Structured innovation in the baking industry

What is innovation in the baking industry?

We talked to Tina Lindeløv, Innovation manager at Lantmännen Unibake-Schulstad, about product innovation in the baking industry.

Lantmännen Unibake is one of the largest bakery companies in Europe, providing customers with over 400,000 tons of bread every year. The Schulstad brand is an important part of Lantmännen Unibake and is focused on innovation, since its very beginning in 1880.

The founder of Schulstad, Viggo Schulstad, was one of the first people in the baking industry focusing strongly on quality and hygiene standards. For many years, he put a lot of effort into research, in order to create new and healthy types of bread. Schulstad continues to innovate, today with the support of Tina, who is part of Schulstad’s innovation processes since 19 years

Ensure a clear innovation strategy

While previously strategies for new product innovations were developed quite short-term, Schulstad now has a 3 year product portfolio strategy. Closely connected to that is the branding and communication strategy. The core pillars of the current strategy comprise four innovation platforms, including health and well-being, everyday convenience, sensorial experiences and planet-friendliness. Within those platforms there are 18 subtopics, called opportunity spaces. Every new project has to tap into at least two of them, preferably from two different innovation platforms. This should ensure that Schulstad covers all ongoing trends, creating a competitive and balanced portfolio.

Main Takeaway: Especially when operating in a big corporation, ensure clear structures to include all relevant aspects into your innovation strategy.

Listen closely to specific consumer preferences, not only to general trends

Marketing has always been a big part of innovation at Schulstad. They organize innovation workshops and provide crucial consumer insights. Based on the topics Schulstad wants to focus on and based on consumer insights, fast concept testing is applied to evaluate ideas. When evaluating those new ideas, the company has to keep in mind that sometimes consumers might not be ready for a new trend, which means products might be introduced too early. For example, due to the trend of stronger health awareness, Schulstad focused more on creating healthy products. However, some ideas failed, as taste was still the most important aspect for many consumers. Focusing only on general trends is therefore not enough. Rather, consumer preferences need to be understood and implemented in the strategy.

Main Takeaway: While some trends are very important on a strategic level, for product innovation knowing about specific consumer preferences is key.

Manage retailer-relationships and align with them on the strategic direction

Especially for the fresh bread business, Schulstad mainly sells to retail customers. While it is crucial to base innovation on consumer insights, it is is also necessary to convince the retailers that the new branded products should be part of their portfolio. On specific “innovation days” they are invited and Schulstad shows them the newest consumer insights, in order to explain the strategic approach. However, not everything can be disclosed, as retail buyers are also constantly in contact with competitors. In order to have a healthy customer relationship, Schulstad listens to the retailers and has a conversation with them about their strategy and how Schulstad can align with that strategic direction.

Main Takeaway: Retail customers need to be convinced of new product portfolios but it is also key to have a constant conversation about the right strategic direction.

Invest into a more collaborative innovation culture

Schulstad has a culture that supports innovation. Nevertheless, they can still do better in further developing this innovation spirit. In the future, Schulstad wants to stronger involve the whole company into the innovation processes. Within such a big company, not everyone might understand why certain things are done. When opening up the innovation process to a broader audience, it is therefore crucial that everyone who participates has a clear idea of what the strategic direction of the company is. Including more people can help to critically challenge why the company is doing certain things. At the same time, it ensures engagement and buy-in of employees below the management level.

Main Takeaway: Try to include your employees into the innovation process but make sure they understand the company’s strategic direction beforehand.

Use a stage-gate model to evaluate concepts

If an idea seems interesting, a typical stage gate model with 5 gates is used to further develop and evaluate an idea. While in the early idea generation phase a big part of the company should be involved, the stage gate process includes fewer people, working together in cross-functional project teams. This process helps the company to manage and prioritize the right projects. The C-level management team comes together once a month to make the go / no go decisions at every gate of the model. This not only structures the process, but also shows the support and engagement of top management in the innovation process, as they free up resources and take time to evaluate the different concepts.

Main Takeaway: A stage gate model is a good tool to structure the innovation funnel and shows engagement from the decision makers.

Future of the bakery industry

According to Tina, sustainability is the most crucial aspect for the future of the baking industry. The focus will increasingly be on how to stop food waste and how to use more sustainable raw materials and packaging. With all these aspects, a high focus lies on being transparent about the product development. This trend also leads to a higher focus on premium products and therefore a higher willingness to pay for those premium aspects.

Tina’s main advice to be innovative:

Continue to look from the outside in. This means strongly focusing on your end consumers’ needs and thinking about where your competencies lie in order to fulfill those needs. At the same time, dare to make mistakes as failures are along the way to great success.

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