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Mexico: Innovation as an engine of growth and value

There are two basic axes to which innovation should contribute in any company.

The first one is usually more seductive in the short term and speaks of “Generating volume with Innovation”. This can bring about relatively fast results with renovation development (Doing better innovation), and help to attain growth in our businesses. In Mexico, this is usually common practice. The consumer likes to find a new size of his favorite brand in the point of sale that adapts better to his consumption pattern or a new flavor that allows him to take his brand to new times of consumption. The key in all these cases is called “incrementality”. If my innovation is not going to generate significant incremental volume, then we are likely to remove that product from our portfolio very quickly. Kantar World Panel data has shown us that in fast-moving consumer goods categories, products with both high volume and high incrementality have more than twice as much chance of staying on the market than those with high volume but low incrementality.

And on the other hand, this is the strongest axis, which though not the most popular in a highly competitive context and pressure to reach our financial results, if to a larger degree, that can contribute to long-term growth. This last one speaks of “Creating value with Innovation”, which means creating products that not only give us short-term volume but would also generate value for our brands and contribute significantly to the long-term growth of our businesses. BrandZ has shown us that brands perceived as “innovators” increase in value more quickly. Brands seen as being different, creative and likely to shake things up can not only gain volume but also give their brands value. In an 11-year period (2006-2016), brands widely perceived as being innovators have increased their value by 154 percent, while brands less likely to be perceived as innovators have only increased their value by 17 percent.



What we have to do with our innovation plans seems clear, but the complicated part is finding those spaces where brands can create products that deliver both volume and value.

It is a big challenge. Brands have never before faced complexity levels like the market has today, or at the speed at which products and categories now evolve. People are more demanding now, and their needs are increasingly more specific, which makes it difficult for new and existing brands to identify real opportunities for growth. The millions of moments experienced every day are multiple opportunities for brands, but that large volume of moments can be overwhelming. We should identify the moments that seem ordinary but that could be a great opportunity for our brands. If we take a good look, it is very likely that we find moments in which two key forces unite. On the one hand, there are people who are not able to resolve their needs in the way they want to, and on the other, the strengths of a particular brand provide superiority over its competitors at that time.

It would seem that the story should start here. We should look for strong moments of opportunity for my brand, then think about innovation and how to break down market inertia of those specific moments in a creative, innovative manner and then we should be closer to that balance between volume and value. Naturally, this is not going to solve all the complications of innovating in our beloved Mexico but it will give us a good line of thinking and inspiration for our innovation developments to lead us to long-term growth of our businesses.