It's de rigueur to advocate cross-functional teams, but it ensures projects are considered from all angles throughout the entire process, and it works well for Hormel Foods. "We meet a lot," says Minerich. "An intern in our packaging group told me he loves the culture at Hormel because you meet face to face with people, and can get things done much more quickly. Our corporate office is located just across the parking lot from R&D, and the path between them is well worn."
Billion Dollar Challenge
"Our CEO Jeff Ettinger challenged our team with the Billion Dollar Challenge -- between 2000-2009, he wanted to add $1 billion of sales from products that did not exist before," recalls Minerich. "We reached the goal two years early, in 2007." During those eight years, overall sales grew 80 percent, to $6.1 billion, with 37 percent of that growth from products that didn't exist before 2000.
"In 2008, Jeff challenged us with a new goal -- by 2012 to hit $2 billion in sales from new products introduced since 2000. That not only built on the original Billion Dollar Challenge, but emphasized the importance of innovation to our company's future growth. Hormel's brands are developed to satisfy consumer trends over time. Many of our brands have been established for decades and we have a faithful consumer base. Our new brands are built with that vision in mind. We don't respond to fads with short life cycles."
Every company has a product development process. "We formalized what we call our 6D process – direct, discover design, develop, deploy and delight," says Minerich. "It's our methodologies and collaborative infrastructure that differentiate us from our competition. Our innovation funnel is full, so our goal is focusing our efforts on higher priority opportunities and allocating our resources to the projects that will have the greatest opportunity in the marketplace."
Asked what the general timeline for coming up with a new product, Minerich kidded, "Between one day and 10 years." Zeroing in, he explained, "Our foodservice projects are very customer-oriented, so we respond quickly to our customers' needs to keep their menus current with fresh ideas. Competition is stiff, so everyone wants to refresh their menus several times a year.
"Some of our longer-term projects, where technology or science innovations are deployed, literally take years. Our goal there is to identify key customer or consumer needs and be sure the product reflects, meets or exceeds those needs, but also gives us a marketable point of difference. We want to do it right," he says emphatically.
"We have both food scientists and chefs on staff, and try to partner those skill sets together during the development process," Minerich continues. "A scientist develops a food product from ingredients up. A chef develops from a finished product backward. The chef is always modifying his creation until it is right and then he looks back at what he did to get there, whereas the scientist tends to develop via formulation. You are really merging left brain and right brain thinking.
Sometimes it's a crash, but it's an exciting crash," he says, laughing.
It is sometimes challenging for a large company to come up with innovative new products because there are so many management layers to sift through. That problem really doesn't exist at Hormel Foods. "It goes back to our management style," says Minerich. "The layers are on an organizational chart, but it's not uncommon for our CEO and vice presidents to talk directly with our scientists. Communication barriers don't exist. Our founder's (George A. Hormel) philosophy of ‘Innovate, don't imitate' is prevalent not only through R&D, but through the entire organization. Our innovative culture goes across the board, and we are very proud of that."
From prematurely right to sweet success
"New product ideas fall into our lap because we have a tremendous consumer insights team that mines consumers for ideas all the time," says Minerich. "There are very unique skill sets involved in questioning consumers and analyzing what they are telling you. Consumers don't give you new product ideas, they tell you what problems, challenges and issues they are trying to work around. Between the marketing and the R&D teams, we have to use our creativity to understand where the consumers are coming from and what opportunities can be mined."
One such product and project Minerich is particularly proud of is the Natural Choice lunch meat line. "I can honestly say we caught our competition off guard," reflects Minerich. HPP uses high pressure, not temperature, to pasteurize food, and Hormel Foods was the first to apply it to lunchmeats on a national basis.
"Many companies were aware Hormel was working with high-pressure processing from a food safety perspective. Internally, we identified the opportunity to remove preservatives and artificial or synthetic ingredients and address the natural foods and minimally processed foods initiative that our consumers were asking for. This technology helped us bridge that opportunity, and I heard from many of my colleagues that they never saw it coming when our products hit the retail shelves."
He is also proud of Hormel Compeats. "It started out as Top Shelf and then merged into Dinty Moore American Classics," he says. "It was one of those products way ahead of its time. Richard Knowlton, our CEO at the time, was quite a visionary and saw the consumer opportunity for convenient, shelf stable meals. He identified this as being ‘prematurely right.'
"The concept was perfect, but food processing and packaging technologies weren't up to speed, so product quality wasn't optimized. Technology had to catch up. It was also a very new idea for consumers to have a shelf-stable ready meal that wasn't refrigerated, so it took some time. [The final success came] when we literally took the packaged food out of the box. We showed consumers it was a tray, they understood the concept, all the pieces came together, and it was a great success."