2010 R&D Team Winner: Hormel Foods

July 6, 2010
Our 2010 R&D Team of the Year winner is rooted in the past, ahead of its time.

Guided by the pursuit of continuous improvement, rooted in quality and innovation and possessing a collaborative spirit, the R&D team at Hormel Foods seeks new ways to bring flavorful, healthful and satisfying products to consumers, just as the company has for 119 years.

Product development at the Austin, Minn.-based company means nurturing 75-year-old iconic brands (Hormel chili, Dinty Moore stew, Spam) while developing leading-edge processes to support new ones (shelf-stable Compleats dinners, Natural Choice meats).

With so many brands, the R&D team has mega product development responsibilities and works on up to 300 projects at any one time. "We either lead or support development across the company," says Phillip Minerich, vice president of research & development. He says about 80 percent of Hormel Foods products in the marketplace are developed through his team. "We do have some fully owned subsidiaries with more targeted and intimate R&D groups such as Jennie-O Turkey Store, Century Foods International and Diamond Crystal Brands," he explains, "But our team supports the entire corporation when it comes to technical innovations, food sciences and food safety interventions."

Accomplishments abound for the team, which recently developed and brought to market innovative new products that have influenced the food industry at large, including:

  • Hormel Natural Choice meats — Using high-pressure pasteurization (HPP), the team was able to create a line of all-natural luncheon meats that are free of preservatives, artificial ingredients, gluten, MSG, nitrites or nitrates. Those are powerful label statements.
  • A variety of Hormel Always Tender oven-roasted pork products for foodservice customers – They're fully cooked before being vacuum packed for tenderness, juiciness and flavor. The kitchen staff needs only to heat the meat up when it's time to serve, so prep time and cleanup is significantly reduced. 
  • Hormel Compleats — These are shelf-stable, microwavable complete meals, ready to enjoy in 90 seconds.

Collaboration is a primary reason for the team's success. "When someone talks about R&D, they are really talking about a number of teams," explains Minerich.

Supplier relationships are key

Supplier relationships are appreciated and nurtured at Hormel Foods. "An example is when we converted our Spam can to a two-piece can," says Minerich. "We worked very closely with our primary can manufacturers Silgan and Crown Holdings, along with International Paper (formerly Weyerhaeuser) for corrugated packaging. In fact, the secondary package design is patented.

"There were a number of labeling equipment suppliers and engineering partnerships formed, so the project stretches beyond Hormel's personal skill sets to the skills of our suppliers.

"Another example is our Lloyd's Barbeque tubs, utilizing an in-mold labeling process provided by Aerolite, a great partnership by our packaging group," he says.
"We are also very loyal to our suppliers, who work hard to become a Hormel Foods supplier. They are challenged, and we have high expectations, but they also have access to our inner thoughts about where we are going, so they help us grow our company and, in turn, theirs."

"We have 110 employees in our R&D group, including 60 scientists and 50 support technicians broken down into various teams -- sensory analysis and shelf life testing, package development, process authorities, product and process development, applied research, chemistry, microbiology and analytical labs, and regulatory compliance and technical services.

"They all have very special technical skill sets that come as a package deal. It is a collaborative team response. The variety and diversity of projects we work on keep us in touch with science and technologies across the whole food science realm," he says.

R&D is charged with product development, packaging development, line extensions, exploratory science and new technology applications, food safety interventions, problem solving and cost reductions. Minerich emphasizes the cross functional effort, not only within R&D, but across the corporation is the biggest strength of Hormel Foods. "Every project involves R&D, operations, engineering, marketing, purchasing, quality control and our suppliers," he says. "That gives us many insights and taps us into different expertise, so we can identify opportunities within opportunities when we develop projects."

Minerich has seven direct reports, and each manages significant areas. "My management style is what I call the TOTL (task-oriented time limited) approach," he says. "That focuses the team on what they are tasked to do, what their responsibilities are, and what they are accountable for, from the start through the end of the project. This is not an academic model; time is money and the only time we make money is when we take product to market.

