study of Business Markets (ISBM) at Penn State University.

Michelle Jones (Contributing Author) is an author, speaker and consultant to industry in the field of

innovation management. She has 20 years experience commercializing and launching new business

models, products and services and has worked with numerous companies of all sizes and industries

around the globe. She draws on an exceptional track record in leading product innovation

transformation programs, including idea generation and Stage-Gate® systems to strategic portfolio

management and product innovation technology strategies, to success. She is the EVP and Chief R&D

Officer at Stage-Gate International, where she directs the development of research, products and

services for companies striving to achieve innovation excellence. Michelle has an MBA from the

University of Western Ontario and is a certified New Product Development Professional (NPDP).

Publication Team

Devon Gerchar is Director, Member Value at IFMA (International Foodservice Manufacturers

Association). She has over 25 years of foodservice industry experience and has worked in market

research, strategy, database consulting as well as in various marketing roles at brand giants Unilever

Food Solutions and Reynolds Packaging Group prior to joining IFMA in 2010. Her role consists of

supporting and promoting new IFMA programming (including the Center of Innovation Excellence) and

managing current offerings that provide manufacturer members market insights and best practices for

further education and increased success.

Shanul Srivastava is Product Manager of Research Services at Stage-Gate International. He served as a

research analyst and project manager in the publication of this report. Shanul holds an MBA in Strategic

Marketing from McMaster University and a Bachelor of Electrical and Electronics Engineering degree

from Birla Institute of Technology and Sciences, Pilani-Dubai, United Arab Emirates.

Release Date: June 2012

Stage-Gate® is a registered trademark. Product

Development Institute® is a registered trademark.

Logo for Product Development Institute Inc. used

under license by Stage-Gate International. Logo for

Stage-Gate used under license where appropriate.

The Innovation Diamond™ is a trademark of Stage-

Gate International.

Cover art by Foodmix Marketing Communications.

© 2012 International Foodservice Manufacturers

Association and Stage-Gate International. All Rights

Reserved. No portion of this publication may be

reproduced, stored in a retrieval system, or

transmitted in any form or media or by any means,

electronic, mechanical, photocopying, recording or

otherwise, without the prior written permission of

IFMA or Stage-Gate International.

IFMA Center of Innovation Excellence IFMA recognizes the increasingly important role product innovation plays in enabling Foodservice

organizations to achieve competitiveness and profitable growth. High quality, practical and relevant

resources are desired by Foodservice organizations to:

• Develop and execute innovation strategies to advance their business goals

• Create new value for their customers through successful product launches

• Measure, monitor and manage new product success more consistently.

Through collaborative efforts with Founding Members and innovation experts, Stage-Gate International,

IFMA is creating the Center of Innovation Excellence for Foodservice to address this important need.

The Center of Innovation Excellence will provide IFMA Members, their customers and trading partners

with a deeper understanding of the drivers of new product success that are unique to Foodservice as

well as a wide variety of resources to help improve their capabilities.

About IFMA

Established in 1952 and incorporated in 1954, IFMA is a leading trade association comprising more than

300 of the world’s most prestigious food, equipment and supply Manufacturers in the $588 billion

Foodservice industry, as well as related marketing service organizations, Foodservice trade publications,

distributors and brokers. IFMA’s mission (“Your Business Partner”) is to be the premier Foodservice

trade association bringing members relevant and actionable services fundamental for their business

assessment, planning and execution. www.ifmaworld.com

About Stage-Gate International

Stage-Gate International is the world's leading full-service provider of solutions which enable

organizations to improve their Product Innovation and Portfolio Management capabilities. A globally

recognized and trusted brand, Stage-Gate International helps accelerate your success through our

strategic advisory and transformation services, leading-edge products, best-selling publications,

corporate training and open enrollment courses, world-class research and benchmarking services, and

the Stage-Gate® Certification Program. We are proud to have had the privilege to work with more than

5000 leading organizations of all sizes across all industries and geographies. www.stage-gate.com

Michelle Jones, Executive Vice President

Stage-Gate International

[email protected]

+1-905-304-8797

www.stage-gate.com

Devon Gerchar, Director of Member Value

International Foodservice Manufacturers

Association

[email protected]

+1-312-540-4403

www.ifmaworld.com

http://www.ifmaworld.com/

http://www.stage-gate.com/

mailto:[email protected]





Table of Contents

1. Introduction 9

1.1 The Quest for Better Performance in Product Innovation 9

1.2 The Key Research Questions 10

1.3 Topic Areas Studied 10

1.4 How the Benchmarking Research Was Undertaken 12

1.5 Organization of the Results 15

2. New Product Performance Metrics 16

2.1 Percentage of Revenues and Profits from New Products 16

2.2 Success, Fail and Kill Rates 17

2.3 On Schedule and On Budget 19

2.4 New Product Projects Meeting Objectives 21

2.5 Business Entity Performance 22

2.6 Performance Metrics Used in Product Innovation 24

2.7 Defining and Identifying the Top Performers 27

2.8 How the Best Versus Worst Businesses Fare in Terms of Performance Metrics 27

2.9 Types of New Products Developed 30

3. Idea-to-Launch Product Innovation Process and Practices 33

3.1 A Systematic Idea-to-Launch Process 33

3.2 What Separates Winners from Losers 35

3.3 Quality of Execution for Key Process Activities 37

3.4 Gatekeeper Governance Practices 41

3.5 Quality of Your Gate Deliverables 44

3.6 Improving Your Gate Practices 46

4. The Importance of Collaboration: Manufacturers and Operators 48

4.1 The Importance and Impact of Collaboration 48

5. Conclusions and Recommendations 53

Appendix

A. Survey Questionnaire 56

B. Responses for Survey Questions – Manufacturers 72

C. Product Innovation: A Common Framework for Foodservice Phase 1 101

References 143

About the Author 144

Contact Information 145


Exhibits

1.1 Overview of Methodology 12

1.2 Primary Business Categories 13

1.3 Annual US Foodservice Sales Revenue 14

1.4 Foodservice Employees (US Only) 14

1.5 Respondent Profile 15

2.1 Percentage of Sales & Profits from New Products 17

2.2 Project Success or Failure – The Average Business 18

2.3 Success or Failure – Top 25% vs. Bottom 25% 19

2.4 Projects On Schedule and On Budget 20

2.5 Projects On Schedule and On Budget – Top 25% vs. Bottom 25% 21

2.6 Projects Meeting Targets or Objectives (last calendar year) 22

2.7 Profitability of Total Product Innovation Program 23

2.8 Product Innovation Program Meets Objectives 24

2.9 Top 4 Metrics Used to Measure Innovation Program Performance 25

2.10 Measures Used for Project Success or Failure - Top 4 26

2.11 Performance Metrics Results – The Best vs. Worst Performers 28

2.12 Projects Meeting Objectives – Performance Metrics Best vs. Worst Performers 29

2.13 Product Innovation Program – Met or Exceed Objectives (past three years) 30

2.14 New Product Types – All Companies 31

2.15 New Product Project Types – Custom vs. Non-Custom 32

3.1 Systematic Idea-to-Launch Process in Place 35

3.2 Impact of Having a Systematic Product Innovation Process in Place 36

3.3 Typical Five Stage Product Innovation Process 38

3.4 Product Innovation Process – Stages 39

3.5 Product Innovation Process Stages – Best vs. Worst Performers 40

3.6 Process Adapted to Meet Your Needs 41

3.7 Gatekeeping/Governance Approaches 42

3.8 How Effective are the Gates 44

3.9 Gate Deliverables 45

4.1 Importance of Effective Collaboration to Success in Product Innovation 48

4.2 Success of Collaboration Efforts in Product Innovation 49

4.3 High Degree of Collaboration Achieved Higher Success Levels 50

4.4 Impact of collaboration – Manufacturers 51

4.5 Successful Collaboration with Customers – Top 4 51


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1. Introduction

1.1 THE QUEST FOR BETTER PERFORMANCE IN PRODUCT INNOVATION

In recent years, foodservice executives have increasingly turned to product innovation to grow

their businesses. However, the quest for new product performance has been met with mixed

results. While some companies seem to effortlessly produce one new product success after the

next, others struggle with failure and disappointment. Is product innovation a viable path to

sustainable growth for foodservice businesses? Are businesses profiting from their new product

strategies and investments? And finally, if some businesses are winning at new products, what

are they doing differently?

Through this research initiative, we have validated that a group of companies is indeed profiting

from their new product efforts. In fact, they are achieving 22% more sales and 20% more profits

from their new products than their average performing counterparts. They are also 7 times

more likely to launch commercial successes and 3 times more likely to meet their market share

and distribution objectives.

We also discovered that when it comes to product innovation, this group of best performing

businesses behaves in a similar way. That is, they all perform certain practices with a particularly

strict discipline, regardless of the product or business strategy they elect – developing branded

products for broad markets or developing custom products for their customers. New product

success in this industry is dependent upon many factors; however, we can now definitively

confirm that success correlates particularly strongly with a purpose-built new product process

governed by the business’s leaders.

In summary, best performers:

1. Achieve better performance results from product innovation efforts

2. Use a flexible and scalable process that is adapted to their needs

3. Execute the entire process more effectively (idea through to launch)

4. Execute governance practices that enable tough choices to be made

5. Collaborate with operators more successfully

We encourage you to please read on so you too can discover what your business can do to win

at new products.


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1.2 THE KEY RESEARCH QUESTIONS

This investigation addresses six main questions in product innovation within the Food Services

industry:

1. Metrics: How are businesses performing in terms of their new product performance?

For example: How successful are they? Are they profitable? What percent of sales and

profits comes from new products? What types of innovation are undertaken? And, at

the project level: what metrics are used to gauge how project teams are performing

against budgets and timelines?

2. Product Innovation Process: How are businesses faring on a number of practices that

have been identified over the years as positive drivers of performance? Do businesses

really have a product innovation process in place? Is it working? Do the early pre-

development activities impact the ultimate success of the project?

3. Gatekeeping and Governance: What practices are used? How effective are gatekeeping

practices? What is the impact on success?

4. Best vs. Worst Performers: What are the best performing businesses doing differently

than the rest? What are some of the details and examples of best practices? How have

companies sought to leverage the people side of innovation?

5. Custom vs. Non-Custom Products: What are the differences in product innovation

practices between companies that are focused primarily on custom product

development versus those organizations that focus primarily on non-custom new

products? Are there different practices that impact success?

6. Operator and Manufacturer Collaboration: An initial look at whether these two groups

of partners view collaboration for product innovation as important or not.

1.3 TOPIC AREAS STUDIED

Previous studies have identified a number of factors that are proposed to drive new product

performance1. These factors provide the conceptual framework and basis for the current study.

The ten main topic areas include:

Performance Metrics:

1. Product innovation metrics at the business unit level

2. The type of projects undertaken and the portfolio breakdown

3. Metrics used to gauge performance at the project level

4. Differences in performance between top performing companies (top 25 %), and the

poor performing companies (bottom 25 %).


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5. Differences between custom and non-custom product development

The Idea-to-Launch New Product Process and Practices:

6. The business’s product innovation process starting at the idea stage through to the

product launch and the elements that occur during each stage

7. Best practices embedded within the product innovation process, including process

flexibility

8. Quality of execution of key activities in typical product innovation projects/programs

9. The effectiveness of gatekeeping and governance practices including the gate

deliverables and their quality

10. The impact of collaboration.

Each of these ten key topic areas consist of a number of sub-items, for a total of 55 practices,

methods and approaches researched.

A study of product innovation performance metrics can provide valuable insights to

organizations striving to benchmark themselves against others to determine if their

performance is acceptable or not. In this study the performance of the company’s product

innovation efforts at both the program and process level is measured. Note that product

innovation performance is a multi-dimensional concept, so multiple measures of performance

are used in this study. These performance measures include:

Percent of the business’s annual sales, net incremental sales and profits generated from

new products (three measures)

Overall profitability of the business’s total new product efforts relative to spending

Business’s total product innovation program meeting or exceeding its sales, volume and

profit objectives (over the last three years)

The success and profitability of the business’s total product innovation program (over

the last three years)

Percent of new products meeting sales, profit and volume objectives (three measures)

Commercial success, moderate success and commercial failure rates of product

innovation projects (three measures)

Proportion of product innovation projects on budget and on schedule (two measures)

Other key indicators used to measure performance.


12

These multiple performance metrics were used to identify the Best Performers in product

innovation.

1.4 HOW THE BENCHMARKING RESEARCH WAS UNDERTAKEN

The research was undertaken jointly by IFMA and Stage-Gate International with the author as

subject matter expert. The study used standard and proven research methodology, including

both qualitative and quantitative methods.

Exhibit 1.1: Overview of Methodology

Qualitative: Ten companies, the original Founding Members for the Center of Innovation

Excellence, participated in the first phase of the research to establish a foundational

understanding of the challenges faced in foodservice innovation within the industry as well as

establishing a working model of how the industry approached product innovation. (See the

complete report of Phase 1 in Appendix A). Six Operators also participated and provided input

on product development from the customer’s perspective. Combined, these companies

represented a good cross-section of the foodservice industry and are extremely dedicated to

validating internal best practices to improve innovation results and to work collaboratively to

help establish industry standards.

Quantitative: A detailed quantitative questionnaire focusing on the 10 topics in Section 1.4 was

constructed. A total of 55 variables or measures were used to capture the existence and

proficiency of practices, approaches and methods in the questionnaire. Additionally, some

general descriptive questions to characterize the businesses were also included. The survey was


13

vetted through several rounds by an expanded group of Founding Members for the Center of

Innovation Excellence.

Many questions were measured on Likert-type anchored 1-5 scales. For example, questions that

sought the degree to which certain practices or methods were employed and how well, or how

successful governance practices are applied. Other questions were direct, seeking a quantitative

answer, such as percentage of projects that were commercial successes or failures or

percentage of projects meeting sales targets. Finally, a number of open-ended questions that

sought text responses were included.

The quantitative sample: A total of 128 business units, all with US based headquarters,

responded to the detailed quantitative questionnaire. Refinement of the data sample plus the

removal of very small organizations led to a useable sample of 106 respondents. Select sample

statistics include:

Companies are in a number of different business categories, however about seventy percent

are in the food sector – see Exhibit 1.2 Businesses with sales in excess of $500 million were 63 percent; 69.7 percent had 100 or

more employees - see Exhibit 1.3 and 1.4 Director, vice-president or higher level respondents represented 78 percent of the input –

see Exhibit 1.5.

Exhibit 1.2: Primary Business Categories

1.9 %

1.9 %

2.8 %

4.7 %

7.5 %

8.5 %

72.6 %

0% 20% 40% 60% 80%

Other

Small Wares/Tabletop

Heavy/Light Equipment

Janitorial/Sanitations

Beverages

Paper Goods/Disposables

Food

Percentage of Respondents


14

Exhibit 1.3: Annual US Foodservice Sales Revenue

23.5%

16.7%

11.8%

19.6%

9.8%

18.6%$1 Billion or More

$500-$999 Million

$250-$499 Million

$100-$249 Million

$50-$99 Million

Under $50 Million

Exhibit 1.4: Foodservice Employees (US only)

5.9 %

8.8 %

9.8 %

9.8 %

26.5 %

16.7 %

22.5 %

0% 10% 20% 30%

1-9

10-24

25-49

50-99

100-499

500-999

1,000 ormore



15

1.5 ORGANIZATION OF THE RESULTS

Next comes the reporting of the results. With so many practices, methods and performance

metrics gauged, a roadmap of the report may be useful:

Product innovation performance results, on a wide range of performance metrics measured,

are provided in the next section, Chapter 2. Here, these performance metrics are also

combined to identify the Best and Worst Performers.

How the businesses rate or fare on the different practices and methods in each of the first

10 topic areas outlined are provided in Chapter 3. Additionally, each practice is measured

against performance metrics to assess how the Best and Worst Performers score on each.

Collaboration efforts and the impact it can have on product innovation from both a

manufacturer and operator perspective are looked at in Chapter 4.

Chapter 5 outlines the Conclusions and Recommendations.

The survey questionnaire is provided in Appendix A for reference.

The survey data results, in chart form, are provided in Appendix B to present the reader with

additional points for reference and information.

Detailed results from Phase 1 of the study representing the qualitative part of the study are

located in Appendix C.

Exhibit 1.5: Respondent Profile

12.4%

39.1%9.5%

11.4%

26.7% 1.0%

Primary Function

C-Level LeadershipMarketing/Product ManagementResearch & DevelopmentInnovationSales/Business DevelopmentOther

22.9%

36.2%33.3%

7.6%

Level or Title

Manager/Senior Manager

Director/Executive Director

Vice President/Executive Vice President

President/Principal/Owner/Business Unit Leader


16

2. New Product Performance Metrics

How is your organization performing at product innovation and how does it compare to other

companies in the foodservice industry? Without clear metrics and a way to compare them it can

be difficult to know whether you are doing good or bad at product innovation; whether your

investment in R&D is producing the desired results, and what areas of your performance might

need to be improved or strengthened. This chapter provides baseline information on how

businesses fare on a number of the top performance metrics. The performance results for the

top 25 percent and bottom 25 percent of the study’s participating companies are also provided.

Based on these performance results, a subset of best performing businesses is identified, which

then helps to identify and validate best practices in subsequent chapters.

2.1 PERCENTAGE OF REVENUES AND PROFITS FROM NEW PRODUCTS

The most popular performance metrics used at the business unit level are the percentage of

annual sales (revenue), net incremental sales and the percentage of profits derived from new

products. But how do businesses perform on these popular metrics? Exhibit 2.1 reveals the

results:

Average Business Top 25% Bottom 25%

% of sales from new products 16.3% 20.0 % 5.8 %

% net incremental sales 21.6 30.0 5.3

% of profits from new products 16.7 20.0 5.2

Overall, the average percentages of sales and profit are impressive for products launched within

the past three years. But most impressive are the results of the top 25 percent of respondents

that reported 20 percent of sales, 30 percent of net sales and 20 percent of profits come from

new products.

These percentages of sales, incremental sales and profits are defined as follows: the percentage

of the business entity’s annual sales revenues (i.e. net sales or the business's profits) that is

derived from new products introduced within the last three years.

Although these are popular metrics they are not necessarily the right metrics to gauge

performance or the only metrics to use. Relying only on the sales related metrics to evaluate

performance can create problems such as unnecessary product ‘churn’ in the product pipeline

which can, in turn, be costly to the business in the long run.


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2.2 SUCCESS, FAIL AND KILL RATES

Another key metric is the new product success rate: what proportion of projects launched

within the last three years become commercially successful (green), moderate commercial

successes (yellow) or commercial failures (red)?


Commercial Success Rate (Green) 42% 74.0% 10.6%

Moderate Commercial Success (Yellow) 35 19.6 45.7

Commercial Failures (Red) 23 6.4 43.7

The result is a success rate on average of 42 percent. Or, if you combine both levels of success

(green and yellow) an overall success rate of 77 percent. But note that there is a significant

difference between the top 25 percent of businesses that have an average success rate of 74

percent while the bottom 25 percent have only about a 11 percent success rate. The top 25

percent of respondents report a success rate that is seven times more successful. These are not

small differences and raise the question: what separates the best from the worst? And why do

the top businesses do so exceptionally well?

Exhibit 2.1: Percentage of Sales & Profits from New Products

20.0 %

30.0 %

20.0 %

16.7 %

21.6 %

16.3 %

5.2 %

5.3 %

5.8 %

0% 5% 10% 15% 20% 25% 30% 35%

% of profits from NPs

% net incremental

sales from NPs

% of sales from NPs

Percent of Business’s Sales, Incremental Sales & Profits

Coming from New Products Launched in Last 3 Years

Bottom 25% of

Businesses

Top 25% of

Businesses

Average

Business


18

The average values are shown in Exhibit 2.2, while the top 25 percent and bottom 25 percent of

businesses on this metric are shown in Exhibit 2.3.

