My first innovation job after graduating was as a marketer of dried soups, at the Dutch market leader called Honig. We sold around 50 million consumer packages per year. Not bad for a country with only 16 million people. Honig had a market share of more than sixty percent. There was only one problem. The dried soups market was not growing anymore.
As ‘new kid on the block’, I was invited to give fresh input on the marketing and innovation strategy. Together with the senior managers we were out in the market discovering customer insights on how people use our soups, researching consumer trends, investigating what competitors like Unilever and Knorr were working on and looking into new technologies. We concluded our present market would not be able to generate growth. So we knew we had to innovate and do something really different. This was in the era that the microwave hit Europe, end of the eighties. A lot of colleague food producers were innovating in fresh chilled or refrigerated foods, which could be prepared in the microwave in seconds. And we had to be part of this we believed.
Next to being involved in strategy, senior management gave me a hands-on innovation assignment. Increase the long term sales of the worst selling soup item in our assortment. It was on place 54: The ‘vermicelli bouillon soup’, which sold 750.000 packages per year. It’s a clear soup with lots of vermicelli, which is a kind of old-fashioned spaghetti type soup pasta. Studying the world of bouillons, one thing struck me. Clear bouillon blocks were a success. Clear drink bouillons were a success. And our Bouillon filled with vermicelli not. Why didn’t we get rid of the vermicelli? And that’s exactly what we did. We re-launched the soup as the first clear bouillon soup. And what happened? Sales doubled within 1 year to 1.5 million packages and margins rose by 50 percent because we saved the costs of producing vermicelli and the packaging costs of it.
You need an awful lot of colleagues and bosses to share your vision before a big change will really happen.
Meanwhile we discussed our strategic chilled soups plan with our colleagues of R&D, logistics and production on a middle management level. They did not like our intention to take Honig into ready-made wet soups. We didn’t have the recipe expertise nor the R&D capabilities. And we had not any clue of chilled logistics, which would be necessary to get it into the supermarkets. We thought our colleagues were fools resisting change, as always! And decided to take our plans up to the top, getting a two hour time slot in the board room of Honig. We presented our chilled soups plan outside in. We showed the board all the consumer food trends and growth figures of microwave products in the world. We even gave a demonstration of fresh chilled competitive products from the microwave and let them taste.
The board was really enthusiastic, until the moment we discussed the business case. This was only going to be profitable after five years in the most optimistic scenario. Both the costs and risks were huge because we had to start a chilled soups factory. And I will never forget the sentence the CEO spoke to me to finalise the strategic innovation discussion: “Gijs, without any risk you doubled profits with our 54th taste of dried soup. Innovate the 53rd and you realise more profits than with chilled soups the coming five to ten years”… And that’s what Honig did. It stayed a very successful market leader in dried soups and never diversified into other soup categories. Fifteen years later H.J. Heinz bought the brand.
The wise lesson I learned as a young marketer is that in an organisation is you cannot innovate alone. You need an awful lot of colleagues and bosses to share your vision before a big change will really happen. So you have to wait for the right moment, because you can only launch a proposal once for the 1st time. Look for moments when there’s a sense of urgency at the middle and top management to do something different. And you have to let them discover themselves which different paths are possible, can be developed, and are realistic to be chosen. This practical wisdom I used twenty years later as on of the fundamentals of the FORTH innovation method, which I developed to ideate innovative products, services and business models.
If you want to be effective as innovator, do not make my mistake. Remember the bouillon soup lesson: you cannot innovate alone. Look for the right moment to involve top management.
By Gijs van Wulfen