The frozen yogurt kiosks cropping up in convenience stores during the past year are proof of the power of collaboration in innovation.
The kiosks were the brainchild of a frozen yogurt machine manufacturer, Argosy Group International, which tweaked its earlier froyo model after it learned a single machine offering two flavors wasn't enough to create a memorable experience for consumers. But that's changed with a new kiosk configuration offering more flavors of the product, which carries a profit margin of 75 percent to 80 percent, or about 41 cents per ounce, says Dan Doromal, vice president of marketing at Argosy Group International in Orlando, Fla.
"This is a collaboration between us and convenience stores. We tried something and it didn't work out, so we asked for their thoughts," Doromal says.
When the equipment manufacturer went back to the drawing board, it realized, "We have to make it seem like this is a frozen yogurt store," Doromal says. The company also provides branding for the kiosks, which offer a total of nine flavor varieties, including six distinct flavors and three combination twists, in about 27 square feet of space.
Whether it starts as an informal partnership between a manufacturer and retailer or as an alliance between a brand and a marketing agency, collaborative innovation often can result in a product or solution that neither party would have come up with on its own.
"For innovation to work, it has to solve some type of problem. To get people involved, you almost have to identify who is impacted by that problem and then who are the players you pull in," says Morris Sneor, vice president of Paradigm Productions Inc., an Internet marketing agency that works with large corporations.
New research suggests executives increasingly are looking to collaborate with suppliers. According to a September 2014 report from SCM World, 54 percent of chief supply chain officers cited "extremely relevant" value from suppliers who provided innovative ideas to them ahead of the competition, while 35 percent cited co-development of new products and services, and 30 percent considered supplier collaboration on new customer propositions to be extremely relevant to their competitive advantage. Other extremely relevant benefits of supplier engagement included faster problem-solving and time to market, quality improvements and cost efficiencies.
Most consumer packaged goods companies and retailers determine, "If we're truly going to be customer-centric, we're going to have to collaborate together," says Matt Davis, senior vice president of research at SCM World in London, a supply chain talent development partner for major corporations, including Procter & Gamble, Unilever, Nestlé and Walgreens.