Although the true product successes and failures are usually clear there are a large number of

projects that are rated as a moderate commercial success (yellow). This common approach,

used in the food industry, of splitting commercial success into two categories (clear success and

moderate success), does have some risks and care should be taken in defining the criteria for

each category to ensure that the organization is clearly measuring performance and recording

project outcomes correctly. As one senior sales executive explained “we know when we have a

clear winner or a clear loser but unfortunately a lot of our new product launches get classed as

moderate successes when actually they are failures and no one will admit it so we call it a

moderate success. But in reality the product did not meet volume or sales targets and hence

really should have been classified as a failure. The only true moderate successes we have are

products that are very new to the market and, as a result, have not yet had enough time to

assess whether it will be a success or failure with our customers”.

Exhibit 2.2: Project Success or Failure – The Average Business

Moderate

Commercial

Success 35%

Commercially

Successful 42%

Commercial

Failure 23%

Percentage of New Product Projects that were a

Commercial Success or Failure within the Past 3 Years


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2.3 ON SCHEDULE AND ON BUDGET

The foodservice industry is known for its tight timeline requirements and the need or ability to

react quickly to customer needs. Thus, another common performance measure is the proportion

of projects that meet their targeted launch dates on time and on budget.


Percent of projects on time 58% 79% 40%

Percent of projects on budget 69 90 51

On average, only 58 percent of projects are on schedule (42 percent missed their scheduled

launch date) and a considerable percentage (31 percent) are over budget (see Exhibit 2.4). This

raises concerns about scheduling, resource management, project management and

commitments to timelines. Admittedly, there is a small group of businesses doing much better

than these average businesses: 79 percent on schedule and 90 percent on budget. But the other

extreme is the bottom 25 percent, whose performance is significantly lower than the top 25

percent. The significant difference between the top 25 percent and bottom 25 percent indicates

that many firms have yet to achieve acceptable on time and on budget results, although a

handful of firms prove that this goal can be achieved (see Exhibit 2.5).

Exhibit 2.3: Success or Failure – Top 25% vs. Bottom 25%

6.4 %

19.6 %

74.0 %

43.7 %

45.7 %

10.6 %

0% 25% 50% 75% 100%

Commercial failures

Moderate commercial

success

Commercially

successful

Percentage of New Product Projects that are Commercial

Successes, Moderate Successes or Failures within the past 3 years

Bottom 25% of

Businesses

Top 25% of

Businesses


20

But how late is late? When a project is late to market how late is it as a percentage of its total

scheduled time to market? On average, when a project is late to market, it is behind schedule

by 28.6 percent, as noted in Exhibit 2.4. This implies that if a project is scheduled for 18 months

time-to-market, the typical “late project” gets there in 23.1 months – i.e. 5.1 months late.

The bottom 25 percent on this metric see their “late projects” miss the scheduled launch by 30

percent, while the best drive this down to 10 percent.

Exhibit 2.4: Projects On Schedule and On Budget

On

Budget 69%

Over

Budget 31%

Percent of Product Innovation

Projects on Budget

Percent of Product Innovation

Projects on Schedule

Behind Schedule

Launch 42%On Schedule

Launch 58%

Projects late (as a percentage of the scheduled project time late):

28.6% of Scheduled Time


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2.4 NEW PRODUCT PROJECTS MEETING OBJECTIVES

What proportion of product innovation projects meets their respective objectives? Management

measures the performance of new product projects on a number of objectives, for example

profits, sales, new incremental sales, distribution and market share. But just how do businesses

rate on these metrics? Exhibit 2.6 shows the proportion of projects meeting these project

targets. It also shows the results for the top 25 percent and bottom 25 percent of businesses on

these three metrics.

The performance results reflect the tough market environment within the foodservice’s industry

and are a cause for some concern. Companies on average are reporting that only about 50

percent of their projects meet these objectives. It also suggests that a sizable proportion of

projects (almost half) are failing to meet objectives. This result should be unacceptable for most

senior management teams, but consider the distribution of results: the top 25 percent of

businesses on these metrics are achieving better than 5 times the performance of the bottom 25

percent, suggesting that many businesses have a lot of room for improvement. Clearly the

winning companies are doing much better here and, over time, are outperforming their

competitors.

Exhibit 2.5: Projects On Schedule, On Budget – Top 25% vs. Bottom 25%

90.0 %

10.0 %

79.0 %

51.0 %

30.0 %

40.0 %

0% 25% 50% 75% 100%

% of projects on budget

Time late (as a % of schedule)

% of projects launched on schedule

Percentage of New Product Projects that

are Launched On Schedule and On Budget

Bottom 25% of

Businesses

Top 25% of

Businesses


22

2.5 BUSINESS ENTITY PERFORMANCE

There are many ways to measure a business’s performance at product innovation. These include

a number of qualitative metrics and other comparative measures that are best captured on 0-5

point scales.

Profitability of the product innovation program relative to spending on it, over the past three

years, is not strong with only 31.9 percent of companies indicating that they meet their

objectives or targets. Only 10.9 percent exceed expectations. These results confirm the tough

market environment that the industry experiences. Encouraging, however, is that about half the

companies are either meeting or exceeding their return expectations (see Exhibit 2.7). An

examination of a broader set of objectives, presented in Exhibit 2.8, also supports this finding.

The results:

1. Most businesses do keep score and measure their overall performance results for the

product innovation program.

2. Businesses see their new product efforts or innovation programs as moderately profitable

relative to how much they spend on them (mean rating: 2.7 out of 5). Only 20.9 percent see

their programs as exceeding objectives or targets.

3. On average, businesses find it slightly more difficult to meet their profit objectives (mean

rating: 2.6 out of 5). Only 21.9 percent of businesses exceeded profit objectives.

Exhibit 2.6: Projects Meeting Targets or Objectives (last calendar year)

88.0 %

88.5 %

88.7 %

84.4 %

45.8 %

50.9 %

52.2 %

52.4 %

58.9 %

8.2 %

8.6 %

12.7 %

14.5 %

15.6 %

0% 25% 50% 75% 100%

Market share objectives

Distribution objectives

Net incremental sales

objectives

Sales objectives

Profit objectives

Percent of Business’s New Product Projects Meeting Objectives

94.2%

Bottom 25% of Businesses

Top 25% of

Businesses

Average


23

4. Businesses also find it challenging to meet sales and volume objectives (each with a mean

rating of 2.6 out of 5). Only 19.8 percent of businesses were very satisfied with their ability

to exceed sales and volume objectives.

5. Distribution targets also score a mean rating of 2.6 with 18.9 percent of the business

exceeding targets.

A review of Exhibit 2.8 shows that the majority of the scores fall in the middle or to the left of

the chart, with the average business achieving a moderate-to-weak score on all performance

metrics with very little difference in results on the four metrics. The pressure for improved

performance and the challenge in trying to exceed targets is clearly reflected in these charts.

Exhibit 2.7: Profitability of Total Product Innovation Program

7.7 %

39.6 %

31.9 %

16.5 %

4.4 %

0%

10%

20%

30%

40%

50%

Fell Far Short ofObjectives/Targets

Fell Somewhat Shortof Objectives/Targets

MetObjectives/Targets

Somewhat ExceededObjectives/Targets

Far ExceededObjectives/Targets

Pe

rce

nta

ge o

f R

esp

on

de

nts

Profitability of Total Product Innovation Program

Relative to the Spending on it over the Past 3 Years


24

2.6 PERFORMANCE METRICS USED IN PRODUCT INNOVATION

What gets measured usually gets done. Metrics that are regularly measured and reported also

tend to shape what people try to improve upon. So, what types of performance metrics are

commonly employed in product innovation? We investigated the specific metrics employed in

product innovation management, not so much as a best practice (there are no ratings or scores

reported here), but as a way to gain insights into which metrics are the most popular.

Two types of metrics investigated are:

1. Metrics used to gauge how well the business’s total product innovation program effort

performs. For example, the percent of new products launched that were commercial

successes.

2. Metrics used to gauge how successful an individual new product project was. For

example, was project X a success or a failure?

Thus, one set of metrics is at the program or business unit level (Exhibit 2.9); the other is at the

project level (Exhibit 2.10). The results are self-evident.

Exhibit 2.8: Product Innovation Program Meets Objectives

8.1

37.9

32.2

20.7

1.2

8.8

42.9

28.6

17.6

2.2

8.8

45.1

26.4

17.6

2.2

10.8

35.1 35.1

18.9

0.00%

10%

20%

30%

40%

50%

Fell Far Short of

Objectives/Targets

Fell Somewhat Short

of Objectives/Targets

Met

Objectives/Targets

Somewhat Exceeded

Objectives/Targets

Far Exceeded

Objectives/Targets

Profit

Sales

Volume

Distribution

Pe

rce

nta

ge o

f R

esp

on

de

nts

Total Product Innovation Program Meet or

Exceeded Objectives Over the Past 3 yearsTotal Product Innovation Program Met or

Exceeded Objectives over the Past 3 years


25

Program (overall product innovation efforts) performance metrics:

Most businesses use multiple metrics (on average, companies use 2.5 different program

metrics). The most popular metrics used to gauge the entire product innovation efforts of the

business are listed in Exhibit 2.9. Sales related metrics are the most popular usually combined

with a profit metric.

Individual new product project performance metrics:

Most companies use multiple project performance metrics here as well (on average, companies

use three or more different metrics per business). The top four most popular metrics are, in

order of popularity, listed in Exhibit 2.10. As expected two of the top three are sales related.

In most cases, a time frame had been defined for the metrics investigated (i.e. new products

launched over the last one, two or three years). Often the definition of “what is a new product”

proved difficult or problematic, but in better practice firms this term had been precisely well

defined to enable the effective use of these metrics and to standardize the comparison of

results over time.

Exhibit 2.9: Top 4 Metrics Used to Measure Innovation Program Performance

28%

30%

46%

67%

0% 20% 40% 60% 80%


Net sales of new

products

Overall profits (annual)

generated by new

products


Percentage of business's

net sales generated by

new products


26

But words of caution: Although these are popular metrics, be aware that they are not

necessarily the right or universal metrics to gauge product innovation performance. Nor will a

single metric necessarily capture all facets of new product performance. Recall the comments of

the experienced sales executive (Section 2.1) who noted that “percentage of sales” can reward

or induce the wrong kind of behavior. He was not alone. We heard a number of knowledgeable

people suggesting caution in that new product metrics, as with all metrics, can cause or incent

the wrong kind of management actions. For example, performance measured strictly by

“percentage of sales from new products” will logically lead to:

a number of short-term, fast projects (and few longer term ones)

projects that generate sales but not necessarily profits

new products that could cannibalize existing products and create a lot of

unnecessary churn in the product line without added value.

Perhaps the over reliance on short-term sales numbers, quarter by quarter, is partly the reason

the industry has a shortage of projects that produce truly stellar results and instead rely on a

large number of smaller hits in the marketplace.

Exhibit 2.10: Measures Used for Project Success or Failure - Top 4

36%

36%

43%

58%

0% 20% 40% 60% 80%


Sales vs. forecasted

sales

Profitability (e.g. NPV

and gross margins or

operating profits)

Net incremental

sales

Meeting customer

satisfaction


27

2.7 DEFINING AND IDENTIFYING THE TOP PERFORMERS

Which businesses are the best or top performers? And which are the worst performers? These

are important questions, and lie at the basis of a valid benchmarking study. By comparing the

product innovation practices used by Best versus Worst Performers, one can zero in on the best

practices. For example, while many of the practices and methods we observe and report in this

study may seem intuitively obvious as “best practices” (such as building in good governance

practices, or adopting a solid new product development system) unless these practices can be

proven to significantly correlate with performance, they cannot be considered as best practices.

Moreover, just because someone in the company claims that some method or approach is a

best practice, does not necessarily make it so. Unless it can be proven to positively impact

performance, it cannot be labeled as a best practice. Thus, identifying the Best Performing

businesses in product development, and then comparing what they do versus the Worst

Performers, is an important step to identifying and validating best practices within the

foodservice industry.

Therefore, the performance results were explored to determine if in fact best and worst

performing companies could be identified and separated. Two different metric groupings were

identified that did indeed separate the best and worst performing companies at a statistically

significant level. The statistically strongest groupings were based on the project’s commercial

success or commercial failure in the marketplace (a green success rating). A secondary grouping

was also identified by combining the overall measures of program metrics (success relative to

spending, sales, profit, volume and distribution objectives). Although both groupings produced

significant results, the commercial success (green) measure proved to be the most powerful and

is the basis for the results reported in this report. However, as would be expected, many of the

same traits were identified by both groupings.

The “best” performers for this composite had consistently strong performance across all

questions, and the “worst” performers for this composite had consistently weak performance in

the three areas. The “middle” group had any other combination of scores or the middle range.

Hence, a new composite variable was created that reflects the three groups’ strength on this

metric.

2.8 HOW THE BEST VERSUS WORST BUSINESSES FARE IN TERMS OF PERFORMANCE METRICS

How did the Best and Worst Performers do in terms of the program and project performance

metrics that were measured? And are they really the Best and Worst businesses according to

these metrics? Let’s look now at how well or poorly they really did in new product development

– a validation (see Exhibit 2.11 and 2.12).


28

The results are overwhelming: clearly a powerful set of Best Performers that can readily be

compared to a weak set of Worst Performers has been identified. There are 10 performance

metrics in total (Exhibit 2.11 and 2.12). Here we see that on all 10 metrics, the Best Performers

score significantly higher and stronger than the Worst.

For example, the Best versus the Worst Performing businesses in Exhibit 2.11 and 2.12:

Have seven times higher new product success rates (74.0 percent vs. 10.6 percent) and

much lower failure rates (6.4 percent vs. 43.7 percent)

Have 20 percent higher proportion of projects on time (62 percent vs. 51.6 percent) and on

budget (72.8 percent versus 59.2 percent)

Have more than twice as many projects that meet their profit objectives (79.4 percent vs.

36.4 percent)

Have 2.5 times as many projects that meet sales objectives (74.1 percent vs. 30.6 percent)

Have about 2.5 times as many projects meeting their net sales and distribution objectives,

and

Have almost 3.5 times as many projects meeting the market share objectives.

Exhibit 2.11: Performance Metrics Results – The Best vs. Worst Performers

72.8 %

62.0 %

6.4 %

19.6 %

74.0 %

71.0 %

58.7 %

21.8 %

36.1 %

42.1 %

59.2 %

51.6

43.7 %

45.7 %

10.6 %

0% 25% 50% 75% 100%

Projects developed on budget

Projects developed on schedule

Commercial failures

Moderate commercial success

Commercially successful

Percentage of New Product Projects that are Commercial

Successes, Moderate Successes or Failures within the past 3 years

Worst Performers

Middle Performers

Best Performers


29

At the product innovation program level the results are also impressive for the Best Performers.

In Exhibit 2.13 the results are explored for the total product innovation program over a three

year period. The results indicate that the Best Performers are achieving better results across all

five performance metrics. For example:

Best Performers are achieving better results for their total product innovation program

relative to spending on it than Worst Performers (mean rating on a 1-5 scale: 3.1 vs. 2.2)

Best Performers are also achieving better profit, sales, volume and distribution metrics.

Exhibit 2.12: Projects Meeting Objectives - Performance Metrics

Best vs. Worst Performers

75.0 %

74.6 %

74.6 %

74.1 %

79.4 %

39.7 %

48.6 %

46.5 %

50.8 %

55.0 %

22.1 %

29.2 %

25.9 %

30.6 %

36.4 %

0% 25% 50% 75% 100%

Met market share objective

Met distribution objective

Met net incremental sales objective

Met sales objective

Met profit objective

Percentage of Company’s Projects Meeting

Objectives Within Last Calendar Year

Worst Performers Middle Performers Best Performers


30

2.9 TYPES OF NEW PRODUCT DEVELOPED

What is the right portfolio mix in terms of projects? This question deservingly generates quite a

bit of debate with executive teams. Common questions include: how do we optimize the

portfolio mix? or, what is the right split between high and low risk projects or short term and

medium term? or, do we have enough high value projects? The answer to these questions

should be reflected in the breakdown of product development or project types undertaken –

where the funds are invested. By default, the projects that are underway and funded are your

current and active portfolio and are a reflection of current managements’ view of their

innovation strategy and a reflection of their risk profile. Additionally, the breakdown of new

products and projects by innovation type is a predictor of the business’s product innovation

performance and acts as an indicator of what types of results you should be able to expect in

the future. For example, too much emphasis on short term, low risk small projects might point

to an under-achieving business or a business where the actual spending reflects a very risk

adverse culture or one focused on the short term. Exhibit 2.14 shows the breakdown for the

average business. Note that the dominant top line categories are:

Product line extensions (23.3 percent); followed by

New products to the firm (16.9 percent); and then

Major product improvements (12.3 percent).

Exhibit 2.13: Product Innovation Program – Met or Exceed Objectives (past 3 years)

3.2

3.1

3.1

3.1

3.3

2.5

2.6

2.6

2.7

2.7

2.2

2.0

2.1

2.2

2.1

1 2 3 4 5

Distribution objectives

Volume (or units sold) objectives

Sales objectives

Profit objectives

Overall profitability of product

innovation program relative to spending

Projects Meeting or Exceeding Business Objectives or Targets


Fell far

short

Far

exceeded


31

By contrast, new-to-the-world products – true innovations – represent a smaller minority of new

products at only 8 percent.

Bottom line projects represent 23.9 percent of the investment spent on R&D. Bottom line

projects are the grouping of projects that are typically defined as internal cost reduction,

regulatory, quality and supply chain projects. These projects are often targeted as margin

improvements or ‘must do’ projects that will not usually impact the top line growth mandate.

Interestingly, there was no impact on performance between the Best and Worst Performers

based on how resources were allocated to the different project types. Both groups reflect

basically the same allocations and only have minor differences from the allocations reflected in

Exhibit 2.14.

Custom vs. Non-custom: Perhaps more prevalent to the foodservice industry than some other

industries is that some companies are heavily focused on developing and selling custom

products while other companies are more focused on non-custom or branded products for their

respective customers. A common perception is that there are major differences in the types of

projects that each group undertakes in their product innovation pipelines to satisfy each market.

This assumption was explored to see if indeed that was true or not and to confirm how each

group’s respective pipelines differ.

Exhibit 2:14: New Product Project Types – All Companies

Top Line Projects

New

Exploratory

Technology

New-to-the-

World

New Product -

New-to-the-

Firm

Product Line

Extension

Major Product

Improvement

Incremental

Improvement/

Changes

6.17% 7.99% 16.92% 23.25% 12.25% 9.40%

Bottom Line Projects

Internal Cost Reduction/

ImprovementsRegulatory/Quality Supply Chain Other

10.79% 6.48% 5.70% 0.97%


32

The custom product category is defined as companies that target at least 75 percent of their

product innovation efforts toward products customized for customers. Non-custom was defined

as companies that target at least 75 percent of their product development efforts toward

market launches for broader market needs as opposed to a single customer need. The results

are presented in Exhibit 2.15. Interestingly, there are fewer differences that exist between the

two groups than perhaps originally thought. The two main differences, as would be expected,

are that non-custom product innovation pipelines have more projects that can be described as

‘new-to-world’ while custom innovation pipelines had a heavier focus on incremental

improvements. Both groups spend about the same on bottom line projects.

Exhibit 2:15: New Product Project Types – Custom vs. Non-Custom

AllCustom Products

Only

Non-Custom

Products Only

New Exploratory Technology 6.2% 5.2% 7.1%

New-to-the-World 8.0% 5.6% 10.9%

New Product - New-to-the-Firm 16.9% 17.1% 15.3%

Product Line Extension 23.3% 20.9% 21.4%

Major Product Improvement 12.3% 11.4% 13.6%

Incremental Improvements/

Changes9.4% 13.1% 7.6%

Bottom Line Projects 23.9% 26.7% 24.1%

Significantly different for Custom and Non-Custom Products


33

3. Idea-to-Launch Product Innovation Process and

Practices

The product innovation performance of foodservice companies highlights the tough market

environment. However there is a group of best performing companies that is able to execute

product innovation better than other organizations. This section investigates the process that

foodservice companies use to drive new product projects from Idea through to Launch. Specific

topics in this section include:

1. The nature of the business’s idea-to-launch process

2. Practices embedded within this process

3. The role of governance (decision-making).

3.1 A SYSTEMATIC IDEA-TO-LAUNCH PROCESS

A product innovation process is a “game plan” or “playbook” to guide a new product

development project from idea to launch. The term “product innovation process” means more

than just a flow-chart; the term includes all process elements (the stages, stage activities,

decision points, deliverables and decision criteria) that constitute a well-defined product

innovation process. For more than twenty years, organizations have been urged to design and

implement such a product innovation process, and they appear to have heeded the experts.

