UNLEASHING CONSISTENT BREAKTHROUGH INNOVATION
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1 UNLEASHING CONSISTENT BREAKTHROUGH INNOVATION Taddy Hall & Eddie Yoon Principals, The Cambridge Group Leaders, Nielsen Breakthrough Innovation Project Bestselling Authors: Competing Against Luck & Superconsumers November 16, 2016
2 OUR PRESENTERS TADDY HALL Innovation Expert, Jobs Theory Pioneer EDDIE YOON Superconsumer Expert, Growth Strategist
3 O P P O R T U N I T Y ONLY 78,264 INNOVATION BOOKS ON AMAZON The world need another! Marketers are faced with a dizzying array of approaches to tackling innovation Copyright 2016 The Nielsen Company. Confidential and proprietary. 3
4 I N N O V A T I V E A P P R O A C H SO WHY WOULD WE DO THIS??? Copyright 2016 The Nielsen Company. Confidential and proprietary. 4
5 I N N O V A T I V E A P P R O A C H OUR JOURNEY Parallel Play = 3 Valuing Anomalies Curiosity & Empathy Causation, Not Just Correlation Jobs Drives Innovation Supers Find Latent Jobs Jobs + Supers = Breakthrough Innovation
6 WHAT CAUSES SUCCESSFUL INNOVATION? (IS THIS A SERIOUS QUESTION?)
7 THE BREAKTHROUGH PROJECT: A STUDY OF CAUSALITY DISTINCTIVENESS RELEVANCE +20k ENDURANCE New product launches 92 US Breakthrough Winners 7
8 SUPERCONSUMERS GROWTH STRATEGY: A STUDY OF CAUSALITY HUNDREDS OF CATEGORIES BIG DATA AND LITTLE DATA CONTEXTS DOZENS OF COUNTRIES Dozens of collaborations with clients $1B+ worth of profitable growth 8
9
10 LOOKS RANDOM BUT IT S ANYTHING BUT Nielsen Breakthrough Innovation Winners in the Spotlight :
11 Copyright 2014 The Nielsen Company. Confidential and proprietary. EXPERT S MIND COMPLICATES THE CHALLENGE
12 MANAGERS OFFER MANY DEFINITIONS FOR INNOVATION Consumers use just one A new offering that resolves a circumstance of struggle and fulfills an unmet aspiration. 12
13 THE ARCHITECTURE OF A JOB Foundation for successful new products Circumstance who, when, where Job Spec Feeling Functional Circumstance who, when, where Social Emotional Doing 13
14 CIRCUMSTANCE IS THE ESSENTIAL UNIT OF TRUE INNOVATION All products are actually services Jobs have hiring and firing criteria Jobs include a clear spec for perfect fulfillment Category boundaries transform 14
15 IT S EASY TO GO ASTRAY 4 unreliable innovation guides Consumer Characteristics Trends Product Attributes Competitive Consumer Product Characteristics Attributes Response Trends Circumstance Competitive Response 15
16 WHAT DOES INNOVATION DATA LOOK LIKE? Stories are the DATA behind the numbers 16
17 IT S NOT THE FEATHERS: THEORY MATTERS Theory is what allows you to see what causes what It s LIFT, not Feathers! 17
18 Functional Value JOBS + SUPERS = BREAKTHROUGH INNOVATION Entry- Level Jobs Scissors Mid- Management Level Jobs Baking Soda Executive Jobs Hot Dogs Facebook Mtn. Dew You can look at categories as well as brands this way Higher level jobs drive higher margins Emotional and Social Value 18
19 Copyright 2014 The Nielsen Company. Confidential and proprietary. CONTEXT FOR SUPERCONSUMERS 40+ years of quantifying current, emerging and latent demand to drive growth Dozens of B2C & B2B industries, 100+ countries, millions of consumers and billions of data Clients have driven $20B+ of annual profitable growth Validated by Nielsen s petabytes of global data on what people watch & buy Cambridge s worldview on demand and growth are some core philosophical POV Not everyone consumer is the same Some are far more valuable than others economically, insightfully and strategically A world of complexity, hyper-competition and big data simplicity, speed and synchronization are even more valuable Strategically engaging with these superconsumers can enable superior growth 19
