435: Hershey’s award-winning approach to innovation – with Charlie Chappell and Greg Coticchia

Learn from the 2022 winner of PDMA’s Outstanding Corporate Innovator award – for product managers

For the last 36 years, each year the Outstanding Corporate Innovator award is provided by PDMA to an organization that excels in innovation. At the time of this recording, the last winner was Hershey, and I was at their award ceremony. There were boxes of Hershey chocolate treats for everyone. It was a good ceremony :) 

We are going to learn what has made Hershey an outstanding innovator, gaining insights that might help you and your organization. With us is Charlie Chappell, the VP of Innovation and R&D at Hershey, and Greg Coticchia, the CEO of Sopheon.

Summary of some concepts discussed for product managers [1:54] Charlie, why did Hershey decide to apply for the OCI award?

We thought we were having some success as an innovative company, but it’s always good to get an external perspective. We decided to pursue the OCI award as a learning exercise and a moment of inspiration for the company. Applying proved to be a galvanizing effort because we had a lot of people in the company involved as we thought about our innovation process from end to end. It helped bring the team together. Winning provided great external validation and energized the team to ask, what more could we do now with innovation?

I recommend applying for the OCI award to colleagues working in other places, especially if you’re at a stage where you’re assessing your innovation operations now. Applying for the OCI award is a great way to document what you’re doing. It’s not for the faint of heart. There’s a lot you put into the application. You get a lot of feedback from PDMA. They do a site visit. It is a lot of work, but the benefit we’ve gotten out of it has been well worth the effort.

[4:01] Charlie, what are the innovation practices that makes Hershey an outstanding innovator?

Everything for us starts with strategy—both innovation strategy and corporate and total enterprise strategy. In the application, we shared our enterprise strategy and specifically the significant role innovation plays in that. We highlighted how we translate that strategy into the projects we pursue. We had clear KPIs of what innovation had to deliver. We shared how we set up a process and tools to manage and govern projects so we’re hitting our goals. We demonstrated we were meeting and beating our goals.

We also emphasized how innovation isn’t just an R&D function or innovation group. We bring in the entire organization and involve everybody in innovation. Everyone plays a role, whether that’s our supply chain partners, sales partners, marketing partners, finance partners. Everybody contributes to what innovation is at the Hershey company.

[5:58] How do you communicate the organization strategy throughout the organization to help keep everyone on the same page?

Communicating strategy starts at the highest level of the company. Our CEO and executive committee members make a very concerted effort to share the enterprise strategy with every employee in the company. By the time I go to my team, they’ve already heard the strategy from my bosses. I communicate what that means to us.

We make sure all our projects align to the strategy. We don’t want to pivot too much on our strategy, but we also need to evolve. Especially at the front end, we’re having discussions all the time, asking, “Does this project still fit with the strategy? Where does it fit in the priorities of everything we’re doing? If it’s not a high priority, what else could we do with those resources?” And then we pivot. At the same time, at the front end we need to see what’s coming next and make a pivot in strategy because of what we’re seeing happen in the marketplace.

[10:08] Is there a tool you use for aligning projects to your strategy?

We don’t use tools so much, but we do use organizational structures around where we put priorities. Within the innovation team, if we have total enterprise priorities, we organize our teams by which teams are working on each priority. The plans keep getting more and more granular as you go down into the organization. We have a rigorous process of setting individual and team priorities and goals for the year. We do goal sharing meetings were we make sure our teams and partners are aligned. We find where the pinch points are and discuss what problems we have to solve collectively to be able to do everything we need to do.

We have a ten-year vision that sets big priorities. Then we do strategy planning for the next three to five years. Then we do annual planning. As the annual plan is finalized, everybody sets their individual goals based off that. Those are the goals our performance is measured against at the end of the next year.

[12:51] How do you make innovation’s everyone’s job?

For us there’s two definitions of innovations. Product innovation is a new product that goes to market, is sold to consumers, and drives revenue growth. Second, in the entire company, innovation is about problem solving. No matter where you are in the organization, you could innovate. Right now, HR is having to innovate by figuring out how to keep the culture of the company while giving people the flexibility that remote working has enabled.