Indeed, having a well-defined product innovation process is the strongest practice observed in

the sample of foodservice companies. Consider now some of the details and practices

associated with this practice (Exhibits 3.1 and 3.2):

1. A clearly defined formal product innovation process: The process that guides projects

from idea through to launch is standardized and documented with defined stages and

Go/No Go decision points (gates). As noted, businesses rate very high here, with 75

percent having such a product innovation process, and only 25 percent scoring poorly

(Exhibit 3.1). The Best Performers use the process to a greater extent than the Worst

Performers (3.8 vs. 3.3 out of 5).

2. Clearly defined stages: A set of prescribed activities that are undertaken in each clearly

defined stage, for example Business Feasibility or Validation stages. Here too companies

rate well, the majority of companies reported using a series of defined stages (73

percent). The Best Performers score 3.8 out of 5 here compared to only 2.9 for the

Worst Performers.

3. Activities defined for each stage: The activities are listed for each stage. For example

the activities in the Validation stage might be product testing, formula/recipe finalized

and trails. Again the majority of companies have defined activities for each stage (67

percent). The Best Performers score 3.5 out of 5 here compared to 2.9 for the Worst

Performers.


34

4. Defined Go/No Go decision points (or gate): Each stage in the process is followed by a

Go/No Go decision point or gate. These decision points require management to meet

with project teams to review the project, evaluate its merits, and make Go/No Go and

resourcing decisions. The majority of companies reported having gates (71 percent)

while 29 percent do not. The Best Performers score 3.6 out of 5 here compared to 3.0

for the Worst Performers. Having well defined decision points (gates) was a significant

discriminator between the Best and Worst Performers.

5. Defined Go/No Go decision criteria at gates: Go/Kill criteria are considered important

to better evaluate the merits of a project, and to assist management in making critical

Go/No Go decisions. In spite of the logic of having consistent gate criteria, the lack of

such criteria is fairly widespread (44 percent of businesses lack these criteria; only 33

percent claim to have very well-defined gate criteria). Indeed this is a somewhat weaker

facet of business’s product innovation processes (a mediocre mean rating score of 2.9

out of 5). Without clear decision criteria it is hard to separate the winning projects from

the less attractive ones.

6. A flexible and scalable process: Is the product innovation process a flexible and scalable

one depending on the size, type, complexity and risk of the project? Can stages be

collapsed, decision points deleted or activities omitted or combined as needed? Or is it a

rigid, one-size-fits-all process, failing to recognize the difference between high risk and

low risk projects? Over two thirds of the businesses in this study (73 percent) view their

process as somewhat flexible, adaptable and scalable. (The Best Performers score of 3.7

out of 5 compared to only 3.0 for Worst Performers). Process flexibility was identified as

one of the key differences between Best and Worst Performers.

7. Whether the process is really used: The true test of a process is whether or not it is

really used; or is it merely window-dressing in the business (i.e. a paper process only).

There is clear evidence that some businesses have a process that is consistently used

and understood by the organization with 73 percent indicating a moderate or strong use

of their product innovation process. Somewhat disturbing is that 29 percent claim that

their process is not really used.

8. An enabling process for the project team: Another test of one’s product innovation

process is whether or not it is a facilitating process that helps project teams get their

products to market (rather than a bureaucratic process that stands in the way). This is

one of the weakest elements of the product innovation process with 37 percent of

companies scoring poorly here (44 percent of businesses reporting that it is strongly

enabled teams). Best Performers, however did outscore the Worst Performers 3.2 vs.

2.8 out of 5.


35

3.2 WHAT SEPARATES WINNERS FROM LOSERS

For the majority of businesses in foodservice, the product innovation process is in moderately

good shape. However, Best Performers are more efficient and effective at executing their

product innovation process than Worst Performers are. But what do they do differently to

achieve consistently better success rates?

Merely having a product innovation process in place is a good start but it is not enough to

positively influence performance. The Best Performers go on to further enhance their process to

ensure it is working effectively and delivering the desired results. Unfortunately, the poorer

performers have still not adopted this best practice as the results in Exhibit 3.2 clearly

demonstrate.

A closer look at the ingredients of such a process confirms the conclusion above: that having a

product innovation process is the starting point to separate the Best from the Worst Performers.

Having all of the elements of this process in place is very evident in top performing businesses.

Note that Best Performing businesses rate higher across the board on almost all the elements of

a systematic product innovation process in Exhibit 3.2 compared to the Worst Performers.

Exhibit 3.1: Systematic Idea-to-Launch Process in Place

25% 27%32% 29%

44%

27% 29%37%

20% 18%

24%22%

22%

24% 24%

19%

56% 55%

43%49%

33%

49% 48% 44%

0%

20%

40%

60%

80%

100%

Use formal

NPD

process

Clearly

defined

stages

With

identified

activities

Defined

Go/No Go

decision

points

Go/No Go

criteria

defined

Flexible,

scalable

process

NPD

process

used and

understood

An enabling

process for

project

teams

Practice is Strongly Applied (Rating of 4 to 5)

Practice is Moderately Applied (Rating of 3)

Practice is Weakly Applied (Rating 1 to 2)

Pe

rce

nta

ge

of R

esp

on

de

nts


36

Best Performers overwhelmingly have a product innovation process in place, along with most of

its elements. Thus having a product innovation process, along with the items or ingredients

listed in Exhibit 3.2, is highlighted as a best practice in this study. So, if your business lacks a solid

process, or it is only high-level, it may be time to undertake a refresh to make it truly best-in-

class, complete with these six items observed in our Best businesses:

1. A clearly defined idea-to-launch product innovation process: This includes clearly

designated stages – a series of defined stages, for example: exploration, business

feasibility, development, validation and launch; with activities defined for each stage

(i.e. outlines of what happens in each stage and includes guidelines on the “how to’s”).

2. A visible, documented process: A mapped-out, visible and well-documented process,

much like a “play book” that provides genuine guidance to project leaders and teams.

3. An enabling process for project teams: A facilitating process, that helps project teams

get their products to market.

4. An adaptable and scalable process: A flexible process that can be easily scaled to the

complexity, size and risk of the project.

5. A process that is really used: An effective implementation and ability to sustain the

process is essential: getting senior management buy-in and commitment (i.e. they really

Exhibit 3.2: Impact of Having a Systematic Product Innovation Process in Place

3.2

3.4

3.7

3.1

3.6

3.5

3.8

3.8

3.4

3.5

3.2

3.1

3.4

3.3

3.6

3.7

2.8

3.0

3.0

2.6

3.0

2.9

2.9

3.3

1 2 3 4 5

Enabling process for teams

Process used and understood

Flexible, scalable process

Go/No Go criteria defined

Defined Go/No Go decision points

With identified activities

Clearly defined stages

Use formal NPD Process

To what extent each NPD process element exists


Not at

all

Very

much so

Significant differences between Worst and Best performers


37

are walking the talk); user-friendly documentation; training of all players – teams, team

leaders, and gatekeepers; ensuring all projects are in the process; a Process Manager in

place; a process database, IT support and performance metrics all contribute to ensuring

the process is enabling people and that they actually use it.

6. Defined Go/No Go criteria at gates: The criteria that projects will be judged on to make

Go/Kill and prioritization decisions.

Note that merely having a formal and documented product innovation process is only the first

step. It is how the process, its activities and recommended practices are implemented that

makes the difference. Some of these impacts are presented later in this chapter.

3.3 QUALITY OF EXECUTION FOR KEY PROCESS ACTIVITIES

A well-defined product innovation process has been identified as a best practice. So what

happens in each stage and how well these activities are executed should also impact success. To

explore this, companies were asked to rate how well each stage (set of activities) is handled for

a typical project. Exhibit 3.3 provides a brief description of each of the typical five stages plus

the post launch review. A more detailed description of the process is provided in Appendix A. In

Exhibit 3.4 the results are provided.

Quality of execution is a key driver of success. Most companies acknowledged that they do have

some sort of process that follows the typical flow common to the industry. So the question now

becomes one of quality of execution. Are there differences in how the activities are applied in

different parts of the process as the project migrates from an idea through to a commercial

launch stage and beyond? And does this quality of execution of the activities occurring within

each stage impact success? As illustrated in Exhibit 3.4, most companies do attempt to do the

activities in each stage. Overall the average results are mediocre, reflecting a 3 out 5 score on

quality of execution.


38

Exhibit 3.3: Typical Five Stage Product Innovation Process

Exploration Stage

Generating and assessing an idea. Typical preliminary assessment activities include: preliminary

product (e.g. qualitative description of the intended product), market (e.g. outlining size and

attractiveness of the market), and technical (e.g. technical capabilities, risks, vendors and supply

chain) assessment, as well as a preliminary business case.

Business Feasibility Stage

Conducting a detailed design and feasibility analysis of the product concept. Typical detailed

assessment activities include: detailed product (e.g. design, formula/recipe, packaging

requirements, food safety, regulatory and IP requirements), market (e.g. voice of customer

research) and technical (e.g. build or buy options, supply chain, sourcing and capital)

assessment, as well as a detailed business case.

Development Stage

Conducting customer acceptance testing, final product validation and assessing supply chain and

forecast accuracy. Typical activities include: validating and finalizing product (e.g. formula/recipe

refinement), market/sales plan (e.g. finalizing details of packaging and labeling, distribution

plans) and technical plans (e.g. manufacturing plans, trials, pilot productions etc.), as well as an

updated business case.

Validation Stage

Conducting customer acceptance testing, final product validation and assessing supply chain and

forecast accuracy. Typical activities include: validating and finalizing product (e.g. formula/recipe

refinement), market/sales plan (e.g. finalizing details of packaging and labeling, distribution

plans) and technical plans (e.g. manufacturing plans, trials, pilot productions etc.), as well as an

updated business case.

Launch Stage

Launching the product. Typical activities include: Executing market launch and sales plans,

production distribution plans, technical plans and supply chain plans.

Post Launch Review

The review and evaluation of the project sometime after launch; assessment of the business

performance results (sales, volume, profit); lessons learned; plans adjusted as needed and

formal termination of the project.


39

But there are significant differences in how well each activity is actually conducted. Do the

activities that occur within each stage and the organization’s ability to execute these activities

separate the Best from Worst Performers? The results are overwhelming in support.

Although on average companies did not excel at these key activities within each stage, the best

performing companies were consistently able to do better quality work. They executed better

(see Exhibit 3.5). In fact, there are significant differences between Best and Worst Performers

for all the stages except Development. In other words these Best Performing organizations were

able to conduct better quality of execution to derive better quality information at each stage

throughout the process.

Doing solid upfront activities in the pre-development stages does have a clear impact on

performance results. It is in these early stages where a new product idea is fleshed out into a

clear product definition or concept; where the magnitude of the opportunity is assessed;

detailed assessments activities are conducted; the business case is constructed and the action

plan for the rest of the project is planned out.

In other words, those companies that are able to conduct better quality of execution to obtain

better quality of information before the actual development work begins, do in fact obtain

higher success rates. They take the steps necessary to execute the early stages well, with a clear

emphasis on up-front homework (both customer and technical assessments), versus rushing

Exhibit 3.4: Product Innovation Process - Stages

3.1 3.2

3.6

3.23.4

2.5

0

1

2

3

4

5

Explorationstage

BusinessFeasibility

stage

Developmentstage

Validationstage

Launch stage Post LaunchReview

Me

an

Does not

happen

Executed

extremely

well


40

prematurely into the Development stage of the project. This is probably one of the key reasons

why these better performing companies achieve the performance results highlighted in the

previous chapter.

Post development or the back end of the process stages are also executed better by the Best

Performers than the Worst Performers. Once a project moves out of the Development stage,

Best Performers do a better job of ensuring that the validation activities (e.g. customer

acceptance testing, product validation, supply chain and forecasts) and the launch phase are

properly executed.

Process Adaptation: To be able to successfully execute product innovation activities repeatedly,

project-by-project, organizations have also ensured that the processes they use are matched to

their needs. They have adapted the process to meet their needs in foodservice (see Exhibit 3.6).

This was identified as another key determinant of success. The better performing companies

have taken the time to ensure the process reflects their development needs.

Exhibit 3.5: Product Innovation Process Stages – Best vs. Worst Performers

2.9

3.6

3.5

3.6

3.6

3.4

2.4

3.6

3.4

3.7

3.2

3.0

2.2

2.8

2.7

3.4

2.8

2.7

1 2 3 4 5

Post Launch Review

Launch stage

Validation stage

Development stage

Business Feasibility stage

Exploration stage

Impact of Each Product Innovation Process Stage


Very

poorly

executed

Executed

extremely

well



41

Many companies have also created several processes to reflect the different types of project

complexity and risk. For example a 5-stage process model for complex projects and a more

streamlined process (3 or 2 stage model) for lower risk projects such as enhancements,

modifications and extensions. One size does not fit all!

These different processes help the organization to ensure that their processes are adapted and

flexible and that the activities occurring within each stage reflect the risks. In the current sample

46 percent of companies reported using different processes for different project complexities. A

good example of this lighter product innovation “Stage-Gate Express” process can be found in

Appendix A.

3.4 GATEKEEPING GOVERNANCE PRACTICES

The gates in a well-defined idea-to-launch process are the Go/No Go decision points where the

latest information on a project is reviewed to ensure that only the right projects move forward.

Effective gates are central to the success of a fast-paced, product innovation process – “as the

gates go so goes the process”. So how well are gatekeeping best practices applied and what is

the impact on project success?

Exhibit 3.6: Process Adapted to Meet Your Needs

3.6

3.2

2.8

1 2 3 4 5

Process adapted to

Foodservice

Extent of Adapting Process to Foodservices Needs


Not at

all

Very

much so



42

First let’s look at the use of gatekeepers (decision makers) in general. Sometimes it is unclear

just who should undertake project reviews and whose signatures are needed for a project to

proceed. The locus of decision-making – the people who make the Go/No Go decisions at gates

– is also an important feature of many firms’ product innovation processes. In Exhibit 3.7 most

companies have clearly identified gatekeepers or decision makers. In some organizations these

decision makers remain the same throughout the process while others use more senior or

higher level decision makers for later gates that require more resources and use the lower level

gatekeepers for the earlier gates.

Next, defined Go/No Go criteria are considered important to better evaluate the merits of

projects, and to assist management in making Go/No Go decisions. In spite of the logic of having

such gate criteria that are spelled out for each gate (written down and visible to everyone), the

lack of such criteria is fairly widespread amongst the poorer performing organizations (2.6 out of

5 compared to 3.1 for best performers). Thus, Best Performers were more likely to have clear

Go/No Go criteria than the Worst Performers.

Finally, for gatekeepers to be able to make good decisions and apply decision criteria, it is

helpful to have the right information available to aid in making these decisions. Best Performers

tend to have deliverables clearly defined for each gate. A standard list of items that the project

team is expected to deliver to each gate in the process (their “deliverables”). This is another key

discriminator separating the Best and Worst Performers.

In summary, best-in-class product innovation processes have clearly designated gatekeepers

with clear Go/No Go decision criteria and predefined deliverables identified.

Exhibit 3.7: Gatekeeping/Governance Approaches

3.3

3.1

3.5

3.2

3.1

3.5

2.5

2.6

3.0

1 2 3 4 5

Defined gate deliverables

Defined Go/No Go criteria

Gatekeepers are defined

Presence of Each Process Element


Not at

all

Very

Much So



43

Having the decision structure (gates) in place is in itself, not enough however. It is also

important to ensure that these meetings are effective: that the meetings are held; that the right

people attend; that the discussion and decisions are of high quality and that the decisions are

actually made. If the meetings are well run and are producing good quality decisions, then the

people will see these meetings as a productive and efficient way to handle this type of decision-

making. So how does our sample of companies measure up? Interestingly, most organizations

indicate that this is an area that could be improved upon. However both the moderate and best

performers were well ahead of the poor performers in how they practice the gate principles (the

results are illustrated in Exhibit 3.8):

1. Gatekeepers attend the meetings: All of the key decision makers invited to participate as

gatekeepers attend the gate meeting. There are no cancellations, if at all possible, and when

a cancellation does occur by one individual the meeting still goes ahead.

2. Effective gate meetings: The meetings themselves are managed effectively. Agendas are

distributed in advance, meetings start and end on time, the agenda is followed and a record

of all decisions is kept. In other words good meeting protocols are developed and followed.

3. High quality contribution: Each gatekeeper makes good quality contributions. In order for

this to occur, each gatekeeper comes prepared for the meeting and has pre-read the project

materials. The questions are insightful and helpful to understanding the risk associated with

the project.

4. Quality/Objective decisions: A high quality approach to decision-making is used. Decisions

are fact-based and objective in nature.

5. Decisions are actually made: Decisions are made at each gate meeting. Either a

Go/Kill/Hold/Recycle decision, including approval of the action plan for the next stage of

work and approval of the resources and date for the next meeting. (Note this was the

weakest area for the poor performers).

6. Gatekeepers support the decision: Each gatekeeper visibly supports the decision made at

the gate meeting (including resources) in the weeks or months after the meeting.


44

3 .5 QUALITY OF YOUR GATE DELIVERABLES

To support effective gatekeeping practices, the quality of deliverables needs to be high enough

so that the decision makers can, in fact, make the decisions that are being asked of them. So,

best practices companies also have standards and expectations around the gate deliverables.

Similar to our discussion above on gate principles both the moderate and best performers tend

to score in the mid-range here, although, it has been acknowledged that this is an area that they

are constantly trying to improve. Not surprising however, the poor performers struggle with

gate deliverables. In Exhibit 3.9 three key practices are profiled.

1. Gate deliverables are complete: The agreed-upon deliverables are completed by the

team. The plan that was approved at the previous gate and the corresponding activities

and deliverables in that plan have been completed. Best Performers significantly

outperformed the Worst Performers in this category 3.2 vs. 2.6 out of 5).

2. Deliverables are distributed on time: All agreed-upon deliverables are distributed to the

gatekeepers on time. Hence the deliverables are received on time, reviewed for

completeness and distributed to the gatekeepers per the guidelines in the product

innovation process.

3.4

3.3

3.3

3.3

3.5

3.1

3.4

3.1

3.1

3.0

3.2

3.2

2.7

2.4

2.8

2.7

2.4

2.8

1 2 3 4 5

Gatekeepers support decision

Decisions are actually made

Quality/objective decisions

High quality contributions

Effective gate meetings

Gatekeepers attend meetings

How Effective is Each Gate Principle


Exhibit 3.8: How Effective are the Gates

Not at

all

Very

much so



45

3. Business case is of high quality: The business case and/or executive summary that are

submitted to the gatekeepers are of high quality. That is, they are complete, include

accurate information, add value, and focus on the critical issues. This is also a key

discriminator between Best and Worst Performers (3.3. vs. 2.7 out of 5).

In summary, an important part of a well-constructed product innovation process is the gates or

Go/No Go decision points. At gates, management meets with the project team to review the

project, evaluate its merits, and make Go/No Go and resourcing decisions. What seems to

separate the Best Performers is the ability to have, on a repeated bases, these demanding

Go/No Go decision points in the process where the hard choices are made, and projects really

do get killed. They have the protocols and best practices built into their process and have the

discipline to follow it. Some businesses claim to have gates in their processes, but a closer

inspection reveals that these are largely “project review points” or “milestone reviews” with no

tough decisions – projects rarely are killed and a lot of time is spent on discussing how to “fix”

the project.

Exhibit 3.9: Gate Deliverables

3.3

2.9

3.2

3.3

3.1

3.2

2.7

2.8

2.6

1 2 3 4 5

Business case is high quality

Deliverables are distributed on

time

Deliverables are complete

Quality of Gate Deliverables


Not at

all

Very

Much So



46

3.6 IMPROVING YOUR GATE PRACTICES

As the gates go so goes the process. Ensuring that your gatekeeping process is working well will

have a strong impact on performance. If your company needs to improve its gate practices with

respect to product innovation, a number of easily identifiable symptoms will be evident.

