Webinar Recap: How Nestlé Applies Agile Principles to Achieve Product Innovation Success

As the world of consumerism has changed, it’s created a number of challenges for consumer packaged goods (CPG) companies when pursuing product innovation.

Today, CPG companies have to operate with far more agility — i.e., move faster — to get viable ideas into the market ahead of the competition. Instead of taking years to develop, test, and launch a new product, companies now have months.

This truncated product innovation cycle means companies have to be open to shedding some of the tried-and-true market research and product development methodologies they’ve traditionally relied upon in the past. By taking an agile approach to product innovation instead, CPG companies can move at the speed required to not only keep up with shifts in consumerism but to introduce the best version of the product into the market faster.

When CPG giant Nestlé decided to create and test a new frozen food concept, they implemented an agile, sprint-based approach to market research for the first time. And here’s what happened.

Today’s product innovation reality

Like other large CPG companies, Nestlé was trying to adapt to the changes in consumerism. Factors that used to be advantageous for them weren’t any longer:

• Company size. Large companies in the past could hold up an ingrained and rigorous innovation process as a plus. But today, “ingrained” and “rigorous” are synonymous with “slow” and “unwieldy,” which can turn a company’s size into a hindrance.
• Predictable purchase paths. No longer confined to purchasing at traditional CPG retailers, consumers have much more choice these days by easily purchasing goods through Amazon and other online retailers, and direct-to-consumer brands as well.
• In-store experiences. The in-store experience used to bring a wealth of consumer insight. But ecommerce brands have leveled the playing field by directly affecting the consumer experience and influencing how they shop and think about brands.
• Brand loyalty. Consumers are much more fickle and focused on their own needs these days. Contrary to the old standards of brand loyalty, consumers today align with brands that can immediately and consistently meet their expectations.

Nestle recognized that successful product innovation was more important than ever if they were to keep up with the new demands of consumerism, and that the launch of any new product had to be impactful.

But their previous approach to product innovation was no longer cutting it. Their conservative, risk-averse approach utilizing lots of traditional testing meant they were often late to market with their ideas—typically taking two years from idea inception to in-market—and they didn’t always generate the incremental revenue they would have liked.

Something had to change.

Nestle’s new agile approach to product innovation

What changed was deciding to cut some of the process out of the process. When it was time to create and test a new frozen food concept, the Nestlé team came up with these objectives:

1. Recognize and kill bad ideas faster
2. Achieve faster time to market
3. Collaborate efficiently
4. Strongly integrate cross-functional teams
5. Bring in the right support at the right time

They chose to partner with the GutCheck team, who fundamentally understands that agility doesn’t just mean speed and cost efficiency. While both are important and can be achieved through agile processes, what’s often overlooked is the quality aspect. And quality comes into play when the agile market research partner understands from initiative to initiative the overarching business objective and layers it into every research phase. Without this context, market research becomes too risky.

More importantly, by incorporating quality along the way, it could allow Nestlé to buy back time on the speed aspect of agile market research. The overall process could be tailored for Nestlé’s team, letting them decide when they needed to slow down and take a more traditional approach or when it would be more appropriate to agilify a process to get the most bang for the buck from a cost and time perspective.

With a new, faster timeline for product innovation, Nestlé didn’t have as much time for the rigor of conventional market research, but they could still find a way to keep the consumer at the heart of everything they were doing. For Nestlé, the agile process meant:

• A good balance of speed and depth of information
• The ability to iterate more quickly
• Flexibility in how the team got to answers
• Empowerment to make decisions and feel good about the decisions they were making

Agile methodology:

Nestlé decided to use sprints to embark on their agile market research initiative. The core sprint team was comprised of a project manager who was initially a marketing person, along with members from the consumer insights, sales, culinary, and finance departments. The core team was focused on one idea, taking full ownership of it throughout the process.

The project manager broke up the timeline into one- to two-week, task- or goal-specific mini-sprints during which the core team would engage the appropriate cross-functional team (such as regulatory, graphic design, etc.) as needed. Nestlé’s approach to sprints enabled a few critical factors. Members of cross-functional teams:

• Were assured that their specific skills could be used on the project
• Could engage with more projects since they didn’t have to be involved with each one start to finish
• Were allowed to say “no” to, or put off, other projects so they could apply greater focus to the task at hand and innovate faster

Product concept:

In Nestlé’s world, frozen foods is a crowded category, and retailers aren’t putting in new freezers to provide space for product innovation. Frozen food consumers seek variety, and tastes and trends can change quickly.

