How PepsiCo & McDonald’s uncover their next big innovations

To compete as a QSR or CPG brand today, you need to have a steady stream of innovations. Consumers and market conditions are changing faster than ever — plus there is no shortage of disruptive new entrants ready to challenge existing brands. No one can afford to coast in this landscape.

Of course, big brands have always spent a lot of time and money planning for future innovation. The problem is that their innovation processes were established in a very different world — one where linear models made sense and where laborious stage gates were acceptable. The goal of these processes was perfection, and striving for perfection takes time (and even then, can perfection really be achieved at all?).

The truth is that those processes aren’t suited to today’s reality. QSR and CPG brands need to bring fresh and exciting new products to market — not just the safest ones that pass the old-school grading system. That requires a new approach to innovation testing.

We recently hosted a webinar called “How to optimize front-end innovation in CPG and QSR with Prioritize It” where two brands, PepsiCo and Mcdonald’s, walked through some examples of how they approach early-stage innovation testing. I’ll recap a few of the points from the webinar in this post, but be sure to watch the full webinar below.

Innovation challenges

In the last several years, PepsiCo has addressed its insights challenges head on by creating its proprietary technology, Ada.

As part of this process, PepsiCo identified a number of challenges with its innovation testing tools:

• The company was good at putting out short-term activation innovations, but not as good at recognizing breakthrough ideas

• The marketing team thought they might be leaving too many good ideas on the cutting room floor by relying on processes that were too risk averse

• Current testing solutions were not giving insight into how consumers would ultimately consume the product or which target groups the product appealed to

• These tools required fully fleshed out stimuli which took a lot of time and resources to put together, prohibiting testing a large number of ideas early in the process

To address these challenges, PepsiCo worked with us to build Prioritize It. This solution has become a critical component of PepsiCo’s innovation process.

Which Frito-Lay concepts will break through?

In one example outlined in the webinar, PepsiCo used Prioritize It to get 37 early Frito-Lay concepts in front of consumers quickly. With Prioritize It, the team could test rough sketches of products and simplified articulations of the ideas — not lengthy concepts.

Prioritize It categorized the ideas according to their trial and breakthrough potential, plotting them along a grid as either “short-term trial,” “seed and grow,” “scale and sustain,” “emergent,” or “deprioritize.” With each concept mapped out in this way, the team gained a more granular understanding of go-to-market strategies and performance — and was able to pick the concepts with true breakthrough potential.

After two rounds of feedback from Prioritize It, PepsiCo landed on seven concepts across Lays, Doritos, Cheetos, and Ruffles brands to continue to invest in.

With this approach, PepsiCo is confident these seven concepts will not be refresh innovations. They will truly break through in the market.

Innovation challenges

McDonald’s has different goals for each innovation, like growing overall number of transactions, increasing average check size, creating buzz, or changing consumer perception. The team strives to be crystal clear about the goal for each new innovation, and then find the best concepts that align with that goal.

A traditional “go/no go” solution that only tells McDonald’s whether it should “proceed,” “proceed with caution,” or “stop” doesn’t give enough information for the team to know whether each concept fits with the overall goal. They need more context for each concept.

Which McFlurrys have trial potential?

In the example shared in the webinar, the goal was to build buzz for limited-time McFlurry flavors, ultimately growing check size during the “PM Snack” occasion. And McDonald’s wanted to find new flavors that consumers would want to try out in the real world.

The team used Prioritize It to test a number of new flavor ideas very early to make sure that only the ones with the most potential got time and attention further into the process. In this case, McDonald’s found two options that had strong trial potential — and it was even able to get some additional color from the verbatims about what consumers liked about those ideas to inform their go-to-market strategies later.

Prioritize It is also able to help McDonald’s understand which occasion consumers are interested in the menu item. This helps them determine early on if they need to adjust their goals or reprioritize concepts accordingly.

In this case, the two McFlurry options they landed on appealed to consumers for “PM Snack,” but also “Dinner at Home with Others.”

Finding true breakthrough innovations requires an innovative new solution. That’s what we’ve built with Prioritize It. As these two stories show, with Prioritize It you can:

• Test concepts early in the process: No need to wait until a concept is completely fleshed out to get consumer feedback.

• Get real go-to-market guidance: Who does your concept appeal to? Will it be a big hit for a short time, or will it change the game? Learn a lot more detail than a simple “yes” or “no.”

• Stop playing it safe: If you have to wait until your concepts pass a bar set by a traditional tool, you’ll very likely end up with only the safest choices. Find the ideas that early adopters will latch onto.

Be sure to watch the full webinar for more behind-the-scenes details.