"Innovation Enablers in Indian FMCG Organizations...An Integrated Strategic Approach"

1. “Study On Innovation Enablers in Indian FMCG Organizations …A Strategic Approach” S.SENTHILNATHAN Registration No: 08PG (J) 066 Friday, January 30, 2009 1 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

2. Friday, January 30, 2009 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach 2 Project profile Objectives: To study the enablers that contribute to the success of innovative organization in FMCG industry To evaluate the extent to which the success depends upon innovation enablers chosen specifically: find the factors between the chosen enablers Research Design: This is an exploratory research to gain a greater understanding of innovation. Data Collection : For this research, convenience sampling is used. A convenience sample is a sample where the respondents are selected, in part or in whole, at the convenience of the researcher. In primary data collection, I collected the data using methods such as interviews and questionnaires. Secondary data - data collected by a literature reviews (journals) Friday, January 30, 2009 2 Study On Innovation Enablers in Indian FMCG Organizations …A Strategic2c Approach

3. Friday, January 30, 2009 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach 3 Project profile "A culture of innovation can be a company's primary source of competitive advantage, and can pay off steadily over the years.“ -- Stephen Shapiro, in '24/7 Innovation' Objectives: To study the enablers that contribute to the success of innovative organization in FMCG industry To evaluate the extent to which the success depends upon innovation enablers chosen specifically: find the factors between the chosen enablers Research Design: This is an exploratory research to gain a greater understanding of innovation. Data Collection : For this research, convenience sampling is used. A convenience sample is a sample where the respondents are selected, in part or in whole, at the convenience of the researcher. In primary data collection, I collected the data using methods such as interviews and questionnaires. Secondary data - data collected by a literature reviews (journals) Friday, January 30, 2009 3 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi3c Approach Friday, January 30, 2009 3 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

4. what is innovation?

5. Innovation Innovation is a process of taking new ideas to satisfied customers. It is the conversion of new knowledge into new products and services. Innovation is about creating value and increasing efficiency, and therefore growing your business. "Without innovation, new products, new services, and new ways of doing business would never emerge, and most organizations would be forever stuck doing the same old things the same old way." Friday, January 30, 2009 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach 5 Friday, January 30, 2009 5 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

6. Organizational Hurdles in Creativity An originator comes up with a creative idea At each level of management, the idea gets pruned and refined “Freedom is the greatest when the ground rules are clear. Chalk out the playing field and say, Within those lines, make any decision you need.” - Dick Brown, chairman CEO of EDS Thus till the time the initial idea gets implemented, it would have gone through a number of hurdles. Friday, January 30, 2009 6 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

7. What is Organization? Friday, January 30, 2009 7 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

8. Innovation enablers 1. Time 2. Competence of staff 3. Space/resources to pursue ideas 4. Open communication and full information sharing 5. Supportive organizational structure 6. Personal authority to initiate change / Individual empowerment 7. Creative leadership 8. Motivation of staff 9. Clear organizational goals 10. Appropriate reward 11. Appropriate investment ($, time, resources etc) 12. Appropriate tools and technology 13. Allowance for mistakes 14. Diversity 15. Organizational desire to learn from previous mistakes 16. Creativity recognized / taken seriously 17. Balance between risk and opportunity 18. Skilled delegation 19. Some ‘fat’ in the system 20. Removing uncreative people 21. Organizational ‘life force’s

10. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion

11. FMCG is characterized by strong presence of MNC and well established distribution network.

12. The intense competition between the organized and unorganized segments operating at low operational cost.

13. Availability of key raw materials, cheaper labor costs and presence of highly effective supply chain system gives competitive advantage.Friday, January 30, 2009 9 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

14. Major domestic players Nirma HLL Nestle Dabur ITC Godrej Britannia Coca-Cola Pepsi Marico indutries Cavin care Perfettiindia ltd Dhara foods Haldiram Pepsico foods Parakh foods MTR FOODS Himalayas Paras Industries ltd. Friday, January 30, 2009 10 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

16. UNILEVER

17. NESTLE

18. GSK

19. JOHNSON AND JOHNSON

20. OZONE AYURVEDICS

21. PROCTER AND GAMBLE

22. RECKITT BENCKISER

23. COLGATE PALMOLIVEFriday, January 30, 2009 11 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

24. TCS in Innovation R&D, including the TCS Innovation Labs and the oldest and largest software R&D lab in Asia, Academic Relationships with the world's leading institutions Alliance Partnership with leading technology companies across the globe Emerging Technology Firms, through our relationships with leading venture capital firms in key markets Clients, leveraging our relationships with industry leaders and the experience gleaned from our engagements Friday, January 30, 2009 12 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

