Coffee innovation from Starbucks
By Darrel Suderman
It seems rare to identify new product innovation in retail packaged goods for the QSR and fast casual dining segments; however Starbucks qualifies as a 5-star winner.
First, let’s define new product innovation. That seems like a logical starting point although it may represent a distant concept to many food and beverage executives. To define product innovation, I refer you to my new product innovation “Bible” titled "The Innovators Toolkit: 10 Practical Strategies to Help You Develop and Implement Innovation" by the Harvard Business Press (2009). It defines innovation as the embodiment, combination, and/or synthesis of knowledge in original, relevant, valued new products, processes, or services. A simpler definition based on its Latin root (nova) means a new thing or method.
Most innovative thinkers define two separate forms of innovation - incremental and radical. In 2003, Harvard professor Clayton Christensen used the terms sustaining and disruptive to describe innovations. He wrote: “Some sustaining technologies can be discontinuous or radical in characters, while others are incremental in nature. What sustaining technologies have in common is that they improve the performance of established products ... Most technological advances in a given industry are sustaining in character ... Disruptive technologies bring to a market a very different value proposition than had been available previously."
In many instances, the disruptive technologies described by Christensen create new markets. Those markets are initially small, but sometimes grow large.
So let’s apply the innovation test of incremental or radical innovation to Starbucks Via Ready Brew Coffee. I won’t call it “radical innovation," but it does represent “incremental innovation” – a 5-star innovation.
Star No. 1 represents packaging innovation. It is innovative to sell high quality “ready brew” coffee in individual serving sizes. Why other mega retail coffee brands haven’t done this escapes my imagination. And with savvy marketing, Starbucks has achieved individual serving success.
Star No. 2 represents meeting a high consumer need. Starbucks introduced individual-serve coffees during recessionary times at a price point below an Americano – allowing customers to enjoy the same flavor at an affordable price.
Star No. 3 represents processing technology. According to my “Innovation Bible," an innovative product cannot be introduced to the general marketplace before the technology is available at an affordable price. I am sure this concept had a lot to do with Starbucks market rollout – something not possible five to 10 years earlier. I also believe Starbucks Via Ready Brew Coffee represents behind-the-scenes flavor processing technology to capture those precious “top note” flavors.
Star No. 4 represents incremental innovation. Starbucks definitely hit the ball out of the ball park with incremental “flavor innovation."
And Star No. 5 represents the ability of an innovative product to change consumer behavior. In this category, I believe that Starbucks Via Ready Brew Coffee will clearly create a consumer segment that regularly drinks high quality, single serve coffee separated from the social network of their neighborhood store.
In summary, Starbucks Via Ready Brew coffee represents incremental innovation because it either improves something that already exists, making it “new and improved,” or it reconfigures an existing form or technology to serve other purposes. It can also be said that its incremental innovation included four new individual flavors: Cinnamon Spice, Vanilla, Mocha, and Caramel. And, the flavored line extension also met the consumer demand for their favorite flavors while working and traveling alone.