Innovation is a difficult game, and one that often ends in failure. While many entrepreneurs and inventors celebrate failure as a fact of life and a learning process, the idea is that eventually you succeed.
Europe’s consumer goods companies have been busy coming up with new products to grab consumer interest but their failure rate is looking pretty severe. Of 8,560 product launches analysed by Nielsen, just 18 succeeded in becoming what it calls ‘breakthrough innovation winners’. That is, achieving £10m of sales in their first year of trading and maintaining 90% of that in their second.
That bar might seem quite high – early-stage entrepreneurs wouldn’t dream of a £10m turnover in their first year – but for the big FMCG giants it’s a lot more achievable. Overall three quarters of ‘SKUs’ (stockkeeping units, or individual products) failed to generate even £100,000 worth of sales in their first year. Of course the fundemantal difficulty with innovation is it's very hard for anybody to know whether something is going to work in advance.
Those products that did manage to break through were extremely varied – from Robinsons Squash’d highly-concentrated fruit cordial to Unilever’s Sure compressed deodorants and Scholl’s ‘Velvet Smooth Express Pedi’, an electronic file used to remove hard skin from the feet. Nielsen attributes their success to ‘Jobs Theory’ – 'the idea that people don’t so much buy products as hire them to perform jobs in their lives.
‘Successful innovators display empathy – they clearly identify the circumstance where consumers struggle or have unmet aspirations and innovate around these,’ said Marcin Penconek, VP of Nielsen’s innovation practice in Europe, and a co-author of the report.
‘Breakthrough innovations are products that solve these issues in a distinctive and compelling way. They communicate it to consumers in a simple way, allowing them to make a clear link between their need and the new product – winners can easily explain their solution to an eight-year old child.’ Good luck holding an eight-year old's attention long enough to extol the virtues of a Velvet Smooth Express Pedi.