25. WHY 3 companies? If we select these three companies then we can cover over all product range of FMCG sector in India Hindustan unilever limited (HUL) Indian Tobacco corporation(ITC) Marico

26. HUL Hindustan unilever limited (hul) has bagged 20 prestigious india star awards and three asia star awards for outstanding innovation in packaging concepts and systems across its foods and home & personal care brands. The awards, given every two years by the indian institute of packaging and the asian federation of packaging the award winning HLL packaging innovations are for brooke bond tajmahal, brooke bond 3 roses, bru instant coffee and deluxe green label roast & ground coffee, bon oval, kissan ketchup, annapurnachapatis, viennetta, pond’s talcum powder, pond’s cold cream, fair & lovely perfect radiance, pears face cleanser, close-up and sunsilk. Friday, January 30, 2009 14 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

27. ITC Itc bags another accolade for its it rural transformation: e-choupal. ITC e-choupal has won the prestigious stockholm challenge award 2006 in the economic development category. The ten-year-old stockholm challenge award recognizes initiatives that leverage information technology to improve living conditions and increase economic growth in all parts of the world. It focuses on social inclusion worldwide and champions ICT projects that show clear benefits to people and their communities, wide impact and sustainable business models. This year a total of1155 entries were received from across more than 100 countries and 26 of these were shortlisted as finalists in the economic development category. Friday, January 30, 2009 15 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

28. Marico Parachute brought coconut oils out of tins into a consumer friendly packaging. Kaya - an example of imaginatively creating a category where none existed before. First large scale skin care service in India. Has largest pool of dermatologists under one roof in Asia. It’s entirely owned and managed by Marico. Pioneering wellness services in India. Revive -changed rice water starching to cold water starching. Pioneering role in sales automation in India. Midas and minet systems developed and deployed by Marico Successful at setting up and efficiently running manufacturing set-up in Kerala, a state which other companies avoid, fearing labor related challenges. Two quick acquisitions in Egypt in 2006-07, although we were not at all present in Africa, unlike some other Indian FMCG players. Marico acquired the brand mediker from p&g who did not see much opportunity in India for this stagnant brand. Within 7 years of acquiring, Marico had innovated on the product to triple the turnover of the brand. Today it dominates the category of anti-lice products withover95%share Friday, January 30, 2009 16 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

29. Data Collection Friday, January 30, 2009 17 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

31. Microsoft Excel

32. Factor Analysis

33. Pie charts

35. Enablers of Innovation Friday, January 30, 2009 20 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

36. Conclusions The correct mixture of leadership, motivation and culture contribute to the totality of an innovative environment in a FMCG organizations which plays an important role for innovation

37. From the Survey… More than 70% of senior executives consider innovation will be at least one of the top 3 drivers of growth in their companies in the next 3-5 years Others see innovation as the most important way for companies to accelerate the pace of change in today’s global business environment Most executives are generally disappointed in their ability to stimulate innovation There are no best-practice solutions to seed and cultivate innovation The structures and processes that many leaders use to encourage it are important, but NOT adequate However, 94% of senior executives consider people and corporate culture are the most important drivers of innovation Friday, January 30, 2009 22 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

38. Companies focus on single elements rather than considering a wholistic composition of a corporation Friday, January 30, 2009 23 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

39. Barriers to innovation Senior Execs cite an unsupportive climate as a critical roadblock to achieving innovation Inability to motivate and support people who have good ideas derail a well-intentioned innovation initiative Not enough of the right kinds of talent available Leaders protecting innovation People not allocated to innovation Friday, January 30, 2009 24 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

40. A Clear Strategy to implement Developing essential organizational elements is key to a successful creation of an innovative organization Friday, January 30, 2009 25 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

41. Building an innovative environment “Set the stage” Define the kind of innovation that drives growth and helps meet strategic objectives Stamp out fear by creating a culture that embraces risk “I did not fail; I just found 10,000 ways that did not work.” Thomas Edison – American inventor Friday, January 30, 2009 26 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

42. Building an innovative environment “Set the stage” Define the kind of innovation that drives growth and helps meet strategic objectives Stamp out fear by creating a culture that embraces risk Encourage diversity – value and leverage ideas from your diverse group of employees How can you help your people understand your strategy and why you need to be more innovative? How do you encourage controlled risk-taking? What is your plan to leverage diversity in your organization? Friday, January 30, 2009 27 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