"All the responsibility and accountability is built on trust and encourages the freedom to explore and be creative. One of our team members, Dan Hirst, is a trained leader in Edward de Bono lateral thinking training, which makes remarkable use of several skills that encourage not only out-of-the-box thinking, but removing the box barriers entirely. Everyone in R&D and many in the corporate office have been trained in this program."

With Hormel Foods for 34 years, Minerich credits all his past managers for contributing to his management style. "My predecessor, Forrest Dryden, was here recently celebrating the retirement of an 82-year-old employee, Pauline Bailey, who was with the company for 33 1/2 years," he says. "Her age is unique, but her commitment and years spent with the company are not unique. It is not unusual within Hormel to have 30, 35 or even 40-year careers here. Because of that, we tend to focus on building teams, bridges and collaborations. I know five years from now I will fundamentally have the same team as I have today."

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."

Minerich is also proud of the company's Café H foodservice line. "Foodservice customers also are time constrained," he says. "This product allows the operator to put his own sauce or our sauce onto prepared meats, whether it is pulled chicken, beef or pork. The line has been a great success. This year we introduced Always Tender Oven Roasted Fully Cooked Pork Loin, another extension of foodservice convenience," he says.

"We own the consumer market with our Hormel Microwave Ready Bacon – four slices of raw bacon per packet and four packets per package. It's a very convenience-driven product, and growth has primarily been through consumer word of mouth," he says. "Our Hormel fully cooked entrees have also been a great success.They deliver easy to prepare, center-of-plate meats to consumers, allowing them to build the rest of their meal around it. Our Hormel Always Tender Case Ready line delivers a patented process guaranteeing quality. Hormel Always Tender is the only fresh meat in the market guaranteed to deliver an always tender eating experience or your money back."

Talking turkey about wellness
"The most important attribute in new products is balance," says Minerich, who believes the wellness trend is here to stay and emphasizes Hormel Foods will continue to build on it. "When you look at a product like Hormel Compleats, you are talking about a balanced nutritional portfolio of proteins, fats and carbohydrates. You are also looking at portion and calorie control. We try to help our customers balance their lifestyle with our product offerings.

"Our fully cooked entrees help balance their meal because we provide that center-of-the-plate experience, and they can build around it with vegetables, starches or salads. Our Hormel Natural Choice line of lunchmeats meets the needs of those consumers looking for naturally healthy products.

"Looking at all Hormel products across the board, more than 80 percent are at or below the RDI for sodium," he says adding, "Our portfolio is far reaching, and sodium is a key issue. We also own Jennie-O Turkey Store, and turkey is a very healthy protein. In general, lean protein offers satiety. When you balance your diet with lean protein, it gives you a sense of satisfaction and fullness that discourages over eating and snacking. Lean pork is as lean as lean chicken now. Convenience and package functionality – easy open, recloseable, portion size -- is also important."

A matter of trust
"We are very much a career oriented company, in fact, the top 10 percent of R&D has over 33 years of seniority," says Minerich proudly. "It's not unusual for our company to have that kind of institutional knowledge, which gives us a unique competitive advantage. A consultant once asked how we could get anything done with so many meetings. I told him that's exactly how we get things done.

We have to have to be efficient with our meetings: have an agenda, get right to task, and get the job done in 30 minutes or less. Questions are asked, there are no holds barred, everyone walks away with action assignments, and we all trust each other to get our tasks done. We all have work to do, so we get down to it and make sure we are advancing the project.

"It goes back to the long-term relationships that have been built on trust. This is the Hormel Foods family, everyone is proud of each other's accomplishments. I've worked for four CEOs, and they, along with all the other employees have integrity. With integrity, trust and teamwork in place, we can focus our efforts on being relevant to the customer or consumer."

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