Coca-Cola innovates delivery and generates new usage data (#innovation @cocacola)

As reported by Innosight in this month's issue of Strategy and Innovation, Coca-Cola is introducing the Freestyle dispensing machine. It's not only an innovative and versatile product dispenser, it's also a data generator, allowing for the device to communicate directly with Coca-Cola.

According to Coca-Cola's press release:

Coca-Cola North America today revealed that "Coca-Cola Freestyle™" is the brand name and logo for its new proprietary fountain dispenser entering market testing this summer. The fountain’s brand name captures its ability to deliver unprecedented beverage variety to suit any consumer taste -- all packaged in an innovative and interactive fountain experience.

"Coca-Cola Freestyle brings to life the refreshingly positive outlook that has always been associated with Coca-Cola," said Chandra Stephens-Albright, Senior Director of Marketing and Business Development for the brand. "It brings back the magic of the fountain of the past, re-imagines it for the future and then takes it a step farther by celebrating the idea that consumers can truly have their say at fountain -- with choices tailored completely for them."

The new self-serve fountains -- which represent a complete departure from equipment The Coca-Cola Company has offered before -- have been in development for nearly four years. The sleek new units