Inside General Mills' new approach to innovation

by Monica Watrous
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Kendall J. Powell, chairman and chief executive officer of General Mills, said the company copies from the playbooks of smaller entrepreneurs.

MINNEAPOLIS — For big growth, General Mills is thinking small. The maker of Cheerios and Yoplait has overhauled its approach to product development based on what management has learned from observing the industry’s smaller players.

“…over the last half dozen years we have been looking very closely at the entrepreneurs that we compete with, the smaller companies that we compete with, and we have studied in detail how those kinds of small companies develop and bring their products to markets,” said Kendall J. Powell, chairman and chief executive officer of General Mills, during a March 18 earnings call. “And we have learned a lot from doing that.

“And I would say a couple of the key lessons that we have learned is that the entrepreneurs who develop those products are very, very, very close to the ultimate consumer who will buy the product; sometimes the consumer is themselves or family members.”

For General Mills and many other large packaged food companies, size has become more of a barrier than a benefit. To adapt more quickly to changes in the marketplace, the company is placing "marketeers" and consumer research specialists closer to its target customers.

“We think it is really, really important, and in many ways it is replacing big and broad-scale tests that we used to do, which in a way moves our marketeers out of the process and distances the consumer from them,” Mr. Powell said. “So we have got a very high premium on getting our folks right next to the consumers who are going to buy these new products.”

Another part of General Mills’ speed-to-market strategy is quickly creating prototypes of new products for consumers to test early in the development process.

“And when you do them the right way the result is you go fast, you make decisions rapidly, you are very connected to the consumer and so you are more on target more often,” Mr. Powell said.

The company said its consumer-first approach to innovation helped restore its yogurt business.

The company’s consumer-centric approach to innovation and marketing has proven successful for its yogurt business, which posted 10% growth in U.S. retail sales for the most recent quarter on renovation of core products. General Mills recently removed artificial colors and flavors from the brand’s children’s yogurts and is rolling out a 25% sugar reduction across the entire Yoplait Original line.

“Consumer-first renovation, innovation and investment have returned our overall U.S. yogurt business to sales and profit growth,” Mr. Powell said. “We are now the fastest-growing of the major yogurt manufacturers, and we are gaining share at an accelerating pace, including more than 2 points of share growth last month.”

Forthcoming innovation across the company’s portfolio will follow a similar path.

“We are developing plans for fiscal 2016 that are designed to build on this momentum and expand the impact of our consumer-first strategic focus,” Mr. Powell said.
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