We’re a very collaborative culture, were at the end of the day everybody is trying to drive toward one goal, which is to make the company successful. There’s less turf wars. The culture makes it possible for people to accept others’ ideas.

[14:55] How do you equip people for innovation?

It starts with hiring people who have a passion for innovation and a curiosity to learn and who want to create new things. We put systems, tolls, training, and space in place to teach people how to gain consumer insights, analyze a marketplace, and see around corners. We train people to take a great idea and commercialize it, get it through the organization, and go to market. On the product development side, we do a lot of technical training on confection.

[16:51] Greg, What does Sopheon do and how are you part of Hershey’s success?

Sopheon is a world leader in innovation management. We provide software and services to help companies like Hershey. We help companies make the idea-to-commercialization process a reality. Sopheon helps companies make better decisions. If you can automate a process, get efficiencies out of the innovation process, assign resources appropriately, and make better bets, then you can unlock better business decisions around your innovation investment. That’s the value proposition of what Sopheon does.

For years, we did that with one product, Accolade, which is used at Hershey. Over the last two years, we’ve also been innovating here, and we’ve added several new products to focus our footprint serve our customers better, and service the market better.

[]19:08 What’s an example of how Hershey makes better decisions because of Accolade?

Greg: Accolade started out by automating the gate process. Many people still use the gat or phase gate process. Everybody needs to go through a decision-making process to make innovation investments. You have to have a risk mitigation process and resource allocation. Accolade helps you track goals in alignment with strategy. You won’t be able to scale a company of the size and stature and portfolio of products like Hershey unless you have that alignment, and you won’t be able to do that with Excel spreadsheets. Many people try to do it with homegrown products or retrofitted project management tools, but they’re not purposely built for innovation. We’ve brought to Hershey a product that is built as a focus lens for a product innovation process.

Charlie: The biggest thing Sopheon has done for us is helping us manage complexity. It made us so much so much more efficient in the decision-making process because it captures all the data that are needed from various places within the organization and puts it all in one place. As we’re going through our product portfolio, there are hundreds of projects every year, and Accolade allows us to get through them efficiently. We can understand the trade-offs between them. We implemented this just as COVID was coming in, and it made the transition from doing this in-person to doing it completely virtual almost seamless because all the information and data were there.

Greg:  Sopheon helps companies and leaders answer the questions, “What did we do? What resources did we apply? What capital did we apply? Are we getting the outcomes relative to our strategy for our innovation dollars?”

[23:50] Can you give an example of innovation at Hershey?

Our biggest brand is the Reese’s brand. It’s the third biggest brand in all of snacking. It’s the perfect combination of chocolate and peanut butter, but there are so many different ways you can experience taht. One of our innovations has been making the Reese’s even more perfect by adding more things into it. We put in pretzels, potato chips, and Reese’s pieces. The latest innovation was a Reese’s cup with Resse’s puffs inside.

You can’t just dump the puff cereal in and it magically happens. We went through a whole innovation process to replicate the experience of eating Reese’s puffs cereal but putting it inside a Reese’s cup. We had to figure out which size cup to put it in, how to put it in, and how to maintain the cereal’s crunchiness. When we state the idea to any consumer, they want it, but going through the process to make it adds complication to manufacturing. Going through that is really rewarding.

Another innovation is the different sizes of Reese’s cups. We find some consumers love it more for the chocolate and some love it more for the peanut butter. The different sizes give you different ratios of chocolate and peanut butter. We even have a half-pound Reese’s cup. The Reese’s Thin is for people who love Reese’s but sometimes don’t want that much. The marketing campaign was, “They get to your mouth faster.” It was still about the enjoyment of the product while communicating a different way to enjoy it.

Action Guide: Put the information Charlie and Greg shared into action now. Click here to download the Action Guide. Useful links:

• Find out more about Sopheon
• Check out the Innovation Talks podcast
• Check out Hershey’s website

Innovation Quote

“I reserve the right to be smarter tomorrow.” – Charlie’s colleague

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.