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Building a Fact Based,

Sustainable Innovation Program

…from Scratch

Amanda Smeller, Director of

Consumer Insights and Innovation

October 18, 2012

Agenda

The Set Up

Objectives of the Innovation Program

The Fun Part…Finding New Ideas

The Wrap Up

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The Set Up

Who I am

Began career in Food Science at Abbott Labs

Moved into Market Research/Consumer Insights

Worked on client, supplier, and agency side of

business

In 2009, opportunity to join Pierre Foods

Painting the Picture

What Do All These Companies

Have in Common?

Epiphany #1: Not everyone felt we

needed CI or an Innovation Pipeline.

Four Distinct Business Units

Schools

Foodservice

Vending /

C-Stores

Club

Select Customers

National

Accounts

Chain

Accounts

Retail

National Accounts

Foodservice

Vend/C-Store

Brands

Epiphany #2: Lots of channels…

lots to learn.

And Separate Locations

Enid, OK

Cincinnati, OH (HQ)

Easley, SC

Claremont, NC

Amherst, OH

Manufacturing – Fully Cooked

Distribution

Portland, ME

Manufacturing – Raw

Assembly/Bakery Facilities

Epiphany #3: We are far, far apart!

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Objectives of the

Innovation Program

Task at Hand

Create an ongoing, sustainable 3 year innovation

pipeline that:

Maximizes resources

Minimizes our go to market risks

Sets us apart from like competitors

Gives us enough ideas to both fail and win

Specific Company goals:

Sales volume ($ & lb.) from qualified new products is 10%

Ideas that are new to:

Line, channel, company, world

Categorized as Line Extensions or Growth in our PPF system

Guardrails for Innovation Pipeline Ideas

Passes internal testing

Aligns with trends

Fits into multiple APF channels

Aligns with APF competency and strategy

Has good potential revenue

Concept Scores/Testing

Test among consumers and/or food service

operators

Purchase Intent and Uniqueness

Develop hurdles

Common sense and experience

Seek out industry standards

Epiphany #5: Where am I going to

find ‘hurdles?’

Epiphany #4: Wait…does traditional

testing work for these channels?

Understanding Trends

Conduct trends analysis annually

Tap into secondary subscription services

Conduct project specific category analysis

Applicability to Various Channels

Ideas have to ‘fit’ into different formats that

are channel specific

Retail versus foodservice

Single serve versus mass feeding (QSR versus

college cafeteria)

Operational footprint considerations

Held frozen versus refrigerated versus warmer

Epiphany #6: It is REAL easy to get

bogged down in complexity.

APF Competency and Strategy

Align with competency and strategy

Bucket products into manageable categories

Volume

Size

Gross margin

Outside trends

Merge all systems to one sales reporting

system

Define ‘Pillar Categories’

Epiphany #7: OK – What is APF’s

strategy again?

Potential Revenue

More familiar with retail models

Designed two algorithms –retail and

foodservice

based on internal successes, like items, and test scores

Big opportunity to get better

Epiphany #8: Hmmm…?!?!?!

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The Fun Part…Finding New Ideas

Initial Exploratory

• Purchase analysis • Consumer needs assessment • Trend analysis • Segmentation • Ethnographic discovery • Technological

assessment

Prototype Development &

Refinement Product Testing

• Sensory testing • Qualitative research • Quantitative research

• Sensory testing • Qualitative research • Quantitative research • Packaging research • Trade-Off analysis • Pricing research • Line optimization • Claim research • In-Home use testing

Idea Generation & Concept

Development

Concept Screening & Refinement

• Brainstorming • Preliminary market

assessment • Technical assessment • VOC research

• Internet studies • Volumetric forecasting • Qualitative research • Quantitative research • SWOT analysis

Developed APF’s Consumer-Centric

Innovation Process

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Epiphany #9: Budget (none) and

timing (now) needs to be managed.

Initial Exploratory

Prototype Development &

Refinement Product Testing

Idea Generation & Concept

Development

Concept Screening & Refinement

Part of Innovation Process

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Fuzzy Front End of

Innovation

Idea Enters Formal

System

Initial Exploratory

Idea Generation & Concept

Development

Sources for New Ideas

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New

Product

Concepts

External

customers/

operators

Internal

(Sales,

NPD,

Marketing)

Discovery

Research

(Primary)

Suppliers

Trends

(Secondary)

Epiphany #10: Respect how things

had been done and add on.

