Recently Campbell Soup Company CEO Denise Morrison took part in Boston’s annual Front End of Innovation conference. [“Campbell Soup CEO Denise Morrison talks corporate innovation in Boston,” by Scott Kirsner, Boston Globe, 8 May 2013] Kirsner points out “innovation” probably isn’t the first thought that comes to mind when you think of Campbell’s. He writes the first thing that probably comes to mind is “the tomato soup behemoth that inspired Andy Warhol.” There’s certainly nothing wrong with that — I love their tomato soup. But, as Kirsner points out, if that is all you think about, “you haven’t been paying attention.”
Besides it famous soups, Campbell’s international portfolio contains a number of other food products and brands. They include: Bolthouse Farms® beverages, carrot products and dressings; North America Foodservice; Pace® sauces; Pepperidge Farm® products; Prego® Italian sauces; Swanson® products; V8® products; Arnott’s® biscuits and crackers; Blå Band® soups; DevosLemmens® sauces; Erasco® soups; Lacroix® soups and sauces; Liebig® soups; Royco® soups; and Touch of Taste® bouillon. That kind of diversity offers Campbell’s a unique ability to mix and match products to create something new. To help the company stay fresh and creative, it named a vice president of innovation earlier this year.
During her presentation, Morrison indicated that she “is an advocate of ‘fail fast, fail often, fail cheap,’ when it comes to developing new product ideas.” Kirsner reports, “Her ambitious goal at the company is to double the rate of innovation, while halving the cost and time spent cultivating new product ideas.” It might strike you odd that a CEO — upon whose shoulders rests the success of a company — would be advocating failure. Of course, that’s not her point. She’s simply stressing the fact that, in order to be innovative, you have to take risks and, if you take risks, you are bound to suffer failures. Her “fail fast, fail often, fail cheap” mantra also implies that she understands that you can learn a lot from failure. To learn more about that topic, read my posts entitled Dealing with Failure often Precedes Achieving Success and Innovation: Learning from both Successes and Failures.
Another point Morrison made was, “Not every great idea needs to be Campbell-generated. It’s clear that partners and vendors and other external sources will generate innovative ideas for us.” The “not invented here” philosophy use to be pervasive in the business world. Collaboration was eschewed and proprietary systems were the norm. The information age played a major role in breaking down that paradigm and encouraging more collaboration. Former Procter & Gamble CEO A.G. Lafley, for example, once set a goal of going outside the company to find half of all innovations. The goal of “outside-in innovation” is to tap into the talents of others at a reasonable cost with good results.
Although the article doesn’t mention sustainability, a company can’t gain a reputation for sustainability excellence if it doesn’t collaborate. Campbell’s was the only U.S. food and beverage company to be “named to the Global 100 Most Sustainable Corporations in the World in a ranking by Corporate Knights, a media and investment research company.” [“Campbell Soup Company Named to the Global 100 Most Sustainable Corporations in the World,” Campbell’s news release, 23 January 2013] Among the factors that won it this recognition were:
- Sustainability investments across Campbell’s plant network over the past four years that have yielded savings of more than $42.5 million.
- A reduction in water use by more than 3 billion gallons, and energy savings resulting in the elimination of more than 280,000 metric tonnes of greenhouse gas emissions, since 2009, resulting in ongoing annual savings of more than $2.5 million.
- The construction of a 60 acre, 10 mega-watt solar field at Campbell’s largest manufacturing site where 24,000 sun-tracking panels generate 15 percent of the electricity to operate the plant, and a partnership to create a biogas power plant at the same site to generate renewable electricity from waste generated from product production.
- The redesign of plastic product packaging that saved more than 1.2 million pounds of plastic in fiscal 2012.
- The distribution of more than $40 million in product donations globally and sales of $3.9 billion of products with improved nutrient profiles.
- The start of a 10 year, $10 million Campbell Healthy Communities program to reduce the rate of childhood obesity and hunger, and the donation of more than 23,000 volunteer hours in the U.S. and Canada to support local Campbell communities.
At the Boston conference, Morrison went on to discuss how companies are taking a more personalized approach to reaching out to customers. Kirsner explains:
“In thinking about how consumers will shop, cook, and eat in the future, Morrison says Campbell’s is trying to understand emerging trends like ‘quantified lives,’ or ‘managing our bodies and diets through personal data and feedback loops.’ She cited Blippar as an example of how shoppers might use an ‘augmented reality overlay’ on top of product packages to view multimedia, recipe ideas, or coupon offers. Coca-Cola’s Freestyle drink machine, offering more than 100 different flavors of soda, is an example of ‘more distributed and personalized approaches to creating, sharing, and eating food’.”