43. Corporate Culture Continuously assessing and improving innovation maturity fosters a wholistic perspective on corporate culture Friday, January 30, 2009 28 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

44. Link Between Leadership & Innovation As with any top-down initiative, the way leaders behave send strong signals to employees Innovation is inherently associated with change and takes attention and resources away from efforts to achieve short-term performance goals Holding leaders accountable for encouraging innovation makes a big difference The research implies that most senior executives do not actively encourage and model innovative behaviour and thus do not providethe support employees need to innovate Friday, January 30, 2009 29 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

45. Influenced by culture, leadership fosters a fundamentally innovative business strategy Friday, January 30, 2009 30 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

46. Business strategy deriving fromleadership creates business processesstrongly supporting innovation Friday, January 30, 2009 31 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

47. Business processes derived from strategy reinforce innovative corporate culture, thus boost innovation maturity Friday, January 30, 2009 32 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

48. How do you remain committed? Set clear and measurable goals Hold regular meetings Accept full accountability for your actions and responsibilities Be very firm when someone steps out of line Build accountabilities for deliverables into performance measurements for employees Friday, January 30, 2009 33 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

49. Create clear specific goals Write clear specific goals achievable goals. “Gain 100 customers by 01/01/2009 or “Achieve 90% satisfaction from the test group of 100 people” are far better than “find Customers”. Give the goals a purpose, date and measurement. Friday, January 30, 2009 34 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

50. Keep the Team Size Small Innovation does not have to be on a massive scale that includes hundreds of people to a Single team. Keep the teams small, 3 is the magic number. Google typically allocates 3 Engineers to a new project for prototypes. Team size can be increased if you launch on a Full scale. Why 3? Because the magic number of 3 has an aspect to it. With 2 you can argue all you want and have a stalemate, with 3 you can Broker a deal! Friday, January 30, 2009 35 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

51. Kill Ideas that do not Work It is important to discuss the killing of ideas. This will happen, its bound to and you need to Kill off ideas that do not work. Do not hesitate, if the ideas do not meet the goal stop working on them, you will be better off and focus on your new innovation or new ideas. This way the risk is reduced from taking on an idea. If the idea is not working, simply Move on to another. Friday, January 30, 2009 36 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

52. Remember: Never Stop Innovating Innovation is a continuous process. No matter how many products you decide to pursue remember this: Your brain has the capacity to create an unlimited numbers of ideas. Friday, January 30, 2009 37 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

53. LEARNING OUTCOME Learnt about the different types of innovation i.e. incremental, radical and disruptive innovations. Understood the practical application of software packages and tools like SPSS and Microsoft excel. Learnt about the innovation processes in FMCG organizations The combination of all the enablers to innovate and take up new projects The advantages of collaborative innovation in the market Friday, January 30, 2009 38 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

54. Limitations Inability to get specific details from companies due to confidentiality maintained in companies. Restricting the survey to primarily online questionnaire gives fewer details. Due to the above reason generalization of the data takes place. Limiting the survey to only 16 people and a few companies. Friday, January 30, 2009 39 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

55. Recommendations and Future Scope The correct mixture of enablers is necessary to ensure a perfect balance in what managers hope for and what they get or reward. An innovative environment in itself is not the key to innovation but what is also important is to emphasize on innovative thinking amongst employees by giving them sufficient reasons to do so for e.g. Including innovation as a criteria in performance appraisal systems. As mentioned before, this study was limited to only 21 enablers. There is a possibility that individual success enablers do not contribute as much as a combination of them. Thus, one direction for a further study might be the investigation of different combinations of enablers i.e. technical, managerial and environmental. Friday, January 30, 2009 40 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

56. Another sign affecting the relationship between the enablers and the success might be maturity of a firm. It might be so that it is not the these enablers themselves that affect the innovation process, but rather companies that are mature enough to use certain techniques tend to succeed more often. For example, correlation between firms using linked systems with suppliers and with customers might mean that companies tend to collaborate more once they have grown to a certain level. Different enablers and at different strength might come into play as the firms develops. Studying the relationship between e.g. the level at Capability Maturity Model and the critical success factors could bring interesting results. Finally, a more specific study could be carried out, which would study the relevance of different factors for different types of the product innovation process (e.g. incremental vs. disruptive). Recommendations and Future Scope Friday, January 30, 2009 41 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach

57. Friday, January 30, 2009 Study On Innovation Enablers in Indian FMCG Organizations …A Strategi2c Approach 42