Given these challenges, speeding up the innovation process and getting the right level of consumer feedback at the right time and quickly is critical for success—both to sell ideas internally as well as to retail partners. Nestlé needed to strike a balance between going fast and knowing when to pause to get deeper insights.

Research phases:

The first phase began with sizing up the frozen food subsegment by determining if there was a unique way to enter it. The core team came up with a few different concepts and narrowed it down to two ideas based on feedback from various internal experts and teams. The core team determined that they needed a read on Millennial men during a design target, and had less than a week to get consumer feedback on ideas.

Together, the GutCheck and Nestlé teams decided to first conduct an online quantitative survey to compare concepts to products already in the market. Because they didn’t have norms for the design target, the two teams picked products that were successful in the frozen food category and used them as a benchmark, then identified the winning idea based on key metrics.

By getting consumer feedback quickly and early in the process, the Nestlé team was able to generate excitement by pulling verbatim customer language from the study so leadership could hear how consumers were talking about Nestlé’s ideas.

The second phase involved determining the right price and size for the product. The core team already knew based on category analysis how products in the frozen food subsegment were priced and sized, but the Nestlé product had some key differences, so they wanted to see if the consumer would value and pay for them. Again, Nestlé engaged the GutCheck team to conduct an online quantitative study to evaluate four different price and size combinations on key metrics.

By then, the Nestle team also knew under which brand they would launch the product and changed the consumer base to the brand target. They learned they had flexibility on the price and that consumers did see value in the differentiators. And when looking at the same key performance indicators (KPIs) used during the design target project, those KPIs went up with the brand target, so it gave the team more confidence to keep the idea moving.

Identifying the right combination of four different flavors was the next phase to follow. The core team did a variety screen to understand what the right combination of flavors should be for launch and how the flavors would interact with the other flavors that were already in market under the same brand. The team worked with a different vendor for this phase, largely because they had more time to conduct it and the other vendor offered a tool that could iterate on the varieties as well as once the product was in market and deemed successful.

The final phase involved naming. The name needed to be a good fit both for the product and the brand under which it would launch. Working again with GutCheck, they launched an online quantitative study of seven names to determine their appeal, uniqueness, and fit with brand.

At the end, the team came up with a name that scored high across all metrics. But when they brought the name to leadership, one of the leaders proposed something else instead. To further complicate matters, the regulatory team said that neither the chosen name nor the name proposed by leadership could be used. The core team then went back and chose a name that had still scored well and could also satisfy everyone else’s requirements.

The Nestlé team learned a valuable lesson: that when moving fast and taking a calculated risk, sometimes testing doesn’t give you the answer that you have to go with in the end. Instead, the team had to check in parallel with other people to satisfy additional requirements.

Results:

The first sprint kicked off in September 2018 and the final product launched in May 2019 with in-market testing. Historically, if Nestlé was lucky, they would have been able to launch the product in 2020 or 2021 using their traditional product innovation processes. But the agile methodology they used this time around resulted in a significantly shorter timeline—around seven months.

What Nestlé learned and continues to learn

The idea for sprinting originally came from Nestlé’s senior leadership, who had embraced the idea and subsequently “put their money where their mouths were” by allowing sprinters to say no to other projects and truly focus on the task at hand. Without that high level of organizational support, it’s unlikely the Nestlé team would have had the success they did in adopting an agile approach to product innovation.

Here are some of the team’s other key takeaways from the agile process:

• Empowering the core team to make decisions and reject ideas that weren’t right for the project—without pushback—kept the whole process moving forward quickly.
• Keeping the consumer at the center of the process resulted in a better product to bring to market.
• Enlisting the help of the right people at the right time helped drive both speed and efficiency.
• Finding an agile market research partner that supported their process, and understood their business objective and the context in which the initiative was happening, instilled the quality that Nestlé was looking for at every step.

To learn more about how Nestlé incorporated agile principles into product innovation, watch the full webinar.