Initial Exploratory & Idea Generation:

Annual Innovation Calendar

Quarter 1 Quarter 2 Quarter 3 Quarter 4

‘Newidea@advancepierre’ mined on quarterly basis, innovation team review

Quarterly activities/contest among employees through portal

Oldies But

Goodies:

Ideation with

internal legacy

employees across

BUs/channels

Vendor Fair:

leveraging their

competency

against macro

trends

Industrial/National Account specific ideation

Food Service Channel Discovery

Ongoing Trend Watching/Fast Followers in relevant categories

C-Store/Vend

concept screen

Low Hanging Fruit/Oldies But Goodies

concept screen

FS Channel

concept screen

Concept Screening & Refinement

Concept Development and Screening

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Very high level – product statements

Two annual concept screens: 20-40 ideas

Team refines Innovation Pipeline

Innovation Pipeline Template per idea

Projects initiated into PPF system

Epiphany #11: An idea has to be

LOVED to live!

Example of Innovation Pipeline – Year 1

No Concept Year/

1st 2nd

FS K-12 Retail C-S/

Vend

Oppty

$$$

Dev

Resources

1 Fully Cooked Philly Steak Breakaway

Fully cooked, steak puck 11/2nd

X X X $$ BS/LG

2 Smart Picks 2nd Generation

New line-up of BFY items/whole grain 11/2nd

X X $$ TG/CD

3 Grilled Dippers/Schools

Non-fried nuggets that have a dry rub 11/2nd

X $ TG/TS

4 Flatbread Sandwiches

Healthy, on the go alternatives to regular

sandwiches

11/2nd X X X X $$$ BS/JN

Pipeline Concept Template:

Create a Template that includes:

Revenue Potential

Development Timeframe

Manufacturability

Fit with Strategy

Background

Consumer Testing

Trends

Competitive Set

Proposed Pricing

Next Steps

Concept A: FC Philly Steak Break Away

Versatile steak like

product to:

Use on a sandwich (steak &

egg, blue cheese & grilled

onion)

Chop on the grill for

traditional Philly

Rough chop with an Asian

sauce for stir fries

Cook, season with.

vinaigrette, slice to top a

salad

Channel/Revenue Potential

Create a product that is wider/broader than a fully

cooked Philly Cheesesteak application (which is

niche)

Development Timeframe

Manufacturability

Product Fit with Company Strategy

FS 250-1mm 1-5mm 5-10mm 10mm+

Schools 250-1mm 1-5mm 5-10mm 10mm+

Retail 250-1mm 1-5mm 5-10mm 10mm+

C-S/Vend 250-1mm 1-5mm 5-10mm 10mm+

6 mo or less 6-12 mo 12-18 mo 18-24 mo

Low Modest Good Very high

Low Modest Good Very high

Prototype Development &

Refinement Product Testing

Completing the Process

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Project in PPF system

Resources are assigned

Project follows ‘typical’ project development

Prototype development/testing

Concept/product fit

Variety development, etc.

Epiphany #12: Let ideas die if they

need too.

Measuring the ROI of an

Innovation Process

Remember Company goal:

Sales volume (sales & lbs.) from qualified new

products (24 months or less in commercial

distribution) is 10%

PPF Quarterly Review reports on:

Amount of projects

Project types (extension, renovation, growth, ops)

$mm in YTD invoiced revenue from new products

Projects, $mm, and volume generated by product

pillar

Project turn time

Epiphany #13: A great program must

rely on support systems.

Example: PPF Review Q2 2012

YTD Q2 2012 there were 139 projects in the PPF.

Most are line Extensions and Renovations.

12 Growth projects are active in the pipeline.

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The Wrap Up

Program Success is Dependent on…

Goals

Benchmarks

Templates

Reporting

Pipeline

Developing/aligning other support systems

Overall company strategy

Sales reporting system

Project Portfolio Forum (PPF)

Other Factors to Success

Just start

All pieces will not be in place from Day 1

Not all projects need to follow entire process

Program tone

Developing culture

“Stick to the original plan, but play it by ear.”

Casey Smeller

Be malleable and learn from mistakes

Internal education

Sell, sell, sell – to your internal customers

Have fun and celebrate successes!

Examples of Recent Innovation