A Century of Innovation
Inside the box at Kellogg's: How the cereal giant keeps its product pipeline fresh
"Science fair." Drink 'n Crunch may not be the best example of "failing fast," but it does demonstrate one unique way Kellogg generates ideas. The product was spawned by a yearly Kellogg event called Moonlighting. It allows researchers to work on projects in their spare time--while also tapping the insights of the consumer research team--and present the results to the company's business units in a trade-show-style environment. The first Moonlighting event was held in 1996 in a conference room, showcasing 20 to 25 ideas. "It looked like a glorified middle-school science fair with poster boards and everything," recalls Mark Holdridge, the program's founder and now Kellogg's lead scientist on its advanced innovation team. By 2000, there were more than 100 exhibits, and Kellogg staged Moonlighting at the Hilton Chicago ballroom. The hand-drawn poster board era was over. "It was getting a little bit out of hand," Holdridge says. "People were even going and getting custom-made graphics."
Kellogg may have scaled back the pomp a little since then, but not the size. This year, Moonlighting will take place at the Kellogg Arena and Convention Center in downtown Battle Creek, with more than 300 presenters displaying some 170 items. So far, Holdridge says, some 30 Moonlighting projects have made it to market. And Bath estimates that former Moonlighting projects have generated some $250 million in sales during the past five years.
"What Moonlighting did was take the relationship between marketing and product development and turn it on its head," says Laura Schmidt, who worked with Holdridge on the Moonlighting program back in the late 1990s. Now she's a consultant at Landis Strategy and Innovation in Palm Beach Gardens, Fla. "Usually, marketing rules the roost at companies. They take their consumer insights and tell developers what the program is. For Kellogg management, it was cultural change that would not have happened if not for Moonlighting."
Not to say that marketing and consumer research aren't driving forces behind product innovation at Kellogg. "They lay out the hunting grounds," says Alan Harris, Kellogg's chief marketing officer. "From there, we create the ideas and concepts that eventually become food." Indeed, the genesis of the idea for Special K Red Berries came out of focus groups in France where consumers expressed an interest in "indulgent" foods. But when divining "unarticulated needs," surveys and focus groups aren't enough. In recent years, Kellogg has started also employing up-close-and-personal techniques called ethnography--long popular in Japan--that are derived from anthropologist Margaret Mead's controversial work with indigenous Samoans in the 1920s. "We've put in a much more concerted effort the past two or three years to get closer to the consumer," says Mike Mickunas, a senior director of market research. "This comes partly from the desire to move more aggressively in innovation and also out of a recognition that the old methods weren't taking us far enough. ... You need to get into people's lives."
Now Kellogg market researchers often visit people in their homes to watch as they eat their breakfast and sit in the far back seats of minivans as soccer moms chuck Nutri-Grain bars toward their hungry kids. They'll even text-message subjects throughout the day to monitor their snack cravings. Among Kellogg's findings: Breakfast time is highly ritualistic, which may be what's hampering Drink 'n Crunch. (You can't peruse the back of a cereal box while you're driving.) Researchers also found that while kids love Pop-Tarts, the snacks get all crumbly when Mom tries to pack them in lunches. So now the company offers Go-Tarts!, snacks that are individually packed and possess a tougher outer shell. And Kellogg now offers easier-to-open packaging for Nutri-Grain bars since parents often want kids to help themselves to those. "Packaging doesn't come up much in focus groups," Mickunas says.
In the competitive cereal and snack markets, there are always plenty of innovation challenges. For one: creating a popular lemon-based cereal that consumers always seem to say they want but never seem to like. Or a real-chocolate version of Special K that doesn't turn, as Bath puts it, into a "flaming mess" in warm climates. So much to be done. "There is a cycle of change that is a great opportunity if you can keep bringing new and relevant ideas to consumers," Jenness says. "But it's also a threat if you are not innovating. You have some winners and some losers, but you've got to keep swinging."
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