Do 95% of all innovations fail? Chances are you’ve heard this tall tale. But if you’ve worked in the innovation space for any amount of time, you might be surprised by this frequently cited statistic. Despite past attempts to debunk this assertion, are the odds really so stacked against innovation success?
Fuelled by incredulity about this stat, I recently sent a group of Bases innovation experts on a quest: leverage our data to validate the (in)accuracy of this ubiquitous failure rate. Not only did we uncover a much different and more encouraging story, we also came to an important realisation. The construct of ‘success versus failure’ is simply insufficient when it comes to innovation measurement.
To illustrate, if a product is delisted after three months, does that make it a failure? What if that product is mince pie-flavoured, intended to be a seasonal treat? Likewise, if a new product stays on shelves through year two, does that mean it’s a success? Technically yes, if your only threshold is survival.
But what is the state of your innovation at the end of year two? Is it healthy, strong, growing? Or is it straggling, worn out, gasping for breath on a death spiral to delist?
We need to move away from measuring innovations by their ‘success’ or ‘failure’. Instead, we should focus on their vitality: this is a product’s endurance, which goes beyond the limited constraints of ‘success’. If properly developed and maintained, these product innovations can even have the potential to be a part of your core brand offering.
Leveraging our Innovation Measurement platform, we reviewed over 60,000 innovations in five countries over multi-year periods, and assessed their vitality by dividing the number of new UPCs that grew sales in year two versus year one by the total number of new UPCs launched during that same period.
We found that on average across all markets, more than half (52%) of new items that hit shelves with national distribution show vitality, growing sales in year two. When we lower the distribution threshold to include all new items, 33% show vitality.
Moreover, when innovation sales grow, a company is 1.8 times more likely to grow overall sales, compared with companies whose innovation sales are stagnant or declining.
Innovation is never a ‘launch and leave’ endeavour. Your product and strategy need care and tending from concept to development to activation and beyond. Reliable data, goal-setting, and understanding your innovation’s potential are key to vitality so that strong new products can continue to thrive over time. It is also crucial to closely monitor launches early on: our data shows proactive and early launch management can increase vitality in 80% of categories.
Innovation vitality is not only worth pursuing – it’s critical to your bottom line.