20 EVERY CATEGORY HAS SUPERCONSUMERS Credit Cards Retail Banking Air Travel Restaurants Staplers Mobile Beyond CPG 6% drive 60+% profit 10% drive 90%+ profit 9% drive 44% of revenue 5% drive 24% revenue 13% drive 40% of revenue 9% drive >100% of profits HIGH PROFITS Heavy User Super Consumers Heavily Engaged HIGH PASSION S E E A R O U N D T H E C O R N E R P L A C E B E T T E R B E T S S U P E R I O R G R O W T H 20
21 THE KEY IS INTEGRATING EMOTION & ECONOMICS 100% 90% 80% 70% Hell No! Motivations I consider myself a wine expert I have no concerns about the environment 60% 50% 40% Polarizing Motivations My coffee must be sweetened My cultural background is a huge part of who I am Completely/Somewhat Series3 Disagree Slightly Series2Agree/Slightly Disagree Complete/Somewhat Series1 Agree 30% 20% 10% 0% Hell Yes! Motivations I am highly concerned about credit card fraud I feel a great deal of belonging to my family 21
22 MOTIVATIONS ARE MORE PREDICTIVE THAN DEMOS 100% Drivers of Beer Spend 39% Beer Variety Seeking I love to experiment with different styles of beer Consumer Motivations 72% 20% Beer Taste Preferences I prefer beer with a strong, fullbodied taste 16% Beer Motivations I see myself drinking more beer in the future than I do today Consumer Demographics 28% 16% 9% Wine and Spirits Motivations Beverage Motivations Consumer Demographics include household composition, marital status, education and employment Total Category Engagement 22
23 SUPERS HIRE MANY CATEGORIES FOR MANY JOBS A SUPER CONSUMER IN 1 CATEGORY Generators IS A SUPER CONSUMER IN AT LEAST 9 OTHER CATEGORIES Life insurance, Vitamins 23
24 Lower Spend and Jobs per Category Higher EVOLUTION OF A SUPERCONSUMER Something just happened and now I need the category I like the category and sometimes I want it, even if I don t need it Wow, I didn t know I could hire the category to do that! This category solves so many jobs for me and has changed my life for the better. I have to tell all my friends and family about it! I m aware of the category, but I don t need it right now No Need Point of Entry Regular Usage Openness to Innovation Consumer Engagement in Category Love & Evangelism 24
25 EVERY CATEGORY HAS ENTRY, MIDDLE & EXEC JOBS ~70-80MM HH with a conventional coffee maker ~$5-6B in revenue ~20MM HH $4-5B in revenue 1MM App users last month $1.9B loaded on App/cards in Q
26 WHY DO COFFEE SUPERS HIRE ENTRY, MIDDLE AND EXEC JOBS? Single Serve Supers Drip Coffee Supers ~2MM H >$80 year on Drip >$200 on Single Serve >$800 on Starbucks/Dunkin Entry Middle Exec Starbuck/Dunkin Supers Why??? 26
27 EACH DOES DIFFERENT JOBS A third place to connect, work and escape Wake up call Marriage Counselor 27
28 Copyright 2014 The Nielsen Company. Confidential and proprietary. SO WHAT? The best way to identify opportunities across all three is to Use Superconsumers to identify and articulate entry, middle and executive jobs Quantify which jobs has the biggest unmet need/gap and latent demand Innovate both product and business model to serve that need (with Superconsumers) Cambridge believes the best growth strategy is to grow your category Most companies have a pie-splitting strategy that drives industry profit down Category growth is a superior growth strategy 1% of brands capture 80% of category growth Category creation is the best category creators grow 4x faster revenue, 6x faster market cap 28
29 MUCH BETTER INNOVATION OUTCOMES ARE A MATTER OF CHOICE!
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