Innovation management

Introduction

FOOD is the world’s biggest industry today, and is also one of the most highly competitive in the global market. Under these circumstances, a well-designed innovation management strategy leading to new food product development is imperative for the industry. Understanding the nature, kinds/types and proper practice of innovation is a good starting point in the journey towards sustainable competitiveness. Substantial knowledge about innovation processes will help you develop products with high market potential.  

There is a very low rate of successful R&D work undertaken in the food industry, such that out of 100% new products launched, 75% were considered to be failures (Winger and Wall, 2006). The low rate of radical change, coupled with the high failure rate of food products following market launch implies that the methodology for new food product development urgently needs to become more focused, quantitative, rapid and knowledge based (Stockmeyer, 2001). Companies which are able to increase the number of successful innovations, as well as to improve the effectiveness of their innovation process will lead in the race for competitiveness ranking (Menrad 2007). Therefore, it is very important that innovation management leading to new food product development be given more attention if high market competitiveness is to be achieved (Gatchalian, 2013)

Definition and kinds/types of innovation

Definition. An extensive search of literature revealed various definitions of “innovation” (Harrington, 2015, Miller, 2008, Other sources, 2016). Among the many concepts presented, one may integrate the common characteristics to define innovation as a unique, creative idea that adds value to the operation’s external customers  and  to the stakeholders while generating more profit;

Kinds of innovation according to approach. Authorities agree that there are two major kinds of innovation based on the approach utilised, namely: a) Incremental innovation which is focused on continuous improvement of an existing product and sometimes referred to as the “me too” syndrome and b) Radical innovation which is actually a breakthrough improvement that involves deliberate collection of as much information and knowledge about consumer needs and requires enhancement of imagination while generating initiatives to create new ideas. Outputs from both kinds are expected to have consumer value to sustain their place in the market. However, radical innovation has higher achievable impact in meeting consumer requirements.

Figures 1 and 2

Types of innovation based on results

It has been generally accepted that there are four types of innovation based on the results and these include innovations in: Product, Process, Management and Marketing.

Product innovation results in new products or services or in the enhancements to old products or services. An example is shown in Figure 1. Process innovation results in improved processes in the organisation such as in operations, human resource management and finance. An example is presented in Figure 2. Management Innovation improves the way the organisation is managed and some examples include: Six Sigma, Japan’s poka yoke, Filipino culture-based “SUGOD”, etc.

A brief description of “SUGOD” (meaning “move-on-together” in the Philippine language) shown in Figure 3. Marketing innovation is related to marketing functions of promotions, pricing and distribution, as well as, to product functions other than product development.

“SUGOD” ( Pilipino acronym) towards total quality management (TQM)

Environment for innovation

Innovation succeeds best if the environment is supportive where everyone in the organisation is given the opportunity to contribute their individual capabilities in a joint effort to create and produce new products. Three major considerations may be explored for the purpose of obtaining interest in innovation and these include: (1) Role of Company Leaders; (2) Contributors to Innovation and (3) Climate for Innovation.

Role of company leaders: The global practice in successful organisations today focus on the importance of “respect for people”. This is why Total Quality Management (TQM) practices have re-surfaced and can be assessed using various approaches like those based on the Malcolm Baldrige National Quality Award (MBNQA).

In the Philippines, the Philippine Quality Challenge (PQC) was developed as a simplified approach to the Philippine Quality Award which is patterned after MBNQA. “SUGOD” is a proposed roadmap towards TQM designed to recognise the Filipino culture in its application and can be assessed using the PQC criteria. Figure 4 presents a sample situation where the innovation process was given full support by management in one of the successful companies in the `Philippines.

Contributors to innovation: In any company, everyone can have a role to play in the innovation process, either as: Creators that generate opportunities, Connectors who link opportunities to solutions, Developers that make solutions practical, and Doers who implement solutions. A self-assessment tool is used to show where one will make his/her best contributions to innovation. Observations show that Creators and Doers are practical, while Connectors and Developers are thinkers.

Climate for innovation: If employees are recognised for their own strengths and given the opportunity to grow in competence, there would be a great chance of their active participation in the innovation process. It is important that Innovation Team members must have open minds, so that their combined capabilities will accelerate the development of a new product. Figure 5 shows employees in one company given the opportunity to “brainstorm” on their ideas pertaining to possible innovation. The more brain-power participating, the greater the amount of information to be extracted and shared.

Figures 4 and 5. In innovation managment, company leaders encourage total involvement of employees at all levels

Stages in the food innovation process

In general, the four major players in a food manufacturing organisation include (1) Sales and Marketing (S&M); (2) Research and Development (R&D); (3) Quality Assurance (QA); and (4) Production (Prodn) as shown in Figure 6. To a large extent, they are known as the “idea generators’ and they contribute much to the proper implementation of the steps in the innovation process. The big challenge in food innovation is understanding consumer needs and preferences and this requires the combined efforts of M&S and R&D since the former is in direct contact with consumers and the latter receives the information which enables them to plan strategies to know and understand consumers preference and needs.

