From "Reverse Innovation": PepsiCo India's experience of trial and error

The new book "Reverse Innovation: Create Far From Home, Win Everywhere" by Vijay Govindarajan and Chris Trimble, describes the phenomenon of new products being born in emerging markets, with radically different value propositions and price points, and spreading to developed markets. This approach is the reverse of the traditional model for Western companies, which create (expensive) products at home, and then adapt them to developing markets.

This excerpt describes some of PepsiCo India's experience developing a new snack cracker named Aliva. It beautifully highlights the inevitability of mistakes when you are trying something new, and that persistently pushing through and learning from those mistakes are hallmarks of a successful product launch.

From its inception to its 2009 launch, the Aliva project took nearly four years. Aliva was evaluated against criteria that took full account of potential uncertainties. Such latitude was indispensable. Aliva had to make its way through a predictably fraught gestation. There were plenty of bumps in the road, and plenty to learn on the way.

Aliva's most vexing challenge was its packaging. Packages are hugely important to snack food performance. If snacks had remained in the era of the general-store cracker barrel, great branding opportunities would never have materialized. Aliva's packaging needed to be as distinctive as the shape of the cracker. The packaging had to communicate that Aliva was both healthy and fun. Decisions about the package would have implications for Aliva's texture and shape, the way the cracker was produced (through baking), and the attractiveness of the offering at the point of sale.

The Aliva bag featured a number of innovations. [Program manager Vidur] Vyas claims that nothing like it had ever been tried before. It was to be made from new materials on brand-new - and untested - machinery. The bag was designed to be flat on the bottom. Unlike typical snack bags in the United States, it could stand up straight on a retail shelf, tabletop, or counter. The packaging material was therefore heavier and stiffer than conventional plastic film. It turned out that a more rugged package could actually be made using only two laminate layers, not three. This solution was both more cost-effective and environmentally friendly.

The package specifications needed to address certain constraints of local infrastructure. It often took a long time to distribute perishable goods through a vast, predominantly rural retail network. Crackers can spoil more quickly than other types of snacks. Aliva therefore had to be protected from spoilage as well as breakage. A rugged, lightproof, hermetic package was key.

Vyas and his team endured a perfect storm of complications on the way to satisfying these needs. Because the Aliva bag was a first-of-its-kind package design, it seemed that every element of the package's structure and manufacture either had to be invented or endlessly troubleshot. To start with, the new packaging machinery was touchy. In limited test runs, things seemed fine. But once Aliva launched, in May 2009, problems cropped up during production-scale runs, particularly with the heat seal at the top of the bag. So, new material had to be designed. This required help from squadrons of global experts on polymers and lamination technologies.

There were nettlesome challenges on other fronts as well. Because Aliva would rely on a new baking system, which had only recently been used for the first time to produce cookies in PepsiCo's Mexico region, Vyas's team needed time and technical guidance to learn how to operate it reliably.

Finally, the team aspired to create a cracker in an eccentric triangular shape. The cracker's unique design was considered an important aspect of the values the brand would communicate. The triangle shape was meant to connote speed, stimulation, and taste. The triangle's curved edges were meant to connote health. At first, however, the crackers suffered unacceptable levels of breakage. Coming up with a workable version - a cracker with a low rate of breakage and a pleasing combination of textures - required innumerable trials.

But if Aliva's journey to market had an unusual share of difficulties, that is only because it was forging entirely new paths in a number of areas. To its credit, PepsiCo patiently tolerated a high degree of necessary experimentation... with packaging, with the baking system, and with the architecture of the cracker itself. (pp 167-168)

From "Reverse Innovation: Create Far From Home, Win Everywhere," by Vijay Govindarajan and Chris Trimble. Published by Harvard Business Review Press. Excerpted by permission.