Innovation. It’s the hottest word in business right now, but every brand innovation demands investment of money, time, and/or human resources. Therefore, senior leadership often hesitates to embark on innovative transformation because they cannot determine a clear Return on Investment.
However, innovation benefits the enterprise in ways that defy typical ROI analysis. At the opening workshop of DMA’s 2018 Marketing Analytics Conference (MAC), speakers explored Return on Innovation, a difficult to quantify but necessary approach to determining and implementing the correct innovations for each organization.
Here’s what leading innovators shared about the approaches their companies take to innovation:
Matt Rachford, Director Innovation – Environmental Operations, Georgia Pacific
Georgia Pacific uses innovation as they seek to optimize their operations processes. Often on certain projects, the company would successfully develop an innovation, but struggle to take the innovative process and adapt it across the enterprise. “We can’t just innovate within an Innovation team, because when we take it to the enterprise level we’ve got to bring in Legal and Operations and others,” said Rachford. “It’s like starting from Step One.”
The company has had successful developing innovations through partnerships, connecting with companies who can go to market quickly. After initial successes, over time those innovations will become core competencies for the company.
Alison Cary-Coleman, Innovation Director, Anthem Inc.
Anthem, one of the largest health insurance companies in the United States, has an innovation studio in Atlanta, and views innovation as anything that challenges the status quo and delivers a better product or experience for their customers. In the innovation studio, the Anthem team looks at risk versus investment in order to assess potential innovations.
Anthem is currently exploring blockchain applications, robotic processing automations, as well as learning algorithms and artificial intelligence, all geared toward encouraging its customers to adopt healthy lifestyles and manage their own healthcare. The company is empowered to look at not just the immediate return, but also the long-term innovation that will pay off down the road. “In the healthcare setting, one of the biggest factors is realizing the cost of doing nothing,” said Cary-Coleman.
Mike Hagen, Former Group Director, Category Strategy & Innovation, Coca-Cola
At Coca-Cola, the company developed an innovation template to demonstrate the value of the product innovation. This template laid out the audience, revenue and other deliverables for the project. “The biggest challenge is not being understood and being ahead of the curve, and knowing your job is to convince both the customer base and your peer group that your innovation is a valuable investment for the company,” said Hagen.
With carbonated beverage sales shrinking, the innovation team within Coca-Cola knew they needed to expand their product offering. Hagen worked to develop non-soda products such as tea and energy drinks for the company to pursue which could expand the corporate portfolio. This meant that Coca-Cola began to establish customer loyalty with new and distinct audiences. “When you look at innovation, you don’t always have to look at your core segment,” said Hagen.
Michael McCathren, Senior Manager, Innovation & New Ventures, Chick-fil-A
“We want fewer ideas, we want more problems,” says McCathren. “That’s the idea Chick-fil-A takes behind innovation, we’re problem-finders.” McCathren’s team considers the audience affected by a concern, identifies the issue and the cause as well as the upside to delivering a solution to the audience. This upside is referred to as the A-ROI – the audience return on investment. With this system, Chick-fil-A has a level playing field for examining problems and how to assess and determine investments.
Once this process has completed, the innovation can begin. Chick-fil-A has a five-step innovation process which turns innovations from ideas into tangible value for the company. McCathren’s team is siloed from the rest of the company, because the fast-moving business has many concerns taking up the day-to-day of employees and leadership. “They’ll say ‘I can’t think about the future, I’ve got too much of now to deal with,’” observes McCathren.
This week, hundreds of marketing analytics professionals are gathering in Atlanta for DMA’s 2018 Marketing Analytics Conference (MAC). Stay tuned to this blog or follow along on the hashtag #MAC2018 for more marketing and analytics expertise!