The Coca-Cola drink machine has been so popular that PepsiCo recently announced its own version. [“PepsiCo Bows Beverage Fountain That Lets Consumers Mix-n-Match Flavors,” by Natalie Zmuda, Advertising Age, 10 May 2013] Personalization and product customization are two characteristics that are likely to define the future business landscape. One thing that Campbell’s Pepperidge Farm brand already offers is customized Goldfish crackers. Morrison is smart to be thinking along these lines. My company, Enterra Solutions, is pursuing a number of initiatives that will help companies use big data to better understand their customers and, as a result, allow them to tailor product offerings to customer tastes and preferences. This is particularly important for food companies since flavor preferences can change from neighborhood to neighborhood; especially in large urban areas. With the world becoming more urbanized, this kind of street-to-street insight will become increasingly important.
Morrison clearly understands the importance of knowing your customers. She told conference participants, “Our core consumers are baby boomers.” While, for the moment, that is a good thing (because baby boomers are still active and wealthy), Morrison understands that boomers are getting older and that Campbell’s must begin to appeal to new demographic groups. She indicated that Campbell’s is trying to “build engagement with faster-growing consumer groups, like millennials and Hispanics.” As Morrison is surely aware, this really complicates matters for both manufacturers, like Campbell’s, and the retailers that sell their products. A study released by Jefferies, a global investment bank, and AlixPartners, a global business advisory firm, concluded, “The confluence of changing demographics, economic factors and customer preferences has the potential to create a long-term disruption across the food-industry value chain that transforms where and how consumers shop for groceries as well as what products they choose.” [“Millennials’ Grocery Consumption Patterns to Vastly Affect Food, Beverage Industry, Study Finds,” SupplyChainBrain, 3 July 2012] Space on store shelves is limited and retailers want to maximize profits. This makes knowing what products are stocked, where they are located, and how often they need to be replenished important information. Big data analytics can help with those challenges as well. As Morrison told conference participants, “The top principle for disruptive and sustaining innovation is that it has to have a laser focus on customers. Innovation begins with their needs and expectations.”
In her talk, Morrison also discussed the importance of knowing how current trends affect the marketplace. Kirsner writes:
“In launching its new Campbell’s Go Soups, which she calls ‘portable nutrition’ in a microwaveable pouch, the company relied exclusively on digital and social media, including Twitter, Spotify, Facebook, and FunnyOrDie.com. The target audience was those 80 million millennials between the ages of 25 and 30.”
If you were wondering how mobile communications could change the food industry, wonder no more. The company also sponsored “a hackathon designed to help home cooks everywhere answer the age-old question, ‘What’s for Dinner?'” The company that developed the winning app was Pollinate Inc. Its 12-member team developed an app “fittingly titled FoodMood.” Rather than create another recipe service that sorts “results based on ingredients or popularity, this app adds a different dimension to the dinner selection process, helping consumers find recipes based on their mood.” [“Developer Cooks Up “What’s for Dinner?” App for Campbell Soup Company,” Campbell’s news release, 25 March 2013]
Morrison also used I term that was new to me and one that Kirsner writes he “really likes.” That term was “drill sites.” Kirsner explains:
“[Morrison] talked about identifying lucrative ‘drill sites’ for innovative product development. … One example: more than 80 percent of U.S. households now own a slow-cooker (a/k/a a Crock-Pot.) But most people have a very limited repertoire of meals that they make in it. So Campbell’s is developing a new line of ready-made sauces that can be combined with meat in a slow-cooker.”
The slow cooker has been around for over 40 years. One wouldn’t normally associate an “old technology” with a modern innovative opportunity. Obviously, however, someone did their analytic homework and, I believe, Campbell’s will do well with their product line. Morrison told Kirsner that most of its product lines have associated innovation centers. While I think innovation centers are a good idea, I hope that there is a lot of cross-pollination between these centers. It would be a mistake to silo innovative ideas along product lines. Morrison told Kirsner that Campbell’s is interested in both sustaining and disruptive innovations; so keep an eye on the iconic tomato soup company.