Generally, lack of alignment, poor cooperation across functions, meetings that do not seem to

be productive and unhealthy competition across groups and/or business units are early warning

signals. The most tell-tale sign is a lack of clarity and transparency about the direction of your

business’s R&D program or total new product efforts.2

Other common warning signs that you may have poor governance practices are:

1. Inefficiencies occur due to duplication of effort: Without good co-ordination and

approval, your projects and project teams are very often working on similar projects, or

even worse, the same project, without realizing it. Oversight of the innovation pipeline

helps to ensure that different parts of your company (often with good intentions) are

not duplicating each other’s efforts.

2. Decision making is not clear and is lacking in accountability: Who is responsible for a

project and how an approval is gained should not be guesswork or the result of hallway

lobbying efforts. As good projects surface in your business, a clear path should exist to

secure timely approvals. For this to happen, clear accountability and specification of

who should be making these types of decisions is needed.

3. The right decisions are not being made: The information to make effective investment or

Go/No Go decisions is often missing or not available. A common symptom here is the

uneasy feeling that your development pipeline contains too many projects that should

be killed, and that it lacks the type of projects needed to meet your business goals.

4. Resource deployment is not clearly aligned with your business’s strategy: Although your

people are working hard and have a full plate of projects to work on, there is no

assurance that these efforts support the strategic direction of your business. This is

likely the result of weak guidelines that lack clear decision criteria.

5. Frustration over the value of the innovation pipeline: Here a common symptom is the

feeling that, if all projects in your pipeline were completed, they would not meet desired

targets. It is probably full of time-consuming, yet low value projects. Or, worse yet, there

are no realistic valuations on projects. Hence there is no real control and prioritization.

6. Business units are not following a governance process to manage innovation: The

problem here is that each business unit spends R&D resources or consumes corporate

R&D budgets, but does not utilize a proper and standard approach to selecting and

funding projects; or they have no clearly defined innovation strategy. Without this type

of oversight, it is very hard to have confidence in the business unit’s ability to deliver

results against their strategic plans.

7. Decisions are not timely: Your competitors always seem to be ahead of you and, as a

result, your project teams always seem to be racing to catch up. With a poorly managed

innovation strategy, organizations do not fund their strategic buckets properly. Instead,

they are busy supporting short-term market requests from the sales teams. Hence, no


47

balance exists between incremental product development projects and longer term,

more strategic, major projects.

8. Internal politics play too large of a role: We have all been there. More time is spent

lobbying than actually doing real work. With no clear definition of roles and

responsibilities, your people learn how to work the system to get things done. So a large

amount of their time is spent lobbying to get or keep their budgets and people.

9. A lack of visibility regarding decision making: No one can really explain how to get

approvals or how past projects were approved. Good projects lie fallow, while others

seem to have a life of their own.

10. Frustration around the level of bureaucracy: Your people’s frustration with the level and

degree of bureaucracy is often a warning sign that existing polices and supporting

documentation requirements are actually counterproductive. Stifling innovation with

too much bureaucracy is very easy, particularly in a large organization. While some

policies and procedures are needed, companies today are too lean to support

unnecessary work.


48

4. The Importance of Collaboration: Manufacturers

and Operators

This section addresses the role of “collaboration”. After all, product innovation – its success or

failure – seems to be very much within the hands of the people who work on or lead project

teams, and their management. Increasingly within the foodservice industry, the need for rapid

innovation by the operators has created an opportunity for the manufacturers to work within a

collaborative product innovation framework. In this study, collaboration has been defined as the

relationship between manufacturers and operators as it relates to product innovation.

4.1 THE IMPORTANCE AND IMPACT OF COLLABORATION

The importance of effective collaboration to successful product innovation is clearly accepted

within the industry with 89.5 percent of both manufacturers and operators rating it as ‘very’ or

‘very much so’ (4 or 5 on the 5 point scale). Only a very small minority group do not believe that

collaboration is important for their success in product innovation. See Exhibit 4.1.

Exhibit 4.1: Importance of Effective Collaboration to Success in Product Innovation

0.0 %

5.3 % 5.3 %

17.9 %

71.6 %

2.6 % 2.6 %5.3 %

31.6 %

57.9 %

0%

10%

20%

30%

40%

50%

60%

70%

80%

Not at all 2 3 4 Very much so

Manufacturer Operator

Pe

rce

nta

ge

of

Re

spo

nd

en

ts

How Important is Successful Collaboration Efforts in Product Innovation


49

Exhibit 4.2 supports the view that the industry experiences a wide range of results however, not

all collaboration efforts are successful. Operators report a much higher degree of success than

do the manufacturers. There is also a strong relationship to successful innovation in projects

that had a high degree of collaboration with customers than for projects that had no customer

collaboration (see Exhibit 4.3).

In Exhibit 4.4 both the worst and best performing manufacturers rate the importance of

collaboration very highly (4.5 on a 5 point scale). Interestingly, both the worst and the best

performing manufacturers recognize the importance of collaboration with operators and there

is no difference in their perception of this. So what does separate these two groups of

manufacturers and their respective performance is in how successful their collaboration efforts

have been over the past two years with operators. Here there is a significant difference, with the

Best Performers clearly indicating they have been more successful at collaborating with

operators and, as a result, are achieving higher success rates. This is supported by the fact that

Best Performers’ product innovation projects that had higher degrees of collaboration were

more successful (4.4 vs. 3.8 on a 5 point scale).

Exhibit 4.2: Success of Collaboration Efforts in Product Innovation

1.1 %

22.3 %

30.9 %

36.2 %

9.6 %

4.0 %

6.7 %

25.3 %

42.7 %

21.3 %

0%

10%

20%

30%

40%

50%



Pe

rce

nta

ge

of

Re

spo

nd

en

ts

How Successful Have Collaboration Efforts in Product Innovation Been (Past 2 Years)


50

In summary:

Both operators and manufacturers believe that collaboration is very important for product

innovation.

Best performing manufacturers are more successful at collaboration with operators.

Innovation projects that have a high degree of collaboration efforts are more successful.

Collaboration, in of itself, does not guarantee higher success rates, but the odds improve.

Exhibit 4.3: High Degree of Collaboration Achieved Higher Success Levels

0.0 %

5.8 %

14.9 %

28.7 %

50.6 %

4.0 %

8.0 %

24.0 %

36.0 %

28.0 %

0%

10%

20%

30%

40%

50%

60%



Pe

rce

nta

ge

of

Re

spo

nd

en

ts

Projects with a High Degree of Collaboration with Customers Achieved Higher Success Levels

than Projects Without Collaboration (Past 2 Years)


51

4.4

3.7

4.5

3.8

3.0

4.5

1 2 3 4 5

Projects with high degree of

collaboration achieved higher

success levels

Successful product innovation

collaboration

Importance of effective

collaboration

Impact of Collaborating with Customers for Product Innovation

Worst Performers Best Performers

Not

at all

Exhibit 4.4: Impact of Collaboration - Manufacturers

Very

Much So


Exhibit 4.5: Successful Collaboration with Customers – Top 4

35% 36%

42%

76%

0%

20%

40%

60%

80%

100%

Trust andtransparency

amongstcollaborating

teams

A commonagreement onwhat is reallyimportant to ajoint success

Good cross-functional inter-

companycommunicationamongst both

executives andteams

Familiarity andknowledge ofour business

31%

42% 42%

88%

0%

20%

40%

60%

80%

100%

Alignment onPriorities and

Timelines

Trust andtransparency

amongstcollaborating

teams

CommonUnderstanding

and SharedSense ofUrgency

Familiarity andknowledge ofour business

Per

cen

tage

of

Res

po

nd

ents

Per

cen

tage

of

Res

po

nd

ents

Manufacturers Operators


52

Both manufacturers and operators were asked to identify what are the most important factors

for successful product innovation collaboration. There were fairly consistent answers for both

groups with their responses. Familiarity and knowledge of the customer (our business) was

rated number one for both groups. Strong communication, common agreement on what success

is, establishing trust and transparency and sharing the sense of urgency were all rated very

highly (see Exhibit 4.5).

Collaboration in the foodservice industry is very important for successful product innovation. All

parties involved recognize this. However some manufacturers seem to be able collaborate

better than others and as a result do achieve higher levels of success.


53

5. Conclusions and Recommendations

Companies are profiting from their new product efforts. Best performing companies in the

foodservice industry are achieving 22% more sales and 20% more profits from their new

products than their average performing counterparts. They are also 7 times more likely to

launch commercial successes and 3 times more likely to meet their market share and

distribution objectives. We also learned that the businesses qualified as ‘best performing

companies,’ transcend size, product strategy (i.e. developing branded products or developing

custom products) and business category (i.e. food, paper, beverages, sanitations, equipment, or

small wares). This is particularly good news, meaning product innovation success is an equal

opportunity venture. Success is not reserved for companies with deep pockets alone!

We discovered that while new product success in this industry is dependent upon many factors,

success correlates particularly strongly with a purpose-built new product process. Yes, a new

product process with structure and discipline in the right areas, including ‘built-in flexibility’,

works. Specifically, the following new product process characteristics are found to be especially

powerful:

Adaptability – the process is personalized to the company’s particular strategies and

business needs (instead of a one-size-fits-all approach)

Flexibility – the process is easily scaled to address the complexity, size and risk of each

project

Clarity – the stages are clearly designated and the activities in each stage are well

defined.

The quality of execution, from start-to-finish, matters. A great deal of our new product success

lays very much in the hands of the project leaders and teams executing projects through each

and every stage of the process. In other words, companies with high quality of execution in each

stage from start to finish deliver better quality information at critical decision points. This

naturally leads to higher success rates. In particular, the following practices when built right into

the process, drive better performance:

Defined Deliverables – the process clearly defines specific information that is expected

to be delivered to each decision point (gate)

Complete Deliverables – teams submit comprehensive information to each decision

point (gate)

High Quality Business Case – teams submit a solid Business Case Deliverable that adds

value and focuses on the critical issues.

Leaders contribute to new product performance by making decisions. In short, as the gates go

so goes the process and your performance! Another important part of the purpose-built new

product process is the gates (Go/No Go decision points). What separates the best performers is

the ability to have, on a repeated basis, demanding Go/No Go decision points appropriately


54

placed throughout the process, where the hard choices area made, where poor projects really

do get killed and meritorious projects get resourced.

Last but not least, through this research initiative, we also confirmed that effective

collaboration between operators and manufacturers is very important to success. Not only are

the best performing companies better at collaborating, but the more collaborative the product

innovation effort, the more successful the project!

When companies implement a flexible, purpose-built new product process to guide high quality

governance and execution of projects, their new product sales and profits improve.

Recommendations

Success at product innovation has quickly returned to be a top priority of executives in this

industry. Executives are faced with the question like never before: how can my business improve

its product innovation performance – more sales, better profits from new products?

Benchmarking product innovation performance and practices against your peers is one of the

most effective ways executives can initiate and lead transformational change within their

organizations – if it works for other companies, could it work for ours? Compare your

organization’s performance and practices to those outlined in this research initiative and plan

improvements.

Here are also a number of questions that might help you identify themes that could be

developed into action plans to improve your product innovation results.

1. What measures could your leadership team take to improve its support of the product

innovation program?

2. How might your product innovation process be better communicated and displayed at your

organization?

3. What steps could your organization take to better manage/govern product innovation?

4. Does your organization use metrics to consistently measure and communicate new product

project and business performance results?

5. Is your organization’s innovation process purpose-built to support your company’s business

and strategy? Have you built in the appropriate levels of flexibility (a scalable process) for

all types of innovation projects or are you using a ‘one size fits all approach’?

6. Do you have in place clear criteria to route projects quickly to the appropriate idea-to-

launch process to match project complexity and risk to the stage activities?


55

7. What steps could your organization take to help clarify expectations for both the project

team and the gatekeepers for projects as they progress through the process?

8. Are there steps you could take to improve the way your company approaches collaboration

with Operators for product innovation?

9. Do you provide product innovation capabilities and process training? Is this sufficient or are

there any other training opportunities you should leverage? Do you make it easy for new

employees to get up to speed? Do you have a plan to help new executives get on-board and

understand how they can support product innovation as gatekeepers?

The conclusion of this research initiative is clear: best performing companies have in place

strong product innovation capabilities and are continuing to raise the performance bar for their

competitors.

Through the leadership of IFMA, the Founding Members of the CIE and this research initiative,

the foodservice industry has now laid the groundwork to enable its members to target

improvements to their product innovation programs that have the potential to achieve

measurable performance results.


56

Appendix A:

Survey Questionnaire

©2011 IFMA and Stage-Gate International. ALL RIGHTS RESERVED.

57

Center of Innovation Excellence Collaborative Benchmarking Study – Phase II

Detailed Questionnaire

General Instructions

This survey is designed to explore the innovation processes and practices that exist within the

Foodservice industry. Our research team wishes to understand the drivers of new product

performance by obtaining a deeper understanding of the types of innovation projects, idea-to-

launch process activities, governance practices and innovation performance metrics that exist

within your organization.

CONFIDENTIAL: All answers will remain confidential and results would only be shared in an

aggregate form.

This survey should take approximately 30 minutes to complete.

SAVING YOUR SURVEY:

1. If you wish to save and continue your survey at a later time, 1) Be sure to provide a vaild

email address in the "General Information" section on the next page and 2) Click on

"save and continue"

2. You will be sent a unique link that allows you to return to your survey at a later time.

When you are ready to continue your survey, simply click on the link in the email.

Glossary of Terms

New Product: A product, service, packaging, equipment or menu offering that has not been

previously offered by the company.

Top line New Product Projects: New products that are intended to impact the customer and

improve the company’s top line by adding revenue. Categories of top line new product projects

are a) New Exploratory Technology, b) New-to-the-World, c) New-to-the-Firm - New Product, d)

Product Line Extension, e) Major Product Improvement, and f) Incremental

Improvements/Changes.

Bottom line New Products: A change to an existing product that is not intended to impact the

customer. Categories of bottom line product projects are a) Internal Cost

Reduction/Improvements, b) Minor Changes, c) Regulatory/Quality and d) Supply Chain.

Non-Custom Products: Products that are developed to leverage a broader market need as

opposed to a single customer need.

Custom Products: Products that are developed to meet a single customer need.


58

General Information

Full Name: ________________________________________________________________

E-mail: ________________________________________________________________

Job title: ________________________________________________________________

Company: ________________________________________________________________

Section 1: Foodservice Firmagraphics

A. You would primarily categorize your

business as a (select one):

o Manufacturer/Supplier/Repacker

o Distributor/Wholesaler

o Foodservice Operator/Restaurant

o Agency/Media/Research Firm

o Consultant

o Other

B. Are you headquartered in the United

States?

o Yes

o No

C. What is your primary function (select one)?

o C-Level Leadership

o Marketing/Product Management

o Research & Development

o Innovation

o Sales/Business Development

o Communications/PR

o Finance

o Logistics

o Procurement

o HR

o Other

D. What is your level/title?

o Associate/Team

Member/Functional

Representative

o Manager/Senior Manager

o Director/Executive Director

o Vice President/Executive Vice

President

o President/Principal/Owner/

Business Unit Leader


59

For Manufacturers only E. Which of the following do you manufacture (select one)?

o Food

o Beverages

o Paper Goods/Disposables

o Small Wares/Tabletop

o Heavy/ Light Equipment

o Janitorial/Sanitations

o Other (specify):__________

F. What are your annual Foodservice sales revenues in the United States?

o $1 Billion or more

o $500-$999 Million

o $250-$499 Million

o $100-$249 Million

o $50 -$99 Million

o Under $50 Million

G. Number of Foodservice employees (US only):

o 1-9

o 10-24

o 25-49

o 50-99

o 100-499

o 500-999

o 1,000 or more

For Distributors only E. You would primarily categorize your business as a (select one):

o Broadline

o Specialist (Specialty)

o Non-Food (Equipment & Supplies)

o Re-distribution

o Other (specify):___________

F. What are your annual Foodservice sales revenues in the United States?

o $1 Billion or more

o $500-$999 Million

o $250-$499 Million

o $100-$249 Million

o $50 -$99 Million

o Under $50 Million

G. Number of Foodservice employees (US only):

o 1-9

o 10-24

o 25-49

o 50-99

o 100-499

o 500-999

o 1,000 or more


60

Section 2: Product Innovation - Project Types and Risk

1. For the following project types:

What percentage of

your R&D budget

(resources = allocation

of dollars and people

(FTEs) over the past 3

years has been spent

in the following

categories? New Exploratory Technology: A fundamental research development project that promises to yield

a major breakthrough or new platform but is not targeted at an

immediate product.

___________ %

New-to-the-World: A new product that is the first of its kind and creates a new market.

___________ %

New Product - New-to-the-Firm: A new product, service, package or equipment offering that is new

to the company but is not new to the marketplace.

___________ %

Product Line Extension: A product that fits within an existing product line. It is a variant of

an established product (i.e. a flavor or a new variety).

___________ %

Major Product Improvement: An improvement to an existing product that achieves performance,

which is perceived to be either of equal or greater value, and

promises to yield more revenue as a result.

___________ %

Incremental Improvements/Changes: A product that is reintroduced by the company to highlight

additional benefits and target a new market segment. This category

also includes seasonal/temporary products, (LTO), incremental

improvements, product re-introductions, rebranding or repackaging

(i.e. single serving packet).

___________ %

Internal Cost Reduction/Improvements: A change to an existing product (i.e. ingredients, processing or

packaging) designed to remove cost and improve margin.

___________ %

Regulatory/Quality: A change to an existing product to meet a regulatory requirement

or address a quality issue.

___________ %

Supply Chain: A change to an element of the supply chain which has an impact on

the product (i.e. substitute ingredient).

___________ %

Other: ___________ % Total must equal

100%


61

2. Considering your total product innovation efforts, what percentage is targeted at:

Custom Products (developed for a single customer need) ________%

Non-Custom Products (developed for a broader market) ________%

Additional Comments:__________________________________________________________

____________________________________________________________________________

____________________________________________________________________________


62

Section 3: Product Innovation Performance Metrics

1. Select the top 3 key indicators your business entity uses to measure the performance of its

total new product program or efforts.

Net sales of new products

Percentage of business's net sales

generated by new products

Percentage of business's growth in

net sales generated by new products


Percentage of business’s profit

generated by new products

Percentage of category’s gross

margin generated by new products

Return on investment of R&D dollars

spent

Overall profits (annual) generated by

new products

Market share/gain in a category

Number of major launches

per year

Success rate of launched

products

Actual time (resources) spent

versus budgeted time

Innovation funnel value

Other (please specify):_______

2. Select the top 3 key measures your business entity uses to determine whether your

product innovation projects are successes or failures.

Sales vs. forecasted sales (meet sales

goals)


Amount of additional sales to the

category

Volume or units sold versus target set

in the business case

Profitability (e.g., NPV and gross

margins or operating profits)

Profitability vs. forecasted profits

(meet gross profit goals)

Time to profit/break-even cost

Performance to budget

Performance to schedule

(on-time launch)

Time to market

(ability-to-ship date)

Calendar time vs. budgeted

time

Distribution target achieved

Meeting customer satisfaction

Market share

Other (please specify): _______

3. According to your business entity's definitions of success and failure, approximately what

percentage of new product projects within the last 3 years were:

Launched and commercially successful? (GREEN) _____%

Launched and only moderate commercial success? (YELLOW) _____%

Launched and commercial failures?(RED) _____%

Total must equal 100%


63

4. Approximately what percentage of your business entity's product innovation projects are:

Developed on budget? _____%

Launched on schedule? _____%

5. For those projects behind schedule, approximately how late were these projects (indicate

as a percentage of the scheduled project time)?

______ %

6. Over the last calendar year, approximately what percentage of your business entity's

product innovation projects met the following targets or objectives:

Percentage

Do not use/Not

measured Don’t know

Profit targets or objectives.

Sales targets or objectives.

Net incremental sales targets or

objectives.

Distribution targets or objectives. Market share targets or objectives.

