Five Steps Behind: How Ethnography Based Strategy Can Fuel Ingredient Innovation in the Early Stages of the Value Chain

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Global fast moving consumer goods companies are faced with significant challenges on all fronts as start-ups challenge brands, retailers’ private labels challenge margins and technology giants like Amazon and Alibaba challenge the entire business model. To survive in this environment, FMCGs must, among other things, grow on the basis of meaningful product innovation — innovation that is often outsourced to their ingredient suppliers. Based on four client engagements, this paper outlines how the existing relationship between ingredient suppliers and their customers further down the value chain is currently defined by a deterministic dynamic that results in incremental and marginal innovation and a risk for said suppliers that their products become mere commodities. We argue that by employing ethnography based innovation strategy, ingredient suppliers can establish their own opinion of the market from the vantage point of their technologies and establish a new, meaningful and human-centered innovation direction that the whole company can unite behind. The approach helps re-ignite dried-up project pipelines through the new insights coming directly from the research, but it also creates more demand, as the combination of technological expertise and end-consumer insights can make the ingredient supplier a valued advisor to their customers on the end-consumer problems their technology can help solve. Ethnographic researchers that embark on providing such insights to ingredient suppliers must prepare to argue for the value of this type of data with scientists and practitioners trained in the natural sciences and must expect to play a key role in translating the data into actionable and measurable consumer benefits. Successfully implementing this type of research and its implications can change the relationships between suppliers and customers and eventually be a key to breaking the vicious cycle that often separates human understanding from technological innovation.

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