“People think of innovation and risk management as two opposing poles, but they’re not. Great achievements require great risk management. If you look at the great innovators of the world, you’ll see they’re actually great risk managers.
Janine Joubert | Risk manager Vodacom | Risk manager of the year - 2014
Innovation - all things new
Innovation can be ‘new to world’ or new to a business and can include:
- new products
- new processes
- new technologies
- new applications
- any change that may have an impact on food
Innovation - a catalyst for profit?
In processed foods, innovation is a major driver of growth and profits. The key to the competitive edge is effectively managing innovation to ensure growth. New products mean new consumers, the ability to enhance or add new marketing claims or splash out with a new line extension. In many cases the driver is the possibility of reducing costs by altering ingredients, manufacturing processes, packaging or suppliers. In today’s economy this is often the primary factor. This approach to innovation must come with a word of caution as cutting corners for the sake of profit can be bad for business…and definitely the consumer’s health and wellbeing.
Innovation - a risky business
In a recent Prepared Foods web survey, conducted on behalf of Lascom Solutions, over 70 percent of responding companies cited slow time to market, and hence lost business opportunity, as their greatest innovation risk.
Although slow is not ideal, there is only one chance to succeed with a new product – that is the first time. Aside from the obvious market research requirements when launching a new product, there are many technical details that must be considered. These take time. This time should be seen as a risk management tool to mitigate the possible failure of the new product.
A company that wants to develop a new or modified product has many decisions to make that can impact labelling, suppliers, formulations, regulatory claims, documentation, ingredient sourcing, safety, costs, and package sizing. A new formulation, for example, often drives the need for new labelling that must comply with regulations. The effects of even small changes are often wide-ranging, complex, and potentially not well understood, but knowing the full impact of each change is essential to bring about the best decisions and avoid costly mistakes.
In part 2 we will consider the practical steps that must be taken in the process of new product development, to ensure food safety is not compromised. The objective is not to eliminate the risks, since this is impossible, but rather to reduce and manage the risk towards picking the winners.
Learn from the best
Failure to launch: Embarrassing blunders for companies launching their latest innovations