7. Approximately what percentage of your business entity’s:

Percentage

Do not use/Not

measured Don’t know

Annual sales (revenue) was derived from products introduced within the last three years?

Annual profits was derived from products introduced within the last three years?

Net incremental sales was derived from products introduced within the last three years?


64

8. Over the last three years, how profitable has your business entity's total product

innovation program been relative to it's spending on it?

1 2 3 4 5

Fell Far Short of

Objectives/

Targets

Fell Somewhat

Short of

Objectives/Targets

Met Objectives/

Targets

Somewhat

Exceeded

Objectives/

Targets

Far Exceeded

Objectives

Don’t

Know

9. Over the last three years, to what extent has your business entity's product innovation

program met or exceeded its:

1

Fell Far

Short of

Objectives/

Targets

2

Fell

Somewhat

Short of

Objectives/

Targets

3

Met

Objectives/

Targets

4

Somewhat

Exceeded

Objectives/

Targets

5

Far

Exceeded

Objectives

Don’t

Know

Profit objectives/ targets?

Sales objectives/ targets?

Volume (or units sold)

objectives/ targets?

Distribution objectives/ targets?


____________________________________________________________________________

____________________________________________________________________________


65

Section 4: Product Innovation Idea-to-Launch Process An Idea-to-Launch product innovation process is a conceptual and operational roadmap or

playbook for moving a new product project from idea to launch. It is a blueprint for managing

the product innovation process to improve effectiveness and efficiency. Governance is the

decision making process for the Idea-to-Launch Process. “Decision Points” or “Gates” are the

actual meetings that decide the Go/No Go of a project and “Gatekeepers” are the executives

that typically make the decisions, and are the resource owners.

Product Innovation Idea-to-Launch Process:

To what extent do you have:

1. A formal product innovation process (a standardized and documented process to guide

development projects from idea through to launch) with defined stages and Go/No Go

decision points (gates). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

2. A product innovation process that is consistently used and understood. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

3. Clearly defined stages that consist of prescribed activities to be undertaken (e.g. stages

such as "Business Feasibility" or "Validation"). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

4. Activities that are listed and defined for each stage. For example, the activities in the

Validation stage might be product testing, technical plan and field trial (e.g.

formula/recipe finalized, testing requirements, trials etc.). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

5. Defined Go/No Go decision points (or gates) for each stage of the project; for example,

Gate 1 might be "initial screen", Gate 3 might be "Go to Development". 1 2 3 4 5

Not at all Very

Much so

Don’t

Know


66

6. Decision criteria for Go/No Go decisions against which projects are evaluated are clearly

articulated (written down and visible to everyone) for each of the decision points (gates)

in the process. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

7. Defined Deliverables for each decision point (gate). For example, a standard list of items

for the project leader or team to complete before entering each gate or decision point). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

8. Decision makers (gatekeepers) that are defined for each stage (e.g. executives who review

the projects at each gate and make the Go/No Go decision are a defined group). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

9. A product innovation process that enables teams to work more effectively and efficiently. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

10. Cross-functional teams that are assembled from different disciplines (e.g. representation

from R&D, marketing, supply chain etc.) to work on product innovation projects. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

11. A product innovation process that has been adapted to meet your needs in Foodservice. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

12. A product innovation process that is flexible and scalable (stages can be condensed, gates

deleted, activities omitted or combined) depending on the size, type, complexity and risk

level of the project. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

13. Does your business have different product innovation processes for projects of different

complexities (for e.g. a 5 Stage-Gate model for highly complex projects, a 3 or 2 Stage-

Gate model for lower risk simpler projects)?

o Yes

o No

o Don’t know


67

Formal Product Innovation Idea-to-Launch Process Activities: What Happens During Each

Stage?

Considering a typical product innovation project in your business, rate how well each stage (set

of activities) is handled.

14. Exploration Stage: Generating and assessing an idea. Typical preliminary assessment

activities include: preliminary product (e.g. qualitative description of the intended

product), market (e.g. outlining size and attractiveness of the market), and technical (e.g.

technical capabilities, risks, vendors and supply chain) assessment, as well as a preliminary

business case. 1 2 3 4 5

Very poorly

executed

Executed

extremely

well

Does not

happen

Don’t

Know

15. Business Feasibility Stage: Conducting a detailed design and feasibility analysis of the

product concept. Typical detailed assessment activities include: detailed product (e.g.

design, formula/recipe, packaging requirements, food safety, regulatory and IP

requirements), market (e.g. voice of customer research) and technical (e.g. build or buy

options, supply chain, sourcing and capital) assessment, as well as a detailed business

case. 1 2 3 4 5

Very poorly

executed

Executed

extremely

well

Does not

happen

Don’t

Know

16. Development Stage: Conducting customer acceptance testing, final product validation

and assessing supply chain and forecast accuracy. Typical activities include: validating and

finalizing product (e.g. formula/recipe refinement), market/sales plan (e.g. finalizing

details of packaging and labeling, distribution plans) and technical plans (e.g.

manufacturing plans, trials, pilot productions etc.), as well as an updated business case. 1 2 3 4 5

Very poorly

executed

Executed

extremely

well

Does not

happen

Don’t

Know

17. Validation Stage: Conducting customer acceptance testing, final product validation and

assessing supply chain and forecast accuracy. Typical activities include: validating and

finalizing product (e.g. formula/recipe refinement), market/sales plan (e.g. finalizing

details of packaging and labeling, distribution plans) and technical plans (e.g.

manufacturing plans, trials, pilot productions etc.), as well as an updated business case. 1 2 3 4 5

Very poorly

executed

Executed

extremely

well

Does not

happen

Don’t

Know


68

18. Launch Stage: Launching the product. Typical activities include: Executing market launch

and sales plans, production distribution plans, technical plans and supply chain plans. 1 2 3 4 5

Very poorly

executed

Executed

extremely

well

Does not

happen

Don’t

Know

19. Post Launch Review: the review and evaluation of the project some time after launch;

assessment of the business performance results (sales, volume, profit); lessons learned;

plans adjusted as needed and formal termination of the project. 1 2 3 4 5

Very poorly

executed

Executed

extremely

well

Does not

happen

Don’t

Know


69

Section 5: Governance - Decision Point (Gate) Effectiveness

Governance: Decision Point (Gate) Effectiveness:

1. All people invited to participate as decision makers (gatekeepers) at decision meetings

(gates) attend the meetings (once the meeting dates/times are agreed to, there are no

cancellations). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

2. The contributions made by each decision maker are of high quality (each decision maker

arrives to each decision meeting [gate] prepared by having read all project materials.

Questions are insightful). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

3. Decision makers use an objective, high-quality approach to decision making. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

4. All expected decisions are made at each decision meeting (gate). For example, a

go/kill/hold/recycle decision, approval of the action plan for the next stage of work,

approval of resources and the date for the next decision meeting is set. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

5. Each decision maker visibly demonstrates support (including resources) for decisions

made at each meeting. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

6. Decision meetings (gates) are managed effectively (an agenda is distributed in advance,

the meeting starts and finishes on time, the agenda is followed and a record of all

decisions is distributed following the meeting).

1 2 3 4 5

Not at all Very

Much so

Don’t

Know


70

Quality of Deliverables (business case and/or executive summary prepared by project teams

for the benefit of the decision makers).

7. All agreed-upon deliverables are completed by the team (i.e. the plan previously

approved by the decision makers and the activities and deliverables outlined in that plan

are completed). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

8. All agreed-upon deliverables are complete and distributed to the decision makers in a

timely manner. 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

9. The business case and/or executive summary submitted to the decision makers are of

high quality (i.e. they are complete, include accurate information, add value and focus

on the critical issues). 1 2 3 4 5

Not at all Very

Much so

Don’t

Know


____________________________________________________________________________

____________________________________________________________________________


71

Section 6: Collaboration with Customers

Collaboration is defined as the relationship between manufacturers and operators as it

relates to product innovation.

1. How important is effective collaboration to your success in product innovation? 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

2. How successful has your collaboration efforts in product innovation been over the past

two years? 1 2 3 4 5

Not at all Very

Much so

Don’t

Know

3. Over the last two years, product innovation projects that had a high degree of

collaboration with our customer, achieved higher success levels than projects that had

no customer collaboration. 1 2 3 4 5

Strongly

disagree

Strongly

agree

Don’t

Know

4. Select the 3 factors most important to successful product innovation collaboration with

your customers.

Familiarity and knowledge of customer, evolving consumer trends and industry

practices

Clear and early resolution of intellectual property and confidentiality issues

A common understanding and shared sense of urgency

Trust and transparency amongst collaborating teams

A common agreement on what is really important to a joint success

Well-defined accountabilities for each collaborating partners

The development of a common, shared language between the collaborating

groups

Alignment of processes to conduct joint new product development

Alignment on priorities and timelines for joint new product development projects

Good cross-functional inter-company communication amongst both executives

and teams


____________________________________________________________________________

____________________________________________________________________________

Thank you for your participation. Your input is greatly appreciated. In appreciation for your

time and feedback, you will receive a complimentary executive summary of the study's results

(emailed no later than March 15, 2012)


72

Appendix B:

Responses to Survey Questions – Manufacturers


73

You would primarily categorize your business as

Distributor/Wholesaler 2%

Manufacturer/ Supplier/

Repacker 98%

Which of the following do you manufacture?

1.9 %

1.9 %

2.8 %

4.7 %

7.5 %

8.5 %

72.6 %

0% 20% 40% 60% 80%

Other

Small Wares/Tabletop

Heavy/Light Equipment

Janitorial/Sanitations

Beverages

Paper Goods/Disposables

Food



74

Are you headquartered in the United States?

No 0%

Yes 100%

What is your primary function?

12.4%

39.0%9.5%

11.4%

26.7%1.0%

C-Level Leadership

Marketing/Product Management

Research & Development

Innovation

Sales/Business Development

Other


75

What is your level/title?

22.9%

36.2%

33.3%

7.6%

Manager/

Senior Manager

Director/

Executive Director

Vice President/Executive Vice

President

President/Principal/

Owner/Business Unit Leader

Number of foodservice employees (US only)

5.9 %

8.8 %

9.8 %

9.8 %

26.5 %

16.7 %

22.5 %

0% 10% 20% 30%

1-9

10-24

25-49

50-99

100-499

500-999

1,000 or more



76

Annual US foodservice sales revenue

23.5%

16.7%

11.8%

19.6%

9.8%

18.6%

$1 Billion or More

$500-$999 Million

$250-$499 Million

$100-$249 Million

$50 -$99 Million

Under $50 Million

Distributors only – You would primarily categorize your business as

Broadline 50% Specialist (Specialty) 50%


77

Distributors only - Annual foodservice sales revenues in US

$1 Billion or more 50%Under $50 Million 50%

Distributors only - Number of foodservice employees (US only)

50.0 %

0.0 %

0.0 %

0.0 %

0.0 %

0.0 %

50.0 %

0% 10% 20% 30% 40% 50% 60%

1-9

10-24

25-49

50-99

100-499

500-999

1,000 or more



78

New product project types

Top line Projects

New Exploratory Technology

New-to-the-World

New Product -New-to-the-

Firm

Product Line Extension

Major Product Improvement

6.17 % 7.99 % 16.92 % 23.25 % 12.25 %

Bottom Line Projects

Incremental Improvements/

Changes

Internal Cost Reduction/

Improvements

Regulatory/ Quality

Supply Chain

Other

9.40 % 10.79 % 6.48 % 5.70 % 0.97 %

Custom or Non-Custom products

Non-Custom Products 55%

Custom Products 45%


79

Select the top 3 key indicators your business entity uses to measure the performance of its total new product program or efforts.

28%

30%

46%

67%

0% 20% 40% 60% 80%


Net sales of new

products

Overall profits (annual)

generated by new

products

Net incremental

sales

Percentage of

business's net sales

generated by new

product

Select the top 3 key measures your business entity uses to determine whether your product innovation projects are successes or failures.

36%

36%

43%

58%

0% 20% 40% 60% 80%


Sales vs. forecasted

sales (meet sales goals)

Profitability (e.g. NPV

and gross margins or

operating profits)

Net incremental

sales

Meeting customer

satisfaction


80

Approximately what percentage of new product projects within the last 3 years were:

ModerateCommercial

Success 23%

Commercially Successful 42%

Commercial Failure 35%

Approximately what percentage of your product innovation projects are:

On Budget 69%

Over Budget 31%

Percent of Product Innovation Projects on Budget

Percent of Product Innovation Projects on Schedule

Behind ScheduleLaunch 42% On Schedule

Launch 58%

Projects late (indicated as a percentage of the scheduled project time Late): 28.6% of Scheduled Time


81

Over the last calendar year, approximately what percentage of your product innovation projects met the following targets:

58.9 %

52.4 % 52.2 %50.9 %

45.8 %

0%

10%

20%

30%

40%

50%

60%

70%

Profit Targets or Objectives

Sales Targets or Objectives

Net Incremental Sales Targets or Objectives

Distribution Targets or Objectives

Market Share Targets or Objectives

Me

an

Performance results derived from new products within the past three years:

16.3 %16.7 %

21.6 %

0%

5%

10%

15%

20%

25%

Annual sales (revenue) was derived from products introduced within the

last three years

Annual profits was derived from products introduced within the last

three years?

Net incremental sales was derived from products introduced within the

last three years?

Me

an


82

Over the last three years, how profitable has your total product innovation program been relative to the spending on it?

7.7 %

39.6 %

31.9 %

16.5 %

4.4 %

0%

10%

20%

30%

40%

50%

Fell Far Short of Objectives/ Targets

Fell Somewhat Short of Objectives/ Targets

Met Objectives/Targets

Somewhat Exceeded Objectives/Targets

Far Exceeded Objectives/Targets

Pe

rce

nta

ge

of

Re

sp

on

de

nts

Over the last three years, to what extent has your company's product innovation program met or exceeded its profit objectives?

8.1 %

37.9 %

32.2 %

20.7 %

1.2 %

0%

10%

20%

30%

40%






Pe

rce

nta

ge

of

Re

sp

on

de

nts


83

Over the last three years, to what extent has your company's product innovation program met or exceeded its sales objectives?

8.8 %

42.9 %

28.6 %

17.6 %

2.2 %

0%

10%

20%

30%

40%

50%






Pe

rce

nta

ge

of

Re

sp

on

de

nts

Over the last three years, to what extent has your company's product innovation program met or exceeded its volume (or units sold) objectives?

8.8 %

45.1 %

26.4 %

17.6 %

2.2 %

0%

10%

20%

30%

40%

50%






Pe

rce

nta

ge

of

Re

sp

on

de

nts


84

Over the last three years, to what extent has your company's product innovation program met or exceeded its distribution objectives?

10.8 %

35.1 % 35.1 %

18.9 %

0.0 %0%

10%

20%

30%

40%






Pe

rce

nta

ge

of

Re

sp

on

de

nts

A formal product innovation process (a standardized and documented process to guide development projects from idea through to launch) with defined stages

and Go/No Go decision points (gates).

4.0 %

20.8 % 19.8 %

22.8 %

32.7 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


85

A product innovation process that is consistently used and understood.

6.9 %

21.8 %

23.8 %

25.7 %

21.8 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

Clearly defined stages that consist of prescribed activities to be undertaken (e.g. stages such as "Business Feasibility“ or "Validation").

8.1 %

19.2 % 18.2 %

30.3 %

24.2 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


86

Activities that are listed and defined for each stage. For example, the activities in the Validation stage might be product testing, technical plan and field trial

(e.g. formula/recipe finalized, testing requirements, trials etc.).

7.1 %

25.3 %24.2 %

23.2 %

20.2 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

Defined Go/No Go decision points (or gates) for each stage of the project; for example, Gate 1 might be "initial screen", Gate 3 might be "Go to Development".

7.1 %

22.2 % 22.2 %

28.3 %

20.2 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


87

Decision criteria for Go/No Go decisions against which projects are evaluated are clearly articulated (written down and visible to everyone) for each of the

decision points (gates) in the process.

12.1 %

32.3 %

22.2 %

13.1 %

20.2 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

Defined Deliverables for each decision point (gate). For example, a standard list of items for the project leader or team to complete before entering

each gate or decision point).

13.0 %

25.0 %

19.0 %

27.0 %

16.0 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


88

Decision makers (gatekeepers) that are defined for each stage (e.g. executives who review the projects at each gate and make the

Go/No Go decision are a defined group).

6.0 %

25.0 %

18.0 %

24.0 %

27.0 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

A product innovation process that enables teams to work moreeffectively and efficiently.

6.0 %

31.0 %

19.0 %

27.0 %

17.0 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


89

Cross-functional teams that are assembled from different disciplines (e.g. representation from R&D, marketing, supply chain etc.) to work

on product innovation projects.

3.0 %

18.0 %16.0 %

22.0 %

41.0 %

0%

10%

20%

30%

40%

50%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

A product innovation process that has been adapted to meet yourneeds in foodservice.

11.2 %

19.4 %

24.5 %

30.6 %

14.3 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


90

A product innovation process that is flexible and scalable (stages can be condensed, gates deleted, activities omitted or combined) depending on the

size, type, complexity and risk level of the project.

10.0 %

17.0 %

24.0 %

28.0 %

21.0 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

Does your business have different product innovation processes for projects of different complexities (for e.g. a 5 Stage-Gate model for highly complex

projects, a 3 or 2 Stage-Gate model for lower risk simpler projects)?

45.9%

49.0%

5.1%

Yes

No

Dont know


91

Exploration Stage: Generating and assessing an idea.

0.0 %

10.4 %

19.8 %

32.3 %

28.1 %

9.4 %

0%

10%

20%

30%

40%

Does not happen

Very poorly executed

2 3 4 Executed extremely well

Pe

rce

nta

ge

of

Re

sp

on

de

nts

Business Feasibility Stage: Conducting a detailed design and feasibilityanalysis of the product concept.

1.0 %

7.2 %

16.5 %

29.9 %

38.1 %

7.2 %

0%

10%

20%

30%

40%

50%

Does not happen



Pe

rce

nta

ge

of

Re

sp

on

de

nts


92

Development Stage: Conducting customer acceptance testing, final product validation and assessing supply chain and forecast accuracy.

0.0 %2.1 %

14.4 %

23.7 %

46.4 %

13.4 %

0%

10%

20%

30%

40%

50%

Does not happen



Pe

rce

nta

ge

of

Re

sp

on

de

nts

Validation Stage: Conducting customer acceptance testing, final product validation and assessing supply chain and forecast accuracy.

1.0 %

7.2 %

21.6 %23.7 %

33.0 %

13.4 %

0%

10%

20%

30%

40%

Does not happen



Pe

rce

nta

ge

of

Re

sp

on

de

nts


93

Launch Stage: Launching the product.

1.0 %3.1 %

15.3 %

24.5 %

46.9 %

9.2 %

0%

10%

20%

30%

40%

50%

Does not happen



Pe

rce

nta

ge

of

Re

sp

on

de

nts

Post Launch Review: The review and evaluation of the project some time after launch, assessment of the business performance results (sales, volume, profit), lessons learned, plans adjusted as needed and formal termination of the project.

2.0 %

18.4 %

34.7 %

23.5 %

19.4 %

2.0 %

0%

10%

20%

30%

40%

Does not happen



Pe

rce

nta

ge

of

Re

sp

on

de

nts


94

All people invited to participate as decision makers (gatekeepers) at decision meetings (gates) attend the meetings (once the meeting dates/times are agreed

to, there are no cancellations).

9.8 %

28.3 %

23.9 %

26.1 %

12.0 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

The contributions made by each decision maker are of high quality (each decision maker arrives to each decision meeting [gate] prepared by having read

all project materials. Questions are insightful).

6.7 %

29.2 %30.3 %

24.7 %

9.0 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


95

Decision makers use an objective, high-quality approach to decision making.

5.5 %

24.2 %

38.5 %

23.1 %

8.8 %

0%

10%

20%

30%

40%

50%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

All expected decisions are made at each decision meeting (gate). For example, a go/kill/hold/recycle decision, approval of the action plan for the next stage of work, approval of resources and the date for the next decision meeting is set.