The five stages in the innovation process include the following: (1) identify the consumer or market needs; (2) generate ideas focused on the needs; (3) select the best idea to meet the need; (4). conduct product development activities; and (5) Test the market and determine profitability. These stages are all incorporated in Figure 6 which starts with M&S focused on understanding consumer needs and expectations, measurement of which is an effort jointly done with R &D. This leads to product development efforts involving QA and Production. In practically all stages, sensory evaluation methods are employed from product identity to monitoring consumer preferences in the marketplace.

Steps in food product development

Figure 7 shows the steps in food product development which starts with Stage 4 of the innovation process. The four major players and their Staff in the organisation have major roles to play starting with product identity as jointly defined by M&S and R&D. Then this is correlated with the information on consumer preferences and needs which serve as the basis for making the product design. These steps plus the development of product and process specifications require much use of sensory evaluation tools and techniques to finally identify the product formulation and process specifications which would best meet consumer expectations. The extent of contributions by each of the four major players are indicated by the number of “Xs” in their cell. At the start of product development, S&M together R&D have “XXX”  but as the steps progress increasing number of “ Xs” are assigned to QA and Prodn where at commercial operation, Prodn has the “XXX”..

Thus, innovation management, when done in a systematic way guided by knowledge of consumer needs and requirements, can progress to new product development which would result to eventual commercialisation of the newly developed product. Generally, if these approaches are followed product market sustainability is assured and thus profitability is insured through time.

Summary

Food is the biggest industry in the world today situated in a highly competitive global market. To survive in a world of great competition, it is imperative that those in the food business must continuously engage in innovation processes to sustain leadership in the marketplace. Likewise, well-developed product development directions could guarantee a sustainable market leadership.

There are various approaches to innovation which are useful in the food industry and depending on the company’s strategic plans, a proper choice can be made. Current findings indicate that the “radical” type of innovation gives the highest returns on investment. This will require participation from everyone in the organisation to ensure that all sources of good ideas are taken into consideration in making the final decision to start the innovation process. This eventually leads to new product development which insures achievement of a successful market launch and a sustainable product life in the marketplace.

References

Chekhov, Anton. 2012.  Chapt- 5 Emotions Research.  Breakthrough Food Product

     Innovation Through Emotions Research. Science Digest 2013 Pages 65-86.

Gatchalian. Miflora Minoza. 2011. “Sensory Quality Measurement: The Red Ribbon

    Bakeshop  Experience” . Proceedings. 55^th European Organisation for Quality

    Congress. Budapest, Hungary.

Gatchalian, M.M. 2012. Phases of Total Quality Towards Competitiveness Improvement. Keynote Speech. Proceedings. VII International Quality Managers Forum. June 2012, Almaty, Kazakhstan.

Gatchalian, M. M.  2013. Accelerating Food Innovation Through Statistically-based

    Sensory Measurement. Proceedings. Philippine Association of Food  

    Technologists, 52^nd Convention. SMX, Makati, Manila Philippines

Gatchalian, M.M. and Brannan. G.D. 2011 Sensory Quality Measurement: Statistical

    Analysis of Human Responses. 3^rd ed. Quality Partners Company, Ltd. Philippines.

    Miriam Webster Publishing Co. Philippines.

Gatchalian, M.M.  Yano, T and  De Leon, S.Y. 1994. Comparative Profiles of Young

    Coconut (Cocus  nucifera) from Fresh and Stored nuts.

Food Quality and Preference. Elsevier Science, Ltd.  U.K.

Harrington, James H. 2015. Innovative Process. Harrington Institute - a Division of Harrington group International, USA.  

Lundahi, David. 2012. Chapter 3 -The Innovation Team. Breakthrough Food Product Innovation Through Emotions Research. Pages 25-42.

Menrad. K. 2007. Traditional Products and the Economic Impact of Innovation. Wissenschaffs Zentrum, Straubing, Germany.

Merril, Peter. 2008. Innovation Generation: Creating an Innovation Process and an Innovative Culture. ASQ Quality Press. Milwaukee, Wisconsin, USA.

Other sources, 2016.  www.businessdictionary.com/definition/innovation.html#ixzz2Qu8JEKzQ

Stockmeyer (2001) as cited by K. Menrad (2007).

Traditional products and the economic impact of innovation. Wissenschaffs Zentrum, Straubing, Germany. 2007. p.18

Winger, R. and Wall.G. 2006. Food Product Innovation: Background Paper. Agricultural and Food Engineering Working Document. Rome, Italy.

*Dr Miflora M. Gatchalian is currently the CEO of Quality Partners Co. Ltd and a retired full Professor at the University of the Philippines in Diliman, Quezon City