2011 R&D Team Winner: Herr Foods Inc.

For our 2011 R&D Team of the Year winner (medium-sized company category), culture eats strategy for lunch.

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"There is some art in the science. Sometimes we are surprised at how good consumers think the product is, or sometimes not. We strive to reduce the risk of going to market, and the consumer voice is in the center of what we do. But research has its limitations; consumers can't always articulate what they want. Historically, only a small percentage of new products (20 percent) are still in the market two years after they are introduced, but 80 percent of our new products remain in the marketplace. That affirms the adage, ‘The harder I work, the luckier I get.' "

Healthier products are the focus of consumers today, so how has Herr's responded? "We try to be relevant to the consumer. We've added more diverse oils to our portfolio, including sunflower, and moved to eliminate trans fats, reduce fat and dabble in natural, organic and the use of sea salt, which consumers perceive as better," says Thomas.

"Household penetration of potato chips is 93 percent, so we try to have something for everybody. Potato chips, eaten in moderation, can be part of a healthy diet. Potatoes are a simple food, and consumers see the merits of our simple labels -- only three ingredients (potatoes, oil and salt).

"We've also made a significant investment to manufacture a line of Baked Potato Crisps for those who want a lighter product. And, over the past five years there has been a resurgence of kettle chips with their unique shapes and crunch. They have rejuvenated and grown the category, so we added them."

At Herr's, ideation is a group effort, and success correlates with how everyone participates. "Going to market with diverse flavors, sometimes you just get lucky," says Thomas. "We are soon launching a line of sweet potato chips. We were sitting around after a round of golf eating sweet potato fries dipped in ranch dressing and thought what a great idea it would be for chips. We come up with ideas all the time and explore the possibilities," he explains.

As consumer tastes become more sophisticated, Herr's responds with creative new offerings. "We have conversations with customers, do consumer research and work with suppliers who recognize that Herr's is open to taking a chance on a new flavor." For example, Thomas says Fireman's BBQ Chicken flavor will soon launch. It will join Heinz Ketchup chips, Old Bay Seasoning chips and Kansas City Prime Steak Potato Chips, among others.

"It usually takes nine months to go from concept to packaging, working out the nutritionals, to market introduction," says Thomas. "Idea generation is distilled though general review. We then move to a more formal process considering whether there is a consumer need or want, whether the product is unique, rather than a me-too.

We proceed to the concept stage with a prototype – tasting, crunching -- then to consumers. If it comes back with good scores, we go with it. Hundreds of ideas are explored for each chip flavor as it gets tweaked."

"What's beautiful is how the manufacturing and marketing teams work together and interact," says Herr. "Sometimes we come up with something really new and sometimes we finesse existing products. Much of our success is due to our supporting partners -- our suppliers who help us with seasonings and raw materials."

Thomas stresses the company's culture of inclusion. "Everyone is approachable and needs to show up – we want the whole person involved and striving to do his best," he says. "As our founder told me, and I never forgot: ‘You can get a lot accomplished if you don't care who gets the credit.' "

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