8.7 %

27.2 %

31.5 %

19.6 %

13.0 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


96

Each decision maker visibly demonstrates support (including resources) for decisions made at each meeting.

5.6 %

18.9 %

34.4 %

30.0 %

11.1 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

Decision meetings (gates) are managed effectively (an agenda is distributed in advance, the meeting starts and finishes on time, the agenda is followed and a

record of all decisions is distributed following the meeting).

8.8 %

26.4 %

28.6 %

24.2 %

12.1 %

0%

10%

20%

30%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


97

All agreed-upon deliverables are completed by the team (i.e. the plan previously approved by the decision makers and the activities and deliverables outlined in

that plan are completed).

7.5 %

17.2 %

41.9 %

31.2 %

2.2 %

0%

10%

20%

30%

40%

50%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

All agreed-upon deliverables are complete and distributed to the decision makers in a timely manner.

9.7 %

20.4 %

37.6 %

26.9 %

5.4 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


98

The business case and/or executive summary submitted to the decision makers are of high quality (i.e. they are complete, include accurate information, add

value and focus on the critical issues).

8.8 %

19.8 %

34.1 %

26.4 %

11.0 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

How important is effective collaboration to your success in product innovation?

0.0 %

5.3 % 5.3 %

17.9 %

71.6 %

0%

20%

40%

60%

80%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


99

How successful have your collaboration efforts in product innovation been over the past two years?

1.1 %

22.3 %

30.9 %

36.2 %

9.6 %

0%

10%

20%

30%

40%


Pe

rce

nta

ge

of

Re

sp

on

de

nts

Over the last two years, product innovation projects that had a high degree of collaboration with our customer, achieved higher success levels than projects

that had no customer collaboration.

0.0 %

5.7 %

14.9 %

28.7 %

50.6 %

0%

10%

20%

30%

40%

50%

60%


Pe

rce

nta

ge

of

Re

sp

on

de

nts


100

Select the 3 factors most important to successful product innovation collaboration with your customers.

35%

36%

42%

76%

0% 20% 40% 60% 80% 100%



Good cross-functional inter-company communication amongst both

executives and teams

Familiarity and knowledge of our business


3%

8%

14%

21%

30%

33%

35%

36%

42%

76%

0% 20% 40% 60% 80% 100%

The development of a common, shared language between the collaborating groups

Alignment of processes to conduct joint new product development

Clear and early resolution of intellectual property and confidentiality issues

Well-defined accountabilities for each collaborating partners

Alignment on priorities and timelines for joint new product development projects

A common understanding and shared sense of urgency



Good cross-functional inter-company communication amongst both executives and teams

Familiarity and knowledge of customer, evolving consumer trends and industry practices


Select the 3 factors most important to successful product innovation collaboration with your customers.


101

Appendix C:

Product Innovation: A Common Framework for

Foodservice

Phase I

Product Innovation: A Common

Framework for Foodservice Written by Dr. Scott J. Edgett

In collaboration with leading Foodservice Manufacturers and Operators


103

Dear Reader,

Welcome to the Center of Innovation Excellence!

Innovation is the life-blood of the Foodservice industry. The International Foodservice

Manufacturers Association (IFMA), its members and trading partners recognize this imperative

and have committed themselves to optimizing innovation throughout the channel. The ultimate

aim: drive value throughout the channel to the consumer, and impact their “foodservice

choice.”

With innovation as a platform, many potential pillars exist. The initial effort will focus on the

new product development “idea- to- launch” and then expand to include other aspects of our

businesses. The “Center of Innovation Excellence” is where the “Future of Foodservice Thrives.”

Background

Emanating from the International Foodservice Manufacturers Association (IFMA) Strategic Plan,

the IFMA Board of Directors issued the directive to focus efforts on improving the effectiveness

and efficiency of innovation in Foodservice, since innovation is critical to IFMA members and

their trading partners. To this end, the Board selected a chair and formed a committee in the

spring of 2010 (all IFMA efforts are driven by committees of its members and trading partners):

• P & G Professional - Norb Mayrhofer (chair)

• Schwan’s Food Company - Jim Clough

• Land O’ Lakes Inc. - John Ellenberger

• Nestle Professional - Dave Hubinger

• Ventura Foods LLC - Lyle Kan

• Dunkin’ Brands - Scott Murphy

• Starbucks Coffee Company - Trish Lum

• Awrey Bakeries - Bob Wallace.

This committee provided the framework for this multi-year, multi-phase effort. They decided to

engage an expert resource to support the effort. Following a search, Stage-Gate International (a

recognized authority in innovation) was selected. Their task: aid the committee in the

development of an innovation process specifically designed to address the unique needs of

Foodservice. The Center of Innovation Excellence (CIE) was born.

Continued…


104

The effort was segmented into three phases:

o Phase 1: Foundational Understanding

o Phase 2: Standards/Benchmarking

o Phase 3: Best Practices.

In the fall of 2010, the committee solicited and secured Founding Members from IFMA

membership:

• P & G Professional – Norb Mayrhofer (Chair)

• Land O’ Lakes Inc. – John Ellenberger

• Otis Spunkmeyer – Jerry Reardon

• Rich Products Corporation – Richard Ferranti

• Schwan’s Food Company – Jim Clough

• International Paper – Kristin Newman

• Basic American – Loren Kimura

• Kellogg’s Food Away From Home – Ben Wexler

• Insight Beverages – Andrew Dun

• Sargento – Rod Hogan.

These individuals provided further direction and assigned topic experts from their organization

to support the effort.

Enclosed is the first work published through an effort that has been over a year in the making. A

foundational understanding concludes Phase I. Phase II will focus on creating

standards/benchmarking and, Phase III will focus on best practices around innovation. The end

result; driving greater value to the consumer and influencing the “food choice” they make every

day. Make it Foodservice!

Sincerely,

Norb Mayrhofer Larry Oberkfell

Global Vice President President & CEO

Procter & Gamble Professional IFMA

PS. For more information regarding Foodservice innovation and the Center of Innovation

Excellence, please visit www.ifmaworld.com.

Product Innovation – A Common Framework for Foodservice


105

Authors

Dr. Scott J. Edgett is internationally

recognized as one of the world’s top experts

in product innovation and is the pioneer of

portfolio management for product

innovation. Dr. Edgett has extensive

experience advising large multinational

clients in a variety of industries, principally

focusing on issues affecting innovation

leadership and capability. He has spent

more than twenty years researching and

developing innovation best practices in

product innovation; co-authored eight

books; and published more than 60

academic articles and papers. Dr. Edgett is

Chief Executive Officer and co-founder of

Product Development Institute Inc. and

Stage-Gate International. He is a former

professor of the Michael G. DeGroote

School of Business, McMaster University in

Ontario and is a Faculty Scholar at the

Institute for the Study of Business Markets

(ISBM) at Penn State University.

Michelle Jones is an author, speaker and

consultant to industry in the field of

innovation management. She has 20 years

experience commercializing and launching

new business models, products and services

and has worked with numerous companies

of all sizes and industries around the globe.

She draws on an exceptional track record in

leading product innovation transformation

programs including idea generation and

Stage-Gate® systems to strategic portfolio

management and product innovation

technology strategies, to success. She is

the EVP and Chief R&D Officer at Stage-

Gate International, where she directs the

development of research, products and

services for companies striving to achieve

innovation excellence. Michelle has an

MBA from the University of Western

Ontario and is a certified New Product

Development Professional (NPDP).

Publication Team

Selin Dossa, MBA is a Senior Consultant and

Analyst at Stage-Gate International and

served as project manager in the production

of this white paper.

Shanul Srivastava, MBA is Product Manager

of Research Services at Stage-Gate

International and served as the lead

publication manager in the production of

this white paper.

Release Date: June 2011

Stage-Gate® is a registered trademark. Product

Development Institute® is a registered trademark.

Logo for Product Development Institute Inc. used

under license by Stage-Gate International. Logo

for Stage-Gate used under license where

appropriate. The Innovation Diamond™ is a

trademark of Stage-Gate International.

Cover art by Foodmix Marketing Communications.

© 2011 International Foodservice

Manufacturers Association and Stage-Gate

International. All Rights Reserved. No portion of

this publication may be reproduced, stored in a

retrieval system, or transmitted in any form or

media or by any means, electronic, mechanical,

photocopying, recording or otherwise, without

the prior written permission of IFMA or Stage-

Gate International.



106

Content

The Business Imperative 107

Types of Innovation Projects and Assessing Risk 111

New Product Development (NPD) Process 114

Typical NPD Process in Foodservice Industry 117

Fast Track Version for Low Risk Projects 125

Making your Governance Work 128

Performance Metrics 131

Internal and External Stakeholders 133

Conclusion 137

Methodology 140

Toward a Common Language for Foodservice 141

Resources for Product Innovation Professionals 142



107

The Business Imperative

The ability to increase business value through innovation is a critical success driver for most

Foodservice organizations. The markets that we operate in provide both opportunity and risk

from an innovation perspective as they are rapidly changing.

Markets provide opportunities if we get it right and threats if we do not, particularly in this

intensely competitive industry. Our quest to realize innovation results is further complicated by

the complexity and diverse nature of the Foodservice industry – the sheer number of players to

coordinate with in the value chain; rising costs; margin erosion; increasing regulatory, customer

and consumer demands; evolving business models; shorter cycle times; and new sources of

competition, just to name a few.

Regardless of these challenges, innovation is prevalent throughout the industry, for example, in

customer service experience; operations; marketing; brand management; culinary; packaging;

products; processing; platforms and technology. Hence, the term ‘innovation’ is often loosely

and broadly used.

Such a wide arena provides many opportunities for Foodservice organizations to successfully

develop and sell new innovations. This white paper focuses on successful product innovation.*

Easier said than done however! The good news is that if you can get it right, you stand to gain a

competitive advantage and will reap the benefits of increased revenue and profits. Hence the

lure of identifying new growth opportunities, increasing volumes and market share, securing a

competitive advantage, improving margins and strengthening brand loyalty, provides a powerful

incentive to be successful at product innovation. However, the challenges the industry faces do

not make this easy. Developing new products and technologies is one of the more complicated

initiatives a Foodservice organization can undertake.

Manufacturers in the Foodservice industry often cite four key external difficulties:

1. Difficulty in obtaining information critical to effective product innovation investment

decisions, especially customer/market insight (i.e. taste preferences, market size, demand

and forecasting inputs).

“In our business, the only sustainable path to growth is through innovation.”

- Michael LaDuke, Senior Director of Culinary Development, Red Lobster

* Where the term ‘new product’ is used throughout this report, it means either a new product, service, package or equipment.



108

2. Lack of a standard approach to working with all of the various customers given the

differences in how they manage their businesses (i.e. processes, discipline, capacity,

capability and the role of innovation in their strategy).

3. The development of products that are standard for the manufacturer to produce yet

customizable by the customer, so they can differentiate their offering.

4. The determination of IP ownership and confidentiality when co-developing with

customers.

Figure 1: The Innovation Diamond Model

Foodservice organizations also face numerous intricacies within their organizations when

developing new products. These can be best illustrated using The Innovation Diamond™ - a

useful framework that examines the complexity and addresses some of the challenges in

product innovation by separating them into four key themes: product innovation strategy,

portfolio management; new product development process and climate and culture (see Figure 1

for illustration). Interestingly, past studies suggest that organizations that excel or master these

four key themes do, in fact, achieve better results from their product innovation efforts.



109

Let’s examine some of the challenges the players in the Foodservice industry have in each part

of The Innovation Diamond (a comprehensive list of challenges is found in Table 1.)

Product Innovation Strategy: It all starts at the top. If there is not a clear and crisp product

innovation strategy that supports the business strategy, problems begin. Some key challenges

are: do we have one? is it clear? is it the right strategy? is everyone aligned? are people walking

the talk? are there realistic expectations on new product revenues and timelines?

Lack of a product innovation strategy tailored to the Foodservice business is cited as the most

common problem.

Portfolio Management: This is the strategic allocation of resources that ensures our innovation

efforts advance our product innovation strategy. This is also the prioritization of projects in the

pipeline to ensure that we are tactically deploying our resources on the right projects for the

right reasons. Some key challenges are: too many projects and not enough resources to get

everything done, difficulty in deciding which projects to select (when evaluating multiple

projects that are competing for the same resources), difficulty in optimizing the portfolio of

projects (i.e. short-term versus long-term, high-risk versus low-risk), poor alignment on

priorities, and resources that are simply stretched too thinly.

New Product Development Process: This is the roadmap or playbook that takes each project

from idea to launch including all of the activities and decisions that must occur in order to be

successful. Some key challenges are: not enough high quality ideas; not having a standard

playbook that can be used repeatedly for projects; not tailoring the development process to

support the business strategy and project needs, being unable to say no to projects and/or the

need to be realistic with actual time and resource expectations that otherwise lead to unrealistic

speed-to-market pressures, expectations for resource commitments to work on projects that

are not in the official process, too many renovation projects that negatively impact the

resources available for innovation projects, and the inability to yield effective decisions in a

timely manner (i.e. everything is a high priority thus creating ‘gridlock’ which in turn results in

significant delays).



110

Climate and Culture: This is ‘the way the organization works’: the typical behavior, norms, values

and leadership style that enables or hinders product innovation performance. Some key

challenges are: difficulty in striking a healthy balance between ‘discipline and focus’ and

‘flexibility and judgment’, driving projects to successful completion while managing cross-

functional teams (i.e. shortage of trained project leaders, staff turnover, gaps in necessary skills,

lack of training and/or experience), management of failure, and poor support from other parts

of the organization.

Table 1: List of Challenges faced by Foodservice Industry



111

Types of Innovation Projects and Assessing Risk

Before proceeding further, let’s establish a common language with working definitions so we

can begin a rich discussion on how best to advance product innovation practices, collaboration

and performance in our industry (a short list of working definitions can be found in the glossary

of terms).

Product innovation projects can be separated into two main types. The first type of projects

have the goal of driving top line growth (generate new revenue) for the company. Within this

category of top line growth projects there are a number of different types of projects. Each

project type represents a different type of risk (either internal, external or a combination of

both). The challenge is to maintain a balance in your portfolio of projects to optimize the

performance of both the top line revenue and bottom line performance. Here is a classification

and some working definitions for these types of projects:

Top Line Innovation Projects:

New Exploratory Technology: A fundamental research development project that promises to

yield a major breakthrough or new platform. These projects do not yield an immediate product

but have the potential to either create a new or improve an existing product family.

Figure 2: Types of Innovation Projects

New-to-World Products: A new product that is the first of its kind and creates a new market.

New Products: A product, service, package or equipment offering that is new to the business but

is not new to the marketplace.

Product Line Extension: A product that fits within an existing product line.



112

Product Improvement: An improvement to an existing product that achieves performance,

which is perceived to be either equal or of greater value, and promises to yield more revenue as

a result.

The second type of projects is considered important to do, but does not generate new revenue.

These projects impact the bottom line in that they defend existing sales, remove costs, achieve

regulatory requirements, address quality issues or manage changes that occur in the supply

chain.

These projects can be simple or complex, planned or unplanned and, since they rely on the same

resource pool as Top Line Innovation Projects, companies should consider them when

prioritizing all project classifications. Most Foodservice organizations devote a portion of

resources to innovation projects that are of this nature.

Bottom Line Projects:

Renovations/Revisions to Existing Products – A change to an existing product that is not

intended to impact the customer. There are three types of these innovations:

Internal Cost Reductions – A change to an existing product (i.e. ingredients, processing,

and packaging) designed to remove cost and improve margin.

Minor Changes – A change to an existing product (i.e. package size, graphics, promotions)

to modernize it in order to extend the product’s life and defend existing sales.

Regulatory/Quality – A change to an existing product to meet a regulatory requirement or

address a quality issue.

Supply Chain – A change to an element of the supply chain which has an impact on the product

(i.e. substitute ingredient).

Assessing the risk of a project helps to set the parameters for the amount of work that is

required to help reduce the risk (both development and market) and to help assess if the project

should even be undertaken. The evaluation of risk enables companies to determine the degree

of rigor, and therefore resources, needed to properly develop the product. The risk/reward

dialogue therefore begins as early in the idea-to-launch process possible even though

information may be limited and inaccurate.

“Rigor is about the number of choices you want to investigate and the amount of information

about each choice you want, before a decision is made. Every decision has an element of risk

of being wrong, but waiting for better information also has risk.”

- Tom Armstrong, Global Innovation

Diamond Leader, Procter & Gamble Professional



113

Correctly assessing the risk also permits a more realistic view of your portfolio of projects. For

example how many are low risk versus high risk. A good risk assessment also permits better

routing of projects into the correct type of product development process (more on this later).

Foodservice product innovation projects contain dimensions of risk that can be organized into

two categories or types of risk: internal risk (project complexity) and external risk (newness of

market). Internal risk is defined by the technical complexity (Product, Plant/Operations, and

Ingredient/Material) of the proposed product; capital investment requirements and resources

needed (usually people’s time). External risk is defined by the newness of the market, customer

or channel. The more risk that a project has (either internal or external) will usually increase the

amount of time and effort that will be required to reduce the risk and ultimately drive a

successful innovation. By recognizing the type of risk a project has early on in the development

process, you increase the probability the development teams and management will be able to

address this risk in a planned manner and experience fewer surprises. It should also aid

management in assessing the risk/reward trade off. The higher the risk-level, the higher the

offset of financial returns should be.

Figure 3: Project Risk Assessment Tool



114

New Product Development (NPD) Process

The goal is to drive new product ideas to market as quickly and as successfully as possible.

However, to deal effectively and efficiently within the complex nature of product development

many organizations in the Foodservice industry have developed a product development process

to ensure that the right activities are occurring at the right time in a repeatable and systemic

manner to minimize the inherent risk that comes with developing new products. The goal of this

new product processes is to manage, direct and accelerate product innovation efforts to

ultimately improve the rate of successful market launches.

A new product development (NPD) process is a conceptual and operational roadmap or

playbook for moving a new product project from idea to launch – a blueprint for managing the

new product process to improve effectiveness and efficiency.

The process breaks the product innovation process into a predetermined set of smaller, more

manageable pieces (or stages) of work. Although different organizations will have different

names for each stage, the purpose and description of the key activities occurring within each is

fairly consistent.

Each stage defines a set of prescribed, cross-functional and parallel activities to be undertaken

by the project team. Management then builds into these stages best practices and critical

success factors learned from past experiences and external sources.

The entrance to each stage is typically a decision point. Decision points are meetings that

control the process and serve as the quality control and Go/Kill check points. At these meetings,

the project is scrutinized by senior management: they review the progress of the project,

determine whether the criteria necessary to move forward have been met, and either approve

the task and resources for the next stage (Go), ask for higher quality information (Recycle), or

stop the project (Kill or Hold). The flow of the typical process is illustrated in Figure 4.

The Stages

The process breaks the new product project into discrete and identifiable stages, typically four,

five, or six in number although five stages appears to be the most common. These stages are

where the project-team members execute prescribed actions. Each stage is designed to gather

“We are extremely disciplined to our innovation process steps yet it’s flexible to allow us to be

nimble and enable us to deliver a predictable return on investment more rapidly if needed.”

- Jim Doak, Director of Research and Menu Development, Culver’s Franchising System



115

information and undertake activities needed to progress the project to the next decision point.

Some key points:

Each stage is cross-functional: There is no “Technical Stage” or “Marketing Stage”; rather,

every stage involves Marketing, Technical, Supply Chain, etc.

Each stage consists of a set of parallel activities undertaken by people from different

functional areas within the firm – that is, tasks within a stage are done concurrently and in

parallel.

The activities within a stage are designed to gather critical information, complete key

activities and reduce the project’s unknowns and uncertainties. Each stage costs more

than the preceding one: the process is an incremental commitment one. But with each

step’s increase in project cost, the unknowns and uncertainties are driven down, so that

risk is effectively managed.

The Decision Points

Preceding each stage is a Go/Kill decision meeting. These are the points during the new product

project where all new information is synthesized and brought together. Each decision meeting

serves as a quality control check point, as a Go/Kill and prioritization decision point, and where

the path forward for the next stage of the project is agreed to. The structure of each decision

point is similar consisting of:

1. A set of required deliverables: what the project leader and team must bring to the

decision point (e.g., the results of a set of completed activities). These deliverables are

visible, based on a standard menu appropriate for that decision point, and decided at the

output of the previous meeting. Management’s expectations for project teams are thus

made very clear.

2. Criteria against which the project is judged: these can include questions designed to weed

out misfit projects quickly. Questions which are used to assess the relative attractiveness

of the project, and thus to prioritize projects are for example:

Does the proposed project fit our business’s strategy?

Does it meet our volume and margin targets?

Is the size of the financial return versus the risk appropriate?

“Innovation is a real team sport. The team – the various internal functions, the customer, and

supply partners - must be in complete alignment each step along the way.”

- Debbie Christensen, Director of New Product Process and Portfolio Management, Schwan’s



116

3. Defined outputs: for example, a decision (Go/Kill/Hold/Recycle), an approved action plan

for the next stage (complete with people required, money and person-days committed,

and an agreed timeline), and a list of deliverables and date for the next decision meeting.

These meetings are usually staffed by senior managers from different functions, who own the

resources required by the project leader and team for the next stage and are a pre-defined

group.



117

Typical NPD Process in Foodservice Industry

Now, let’s have a look at the typical NPD process in the Foodservice industry – an overview of

what is involved at each stage (step by step) and gate. Remember that stages are the points

where various activities are conducted. Stages can vary in length of time depending on what

part the process is in and the complexity and risk of the project. See Figure 4 for a visual

illustration of the complete product development process.

Idea Generation and Screening

Ideas are the trigger to the process, and they can make or break your innovation performance

results. After all it is much easier to develop a great idea and commercialize it than to try to

make a weak or bad idea into a good product. Therefore, the more ideas generated the better it

is, so that the weaker ideas can be screened out early.

Different organizations handle idea generation in different ways. Some wait until the sales

professionals or customers make a request – more of a reactive approach to idea generation.

Other companies are more proactive and invest more heavily on obtaining customer and

consumer insights and then generating ideas. Both types of idea generation – reactive and

proactive – serve as the entry point into the NPD process (more on routing later).

First, most organizations take advantage of some type of Idea Generation and Capture system.

This tends to be source driven (e.g. sales, customers, executives, suppliers, R&D, etc.) although

periodic ideation events do occur to try and encourage and capture more ideas. Once the idea is

submitted it receives a high level qualification (or filtering). If it has promise then it is forwarded

to the first decision point for consideration to become an active project and enter the

development process. Records are kept of ideas and decisions for the future.

“One piece of data alone is not insight. Gather a wide variety of data points, apply some

quality analysis and involve some experienced people to interpret the information, that’s

insight.”

- Dean Veurink, Senior Manager Innovation and Development, Basic American Foods

“We win at product innovation when we strike that perfect balance between using

experience and judgment together with a disciplined execution of our Stage-Gate innovation

process.”

- Michael LaDuke, Senior Director of Culinary Development, Red Lobster



118

As previously mentioned, some organizations have taken idea generation further and allocated

resources to this early phase. Hence a more strategic approach is taken. Basically they are trying

to develop more fully defined concepts that meet an innovation need. This usually involves

conducting a ‘needs and wants’ assessment with Operators and/or customer segments;

leveraging trends, including market, customer, consumers and competitive analysis. They

develop a clear problem statement such as a new opportunity or gap in the existing portfolio. A

preliminary assessment of the product, market and business impact is also conducted. The goal,

of this early phase is to develop a defined concept that can enter the development process.

Since the concept has been more thoroughly defined, it usually can move through the early

stages of the development process more quickly or even omit the first stage eventually.

Decision Point 1: Idea Screen

Idea screening is the first decision to commit resources to the project. This is a “gentle screen”

and amounts to subjecting the idea to a handful of qualitative criteria such as strategic

alignment, project feasibility, magnitude of the opportunity and market attractiveness, product

advantage, ability to leverage the firm’s resources, and fit with company policies. Financial

criteria are typically not part of this first screen due to the limited amount of information

available.

Stage 1: Exploration

This first and inexpensive stage has the objective of conducting an assessment of the idea high

level concept. The output from this stage is a preliminary product concept. The spirit of the work

activities is to conduct a quick assessment or scoping of the new idea. Note that if your

approach is to use a more proactive approach to idea generation, then you may be able to move

through this stage rather quickly and/or omit it all together. This stage should be quick and

consume little time or resources.

Key activities include:

Preliminary Assessment of Product: a qualitative description of the intended product, service

and/or equipment.

Preliminary Assessment of Market: identification of the potential target markets and/or

customer(s); high level evaluation of the competitive situation and an articulation of the

customer needs – Operators, consumers and segments.

Preliminary Technical Assessment: examines whether the technical capability currently exists;

what type of risk maybe involved and a preliminary vendor and supply chain assessment.



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Preliminary Business Assessment: assesses the strategic fit with business strategy, internal

synergies and a high level assessment of the financial returns (i.e. magnitude of the

opportunity).

The output of this stage is a preliminary product concept or description of the product (usually

one or two pages in length).

Decision Point 2

The project is now subjected to a second and somewhat more rigorous screen. This decision

point re-evaluates the project’s merits in the light of the new information obtained in Stage 1. If

the decision is a Go at this point, the project moves into the next, heavier spending, stage.

Besides the qualitative criteria used at the previous decision point, the financial return is also

assessed, but only by a quick and simple financial calculation (for example, the payback period

or high level margin and volume assessment).

Stage 2: Business Feasibility

Stage 2 is where the project’s business feasibility is assessed and the product is justified before it

moves to the formal Development stage. A detailed design and feasibility analysis of the concept

is undertaken. Activities are conducted to clearly define the product, understand what is needed

to win in the market and what internal challenges in development and manufacturing will occur.

Although different organizations might have different descriptive labels for these activities, the

real difference here is not if the various activities are conducted but in how (i.e. techniques,

tasks, methods, tools) the activities are conducted, and how well. This is often described as the

critical homework stage since once a project passes this through this stage it becomes very hard

to stop it.


Assessment of Product: this outlines multiple aspects of design including what the

formula/recipe will be (or product specs); packaging requirements; any regulatory or intellectual

property issues and of course, food safety.

Assessment of Market: a complete assessment of what is involved in the go-to-market/sales

plan including a solid understanding of what a ‘winning’ new product would be from a

customer’s perspective supported by various market research initiatives such as voice of

customer or concept testing.

“We like to have new product ideas ‘on the shelf’ so we [R&D] can move more quickly to

develop new products that contribute to new experience innovations.”

- Sylvia Matzke-Hill, Director of Research and Development, Buffalo Wild Wings Grill and Bar



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Technical Assessment: examines the processing needs (build or buy); sourcing requirements

(availability and qualification of vendors); impact and/or requirements on operations, supply

chain and, if needed, a capital assessment.

Note for a non-food product a detailed technical appraisal that focuses on the technical

feasibility or challenges of the project would be conducted.

Business Assessment: assessing what the product/service/equipment definition and total

proposition will be, financial assessment on how big the magnitude of the opportunity is and

sensitivity of results (i.e. volume, margin, cannibalization, incremental revenue evaluation).

Proposed timeline and resource allocation needs are also determined.

The result of Stage 2 is a solid business case for the project: the product concept definition – a

key to success – is agreed to; and a thorough project justification and detailed project plan are

developed.

Stage 2 involves considerably more effort than Stage 1, and is usually the beginning of input

from cross-functional team members – the core group of the eventual project team.

Decision Point 3: Go to Development

This is the final decision point prior to the Development stage, the last point at which the project

can be killed before entering heavy spending occurs. Once past this decision point, financial

commitments are substantial and the leadership team has signed off on the product and project

definition.

The qualitative side of this evaluation involves a review of each of the activities in Stage 2; and a

check that the activities were undertaken, the quality of execution was sound, and the results

were positive. Next, the project is reviewed against a set of decision criteria, similar to the

previous decision meeting, but this time with much more rigor and with the benefit of more

solid data. Finally, because a heavy spending commitment is the result of a Go decision, the

results of the financial analysis are an important part of this screen.

Stage 3: Development

Stage 3 is the actual development of the product/service/equipment, the imaging and

packaging. The goal of this stage is to develop an internally-tested, robust prototype (physical

product ready for validation). Lab tests, in-house tests or alpha tests ensure that the product

“We need to move slower upfront in order to run faster later.”

- Andrew Dun, Vice President, Business Development, Insight Beverages



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meets requirements under controlled conditions. For lengthy complex projects, numerous

milestones and periodic project reviews are built into the development plan to provide visibility,

project management and control.

Although the emphasis in Stage 3 is on technical work, in parallel, a number of other activities

are occurring as the project team works in a cross-functional environment (for example,

development, go-to-market, supply chain, operations, and quality plans). These activities are

typically completed in a very iterative (back-and-forth) way. Meanwhile, detailed testing plans,

go to market launch plans, and production or operations plans, (including production facilities

requirements), are developed. An updated financial analysis is prepared, while regulatory, and

intellectual property issues are resolved.


Develop Product: this includes iterative processes such as sensory testing, customer validation

and formula/recipe optimization. Note that for a non-food product such as equipment a working

prototype would be developed.

Develop Go-To-Market/Sales Plan: an outline of the launch plan including type of launch

(regional launch or in-market test with a broad market) is prepared. It also outlines packaging

specifications.

Develop Technical Plans: detailed elements of the build or buy recommendations, source

materials and ingredients (including recommended vendors), operations, supply chain, capital

needs, regulatory/IP plans, food safety, quality control targets and vendor qualifications or

production /manufacturing plan are developed.

Updated Business Case: all aspects and elements of the business case such as the financial

assessment (proforma) and updates to the risk assessment are refined and updated.

The output of the Development stage is a prototype ready for validation and a complete update

on all go forward plans including the marketing, sales, operations, supply plans and an updated

business case.

“We have to cut through the chaos and make it easier for Operators and Manufacturers to

work effectively together.”

- Bobbie Mellard, VP of Purchasing and Distribution, Perkins & Marie Callender's Inc.



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Gate 4: Go to Validation

This post-development review is a check on progress and the continued attractiveness of the

product and project. Development work is reviewed, ensuring that the work has been

completed in a quality fashion, and that the developed product is indeed consistent with the

original definition previously specified.

The project’s economics, via a revised financial analysis based on new and more accurate data,

is reviewed. The validation plans for the next stage are approved for immediate

implementation, and the detailed marketing and technical plans are reviewed for probable

future execution.

Stage 4: Validation

This stage tests and validates the entire viability of the project: the product itself, the production

process, customer acceptance, and the economics of the project. It also includes extensive

external validation and testing of the product and production process. The output of this stage is

the total product proposition for the market and customer.

Key Activities Performed:

Validation of the Product: this includes refining the recipe/formula as a result of manufacturing

input and finalizing details such as nutrition facts.

Finalize Go-To-Market/Sales Plan: all remaining plans are finalized including elements such as

packaging labels, customer marketing needs and distributor needs.

Validation of Technical Plans: includes manufacturing plans whether internal or outsourced,

sourcing, operations, food safety, quality, regulatory/IP and supply chain. Note this could

include trial, limited, or pilot production to test, debug, and prove the production or operations

process and throughput, particularly if new production equipment is acquired and tested here.

Finalize the Business Case: includes updates on the final analysis including volume, revenue and

margin refinements (with locked assumptions and inputs), updated risk assessment and a

testing of assumptions (cannibalization, volume, price points, customer/consumer acceptance)

to confirm the continued business and economic viability of the project, based on new and more

accurate data.

Sometimes Stage 4 yields negative results – a technical problem or poor customer acceptance.

In this case the project may need to return to Stage 3. For example the formula may need to be

refined resulting in another round of technical validation. Hence iterations back and forth



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through the development process are quite possible until you get a product that you think will

win in the marketplace and/or satisfy specific customer needs.

Gate 5: Go to Launch

This final decision point opens the door to full commercialization – market launch and full

production or operations start up. It is the final point at which the project can still be killed. Here

the focus is on the quality of the activities in the Validation stage and their results. Criteria for

passing the decision point focus largely on expected financial return and appropriateness of the

launch and operations start up plans. The operations and marketing plans are reviewed and

approved for implementation in Stage 5.

Stage 5: Launch

This final stage involves the launch of a commercial product (a product that will win in the

marketplace or a customer accepted product). This is the implementation of the go-to-market

launch plans, sales plans, technical plans and production or operations plans. Given a well

thought-out plan of action and backed by appropriate resources, and of course, barring any

unforeseen events, it should be clear sailing for the new product... another new product

success!

Key Activities Performed:

Execute Go-To-Market/Sales Plan: includes launch of marketing collateral and campaigns and

sales plans.

Execute Technical Plans: Includes scaling up to full manufacturing (whether internal or

outsourced) and remaining aspects of plans initiated during Stage 4 (i.e. ongoing product

testing, safety, quality and supply chain).

Validation of Business Performance: this includes an assessment of whether volume and profit

goals were met.

Post Launch Review Preparation: includes tasks such as an adjustment of plans as needed when

market conditions change and documentation of lessons learned (what went well or wrong).

Summary: The above section has described a full five stage product development process. There

are two pre-development stages: Stage 1, a quick early assessment and Stage 2, which provides

for a more detailed investigation.

The result is superb up-front homework and sharp, early product definition. Additionally,

constant customer contact and a market orientation are evident throughout all five stages.

These actions heighten the odds of delivering a superior product with real value to the

customer. Finally, a cross-functional team approach is mandatory in order to successfully

execute each stage in a timely fashion.



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Figure 4: Typical Product Development Process for High Risk Projects



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Fast Track Version for Low Risk Projects

Not all projects are high risk and benefit from the full rigor of the typical, five-stage model

outlined in Figure 4. Many Foodservice organizations cope with lower risk projects by viewing

their NPD process as a flexible ‘guide’ rather than a hard-and-fast set of ‘rules’.

This way, each project can be routed through the process according to its specific risk level and

needs. Stages can be omitted and decision points combined, provided that the decision is made

consciously and with a full understanding of the risks involved. The new product process is

essentially a risk-management process, and thus the risk level, the uncertainty, and the need for

information dictate what steps and stages need to be done, and which can be left out.

Companies with a high volume of these low risk projects try to achieve further efficiencies and

speed by formally structuring and using a shortened version of their five-stage process, such as

the three-stage process illustrated in Figure 5. This express version of the process is reserved for

projects determined to be ‘low risk’.

A routing decision usually involves a quick assessment of risk (using the risk tool previously

mentioned) during the first decision point, before the project becomes active. Low risk projects

are routed into a three-stage process whereas high risk projects are routed into a five-stage

process. Typical three-stage process projects include low risk projects such as: extensions,

improvements and minor product renovations and revisions.

Different organizations handle three-stage processes in different ways. For example, some

companies combine different stages together (i.e. stages 3 and 4 versus stages 4 and 5) while

others assign entirely different decision makers to these projects so as to enable the speed that

is so critical with these types of projects. The key however is to have clear and well defined

routing to ensure a new product project is entering the right level of process rigor to match the

level of risk the project actually has. Speed just for the sake of speed can create a lot of

unexpected problems.

”We try to ‘right-size’ our innovation process so lower risk projects are not unnecessarily

burdened. They [lower risk projects] still have to execute all the same activities in the

standard process, but the level of due diligence applied to each activity is usually much less.”

- Nicole Weber, Marketing Manager,

Land O’Lakes



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Figure 5: Fast Track Product Development Process for Low Risk Projects



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Case Example At one of America’s largest Foodservice companies, a five-stage new product process very

similar to the process in Figure 4, is used. The leadership introduced the use of a ‘triage’

approach to routing projects by defining three categories of project types based on their

business strategy, project scope, investment level, and risk. Their goal was to succeed by:

maintaining and improving their core competency in delivering each type of innovation project

by further tailoring their new product process. Their three categories included:

Major projects: These tend to be high risk projects as they typically involve exploring new

product, markets, technologies and solutions. They pass through the full five-stage model.

Fast track projects: These are medium cost projects and feature some risk and development

costs. These moderate risk projects are tracked through a three-stage version of the model

which collapses the two homework stages (Stages 1 and 2) into a single stage and collapses the

Development and Validation stages (Stages 3 & 4) into a single stage. The activities all still need

to occur but the focus is on ensuring that they are done correctly and in a timely manner.

Sales orders: These are relatively minor product changes and improvements, often in response

to a request from a major customer. These go through a two-stage version of the model and

focus on exception activities (only those activities impacted by the request).

The product innovation strategy an organization elects tends to define the types of innovation

projects it pursues (and rightfully so!). For example, you would expect to see a very different set

of innovation project types in a company with a strategy to deliver bold technology

breakthroughs to a broad market than in a company with a strategy focused specifically on

customizing products for their customers. As the primary purpose of the NPD process is to

enable the successful and efficient execution of the projects that will advance the business’s

strategy, ideally, one’s NPD process(es) are tailored and right-sized to achieve this need. See

Case Example.



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Making your Governance Work

A key aspect of having an effective new product process is the ability of the organization to

make timely decisions on a project’s merits and the ability to quickly deploy resources. Many

companies have adopted best practices to ensure that governance (decision-making) in the

process is working effectively.

Successful companies have learned that “as go the decision points so goes the process”. After

all, this is where management ensures that the right projects are being worked on and that the

right activities are occurring. In our industry the approach to governance is characterized by

several unique traits:

Projects tend not to be killed once they enter the funnel indicating that early decision

points are critical to pipeline health. Strong governance at the front end is critical to

ensure a healthy portfolio.

Decision points located later in the process tend to serve the function of project reviews

and problem solving to ensure the project will launch on time. Hence once a project

enters into the annual launch calendar, only rarely will it be stopped or killed.

Sales influence on project approvals and prioritization is strong due to a large number of

single customer projects.

A common problem found in other industries and unfortunately to which the Foodservice

industry is no exception is having:

Difficulty in getting executives together in a timely manner for decision meetings although

some firms do schedule regular meetings and seem to have more discipline around this

practice.

Resource allocation and project prioritization as a reoccurring problem.

A best practice in Governance: Although all companies use some type of executive approval

process to move projects forward from stage to stage, a best practice is to have a consistent

approach with established protocols.

“We need to move from managing a ‘tunnel’ to optimizing a ‘funnel.”

- Jerry Reardon, Chief Operating Officer, Otis Spunkmeyer



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Ensuring that you are working on the right projects is too important to be left to chance. Some

common practices include:

1. Clear identification of who the decision makers are: This is usually executive level

resource owners. People who have authority to release resources as well as the owners

of the financial results.

Figure 6: Sample Checklist of Decision Criteria for Custom Products

2. Established meeting protocols: Regularly scheduled meetings are held. Projects teams

work to distribute pre-defined deliverables to the decision makers before the meeting.

Deliverables satisfy the information requirements of the decision makers. See figure 6

for a sample list of deliverables and how this information satisfies various criteria. The

project leader/team usually presents the project at the decision meeting. Very often

some pre-screening of projects occurs before the meeting.

3. Decision making is clear: The norm is consensus based recommendations with executive

privilege for final decision and/or veto when needed. Many companies try to use

standard decision criteria that increase in rigor as the project moves through the

process.



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In some organizations, decision makers weigh-in by scoring each criteria to arrive at a total

project score. These total project scores aid in prioritizing projects. See figure 7 below for a

sample project scoring tool.

The meeting outcome is a clear decision (Go/Kill or Targeted Recycle with direction).

Figure 7: Sample Project Evaluation



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Performance Metrics

How do we know that we are winning at product innovation? What scorecards should we use?

These are good questions and unless we are tracking our results with clear, well defined metrics

then the answer is opinion based. Having a good set of both business related metrics and

project specific metrics will provide the dashboards needed to determine how well you are

doing at innovation and if you are getting better year over year.

Defining standard metrics can be a challenge as each company has different needs and

definitions. However a good base line to start is with business and project level metrics.

Business Metrics: These metrics are used to measure the success or failure of a new product

launch and its success in either the marketplace or with a customer. They also, at an aggregative

level provide the overall business impact of the product innovation program. Most companies

use multiple metrics to measure business level and project level success.

The most common groups of business metrics used are gross margin and net sales. Caution is

urged here however as financial metrics, although important, should not be the only ones used.

Here are the two sets of financial metrics that seem to be the most common.

Gross Margin: Gross margin achieved vs. budgeted; where margin is defined as gross margin; by

project and by total portfolio by product category

Net Sales of New Products: Net sales is defined as gross sales less trade payments. Note it does

not include cannibalization. It is measured by project and by total portfolio as well as by product

category. Net sales can be further divided into a multiple set of metrics to capture the different

revenue views.

Net sales for Year 1

Net sales as a percentage of sales

Net sales for Year 1 against budget

Net sales for Year 1, 2 and 3 combined

Net sales as a percentage for Year 1, 2 and 3 combined

Net sales for Year 1, 2 and 3 combined against budget

To have a useful set of metrics that are comparable over time, clear and stable definitions are

needed. Also the period of time must be established. For example:

“A company’s attention gets focused on the things that get measured”

- Paul Darrow, Director of Innovation and Business Development Director,

Kellogg Food Away from Home



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When does the clock start ticking for new sales? In the Foodservice industry, a new product

generally counts toward new product sales for 2 years. However, this calculation varies from

one organization to the next. Some organizations evaluate metrics for a one year period –

defined as a rolling 12 month timeframe following the launch date while others use the year of

launch as the starting period. There is also a difference between the first year of sales or launch

period and the repeat rate of sales or multiple year sales. The most common period seems to be

a one year and three year period. Sales are also compared against the forecast or target budget.

Project level: The success of individual projects is measured by tracking the performance of

launched and in-process products using a predefined set of qualitative and quantitative metrics.

A variety of different metrics are used to measure individual project success and the health of

the pipeline. For example:

Number of new product launches per year

Funnel flow rate – the number of projects in each stage

Time to market – beginning at Decision Point 1 or 2 and ending at availability-to-ship date

Actual calendar time spent versus budgeted time (for the entire project and by stage)

Actual time (resources) spent versus budgeted time (for the entire project and by stage)

Volume or units sold of the new product versus the target set in the business case

Success and failure rate of new product launches for year 1 and year 3

“There is a difference between being creative and being innovative. Creativity is about

generating new ideas, while innovation is about strategically turning creative ideas into

dynamic business results.”

- Mike Salem, Senior Director of Research and Development, Del Taco LLC



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Internal and External Stakeholders

One of the challenges in developing new products for the Foodservice industry is the large

number of different stakeholders and functions that must become involved in the project at

different times throughout the NPD process. Typically, various functions will join into the project

at the appropriate time for their involvement, and similarly, will step out of the project when

their contribution is completed. Keeping all of the various team players in alignment and

collaborating effectively from project start to project finish typically falls to the role of the

project leader/manager. In Table 2, for example, is a partial list of internal stakeholders that

have impact on or are impacted by product innovation initiatives.

The industry is also affected by high turnover of people and the need for highly qualified project

managers to lead projects. In today’s business environment a reliance on tribal knowledge can

be a risky strategy.

Table 2: Typical Stakeholders Involved in Product Development Projects



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Working with Suppliers: Successful product innovation is also dependent on our ability to

leverage and/or work with the numerous suppliers and vendors typically involved (see Table 2).

When Manufacturers described their most effective supplier relationships (for the purpose of

new product development), they cited the following:

Desire to work first with pre-approved suppliers due to a higher probability of a good

outcome, based on past projects

Importance of a communication strategy and protocol to ensure both players understand

key strengths and weaknesses and what is important

Desire to have pre-established confidentiality agreements in place or contracts readily

available to avoid unnecessary delays

Know who the key internal contacts are so that you can speak to the right players,

beyond the sales team

For riskier projects have an early meeting to establish who is accountable or responsible

for key aspects of the project; establish specific priorities and timelines

Both manufacturer and supplier using a common NPD process or framework so both are

in alignment and can manage expectations from stage to stage.

Working with Customers: Successful product innovation is also dependent on our ability to

obtain quality customer information. This information extends well beyond the basic product

order information such as volume, price point and product specifications.

It involves gaining a deep understanding of the customer’s business goals, intended product and

brand positioning, target audience, desired margins, volumes, operational feasibility, other

components to the overall service experience and the desired development timelines.

Manufacturers that engage in customizing products for and/or with customers face some

unique challenges, in addition to the general challenges we discussed earlier (See Table 3). Of

these additional challenges, obtaining quality insight into both the customers’ business needs as

well as the consumers’ needs was recognized as one of the highest priorities. Operators also

recognize the value of supplying quality information to their business partners – it makes good

business sense if it helps to achieve a better product and project outcome – a win/win for

“New innovations are central to our business strategy and we rely on partners that use their

deep understanding of our brand and operations to bring innovative concepts that will help

us achieve a competitive advantage.”

- Darryl Mickler, Senior Director of Culinary Innovation, Brinker International



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everyone. For example, Buffalo Wild Wings has been using a standard information brief that

they share with their business partners prior to starting any product development work.

Table 3: List of Additional Challenges faced by Foodservice Industry

This brief typically covers 5 key topics including:

1. Business Overview of Company, including elements of the brand, positioning and target

audience

2. Food Development Mission

3. Key Areas of Food Development Focus

4. Limitations and Opportunities including operations, equipment, service experience

model, internal product development capability and profitability model to work within

5. Model Business Partner Overview including expectations for your role in product

development, NPD process and ideation support, testing and food safety expectations

and the supply/distribution model

Del Taco, LLC includes Menu Engineering Analyses (see Figure 8 for sample analysis) within their

information briefs. Rather than simply telling Manufacturers what their specific product

requirements are, Del Taco looks to their suppliers as business partners. They share information

about their business goals, gaps and opportunities and look to the manufacturer to conduct a

new product opportunity analysis in search of ways to add value to Del Taco through their

products. This is a very different model from the traditional sales approach where the

manufacturer presents their product portfolio and capabilities with the hope that the operator

will be able to determine what to buy.

“When developing customized products, you are working with your customers throughout the

entire innovation process. Unfortunately, current project scoping practices don’t always take

into consideration the additional time it takes to learn each customer’s unique business

culture, strategy and business practices so we can work more successfully together.”

- Rod Hogan, Vice President New Business Development, Sargento Foods Inc



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When Operators describe their biggest challenges with product development, they cite many of

the same challenges raised by Manufacturers. This is not surprising given the pressures they

face to generate new traffic, more revenue, increase receipt size and improve repeat purchase

frequency through new menu innovations while continuing to improve or maintain customer

satisfaction levels. Operators also manage multiple types of product development projects,

hence prioritization, focus and timelines are aggressively managed. Innovation projects might

support:

Increased customer counts vs. menu optimization (portfolio analysis of menus to achieve

cost reductions, changes to packaging and menu engineering)

Consumer demand vs. operational feasibility

Consumer insights to understand the impact the product may have on menu performance

and in market tests

Short term projects (one year) and new products (two to three year timeframe).

When Operators describe their most effective supplier relationships, they cite the following:

Deep understanding of the operator’s business strategy and future needs before meeting

with them

Manufacturers having a willingness to work with them on innovation versus just selling in

product

Understanding the operator’s respective distribution systems and the implications on

supply capabilities (how they will fit in to it – validation, costs and product consistency)

Understanding the time pressures the operator’s face, hence a lack of interest in ‘trial and

error’ types of innovation

Ability to line-up the right internal people to achieve an alignment of expectations from

both parties. Ability to make available R&D staff versus sales

Alignment around the type of customization required

Both the operator and the manufacturer using a common NPD process or framework so

both are in alignment and can manage expectations from stage to stage.



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Figure 8: Sample Menu Engineering Analysis

Conclusion

Having a NPD process that is well designed and that is actually used by the organization will go a

long way in improving your new product performance results. Typical benefits cited by

Foodservice organizations include:

A great roadmap for success – defines the project leader’s and team’s roles,

accountabilities and deliverables

A visible process – enables alignment because it is known & understood by all

A common language to enable more effective working relationships with multiple internal

and external stakeholders, especially customers and suppliers

Makes for a complete process – easier to avoid critical errors of omission, and typical

pitfalls

Puts discipline into a somewhat ad-hoc, chaotic process

Ensures timely customer inputs

Forces more attention to quality of execution - the decision points

Enables effective cross-functional collaboration and timely inputs from all

A faster process via parallel processing

A flexible process

Long lead time activities are more visible and can be moved forward

Stages can be collapsed; manages calculated risk at the appropriate time.



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Getting Started

If your organization is considering improving your product innovation capabilities and/or it is

time to consider refreshing your existing NPD process then perhaps these suggestions will help

you begin. The top ten suggestions below have been collected from the Foodservice

organizations that have contributed to the development of this white paper. They offer these

suggestions to help others within the Foodservice industry to raise the innovation bar even

higher.

1. Ensure you have senior management sponsorship, alignment and support

2. Clarify how your organization’s innovation efforts will support the business strategy

3. Understand the needs of different internal groups that use the process

4. Design the process to be truly cross-functional with all roles represented: people need

to know their interests are represented.

5. Ensure role clarity for all involved in the process; clear accountability

6. It is best to clearly define Governance and Go/Kill decision points throughout, complete

with prioritization resource allocation

7. Have a process owner – someone whose role it is to manage the process and transfer

knowledge regarding innovation best practices

8. Establish few, meaningful metrics so you can measure results

9. Define quick wins so people can see what impact the process is making

10. Allow for continuous improvement; you will learn as you go.

Words of Caution

Last but not least, the innovation leaders and champions that have experienced both the

rewards of implementing a new product process, and the disappointments of not being able to

leverage one, have provided some words of advice. They offer these words of caution so you

”Pioneering the creation of the Center of Innovation Excellence is an exciting step forward

[by IFMA Members] to help address this important challenge faced by many businesses in

the Foodservice industry.”

- Larry Oberkfell, President and Chief Executive Officer, IFMA

“There needs to be more high-level sharing of innovation best practices in this

industry, for all players to benefit.”

- Jim Doak, Director of Research and Menu Development, Culver’s Franchising System



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can pre-empt some of the common problems and pitfalls that they had to overcome during their

implementation journey.

Product Innovation Strategy: develop one, make sure it is realistic and get everyone

behind it/aligned

Portfolio Management: be on the lookout for too many projects and too few resources

and develop ways to prioritize and allocate resources

Risk tolerance: initiate the dialogue and seek to understand how much risk the

organization wants to take

Incentives and bonus plans do not always align to innovation objectives

Unrealistic expectations from leadership and customers e.g. timing, lead time, resources

required, costs will be common – if you write it down, people can see it, understand it and

react to it

Lack of the right skills on NPD project teams will be common so turn your process into an

enabler by incorporating guides and templates

Learn to recognize the signs that people are not following the process

- Scope creep because of an unclear project definition;

- Ignoring the research because it doesn’t align with what you’re trying to achieve;

Communication and Training: the process might appear ‘simple’ but do not

underestimate the need to communicate and train all involved

Overcorrecting: avoid making the process too bureaucratic and inflexible because of a

few early mis-reads or mis-understandings.

Doing It Right

Product innovation is one of the most important endeavours in Foodservice, yet one of the most

complex and risky. Without a systematic new product development process, however, often the

NPD effort is a chaotic, hit-and-miss affair. The NPD process acts as an enabler or playbook,

building in best practices and ensuring that key activities and decisions are done better and

faster.

But a NPD process is considerably more complex than the simple diagram in Figure 4 suggests;

there are many intricacies in the details – both the “what’s” and the “how to’s” and

implementing and sustaining the process requires on-going support. Many leading companies in

the Foodservice industry, however, have taken the necessary steps, and have designed and

implemented a world-class NPD process, and the results have been positive: better, faster and

more profitable new product developments!



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Methodology

This whitepaper is a collaborative effort between the International Foodservice Manufacturers

Association (IFMA) and Stage-Gate International (SGI) with the goal to assess the current state

of product innovation within the Foodservice Industry.

The scope of qualitative research is specifically focused on the new product development

process. The initiative was sponsored by IFMA’s Center of Innovation Excellence with the

leadership of IFMA’s Founding Member companies (listed earlier in this paper).

Participants

Approximately 50 business leaders and innovation professionals from 16 companies in the North

American Foodservice industry participated in this qualitative research study.

Participating Manufacturers represented food, beverage, packaging and equipment innovations

of both small and large sized organizations. Participating national and regional chain Operators

represented the fast casual, casual and full-service segments.

Qualitative Research – Method

All participants generously shared their expertise, experience and organization’s product

innovation programs over the course of two Innovation Roundtable Workshops, personal

interviews and by submitting critical innovation information to Stage-Gate International for

thorough analysis and assessment.

The Innovation Roundtable Workshops focused on capturing a collaborative illustration of

typical Foodservice new product process workflows, inputs, activities, interfaces with suppliers

and customers, and unique practices and challenges. Additionally, participants discussed key

challenges associated with customizing products for customers and co-developing products with

customers.

The Innovation Roundtable Workshops were professionally designed and facilitated by Stage-

Gate International. Feedback was collected on the findings, analysis was conducted by Stage-

Gate International and final findings, illustrations, workflow and descriptions, as appropriate,

were reviewed for general industry application by the Founding Members. Finally, findings from

the Innovation Roundtable Workshops, document reviews, interviews and subject matter expert

analysis conducted by Dr. Scott J. Edgett, were used to develop this whitepaper.


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Toward a Common Language for Foodservice

KEY TERMS

Business Case: Summary of key elements of the project that highlight the product’s total value

proposition to the market or customer in economic terms.

Cannibalization – The portion of demand for a new product that comes from the erosion of the

demand for (sales of) a current product the company makes.

Commercial Product – A test approved production model (scalable) of the prototype that is

customer-ready for shipping.

Concept – A documented and possibly visual description of the new product prepared through

team-work (casual or structured), may describe various options for product design, formula and

benefits combined with a broad understanding of technology needs and can be presented as

preliminary or detailed.

Deliverables – Succinct information compiled by the project leader and project team that is

used by gatekeepers to make a go/kill decision on a project.

Idea – Typically generated by an individual, the idea is the most embryonic form of a new

product that often consists of a high-level vision of a solution to a problem or need.

New-to-World Product – A first of its kind product that creates a new market.

New Exploratory Technology – A fundamental research of platform development project that

promises to yield a major breakthrough or platform.

New Product – A product, service, package or equipment offering that is new to the business

but not new to the marketplace.

Parallel Activities – Work undertaken by people from different functional areas within the

organization and is done concurrently.

Product Line Extension – A product that fits within an existing product line.

Product Improvement – An improvement to an existing product that achieves performance

perceived to be equal or greater and promises to yield more revenue as a result.

Product Renovation – A change to an existing product that is not intended to impact the

customer.

Prototype – A physical model of the new product concept. Prototypes can be presented as

preliminary (bench-top) or robust (functionally working and scalable for production).


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Resources for Product Innovation Professionals

Robert G. Cooper. (2011). Winning at New Products: Accelerating the Process from Idea to

Launch, 4th Edition. Perseus Publishing.

Robert G. Cooper; Scott J. Edgett. (2009). Product Innovation and Technology Strategy. Product

Development Institute Inc.

Robert. G. Cooper and Scott J. Edgett . (2007). Generating Breakthrough New Product Ideas:

Feeding The Innovation Funnel. Product Development Institute.

Robert. G. Cooper and Scott J. Edgett. (2005). Lean, Rapid, and Profitable New Product . Product

Development Institute.

Robert G. Cooper, S. J. (2001). Portfolio Management for New Products 2nd edition. Perseus

Publishing.

These resources are available at a preferred price to IFMA members on the IFMA website

www.ifmaworld.com. For additional product innovation resources and consulting services

contact:

Michelle Jones, Executive Vice President

Stage-Gate International

[email protected]

+1-905-304-8797

www.stage-gate.com

Devon Gerchar, Director of Member Value

International Foodservice Manufacturers

Association

[email protected]

+1-312-540-4403 www.ifmaworld.com







143

References 1. See success/failure studies and benchmarking investigations into new product

development, for example: Cooper, R.G. and Edgett, S.J., “Best Practices in the Idea-to-

Launch Process and Its Governance”, Research Technology Management, 55,2, 43-54,

2012. Cooper R.G. and Edgett, S.J., “Developing a Product Innovation and Technology

Strategy for Your Business”, Research Technology Management, 53, 3, 2010, 33-40;

Cooper, R., Edgett, S. and Kleinschmidt, E. “Benchmarking Best NPD Practices – III:

Driving New Product Projects to Market Success”, Research Technology Management,

47, 6, 2004, 3-55; Cooper, R., Edgett, S. and Kleinschmidt, E. “Benchmarking Best NPD

Practices – I: Culture, Climate, Teams and Senior Management Roles”, Research

Technology Management, 47, 1, 2004, 31-43; Cooper, R., Edgett, S. and Kleinschmidt, E.

“Benchmarking Best NPD Practices – II: Strategy, Resource Allocation and Portfolio

Management Practices”, Research Technology Management, 47, 2, 2004, 50-59.;

Cooper, R.G., “New products: What Separates the Winners from the Losers”, in PDMA

Handbook for New Product Development, ed. Milton D Rosenau Jr., New York, NY: John

Wiley & Sons Inc, 1996; Cooper, R.G. & Kleinschmidt E.J., “An Investigation into the New

Product Process: Steps, Deficiencies and Impact”, Journal of Product Innovation

Management, 3, 2, 1986, 71-85; Cooper, R. and Edgett, S. “Critical Success Factors for

New Financial Services”, Marketing Management, 5, 3, 1997, 26-37; Cooper, R., C.

Easingwood, S. Edgett, E. Kleinschmidt and C. Storey, "What Distinguishes the Top

Performing New Products in Financial Services", Journal of Product Innovation

Management, 11, 4, 1994, 281-299; Edgett, S., "The Traits of Successful New Service

Development", The Journal of Services Marketing, 8, 3, 1994, 40-49; Cooper, R.G. &

Kleinschmidt, E.J., “Major New Products: What Distinguishes the Winners in the

Chemical Industry,” Journal of Product Innovation Management, 10, 2 March 1993, 90-

111; Cooper, R.G. & Kleinschmidt, E.J., “Benchmarking the Firm’s Critical Success

Factors in New Product Development”, Journal of Product Innovation Management, 12,

5, Nov. 1995, 374-391.

2. For more information on gatekeeping practices, see Cooper, R.G. and Edgett, S.J.

Product Innovation and Technology Strategy, Product Development Institute, Chapter 8,

2009. And also Cooper, R.G., “Effective Gating: Make Product Innovation More

Productive by Using Gates with Teeth”, Marketing Management, March-April 2009, pp.

12-17.


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About the Author

Dr. Scott J. Edgett is internationally recognized as one of the world’s top experts in product

innovation and is the pioneer of portfolio management for product innovation. He is a high

profile speaker and sought-after advisor. Dr. Edgett has had extensive experience working with

large multinational clients in a variety of industries, principally focusing on issues affecting

innovation leadership and capability. He is credited with helping business executives and

innovation professionals successfully implement world-class innovation processes that have

generated outstanding results. His speaking engagements and consulting work have taken him

around the globe to work with some of the world’s best innovators and companies among the

Fortune 1000.

Dr. Edgett is Chief Executive Officer and co-founder, with Dr. Robert G. Cooper, of both Product

Development Institute and Stage-Gate International. He has spent more than 20 years

researching and developing innovation best practices and working with organizations in product

innovation. He is a prolific author having coauthored seven books including the popular

‘Portfolio Management for New Products, 2nd Edition’ and has published more than 65

academic articles. Dr. Edgett is a former Professor of the Michael G. DeGroote School of

Business, McMaster University in Ontario and is a Faculty Scholar at the Institute for the Study

of Business Markets (ISBM) at Penn State University.

Contact author at: [email protected]


145

For More Information

Contact:

• IFMA

Name: Devon Gerchar

Email: [email protected]

Tel: +1-312-540-4403

Website: www.ifmaworld.com

• Stage Gate International

Name: Michelle Jones

Email: [email protected]

Tel: +1-905-304-8797

Website: www.stage-gate.com





foodservice new product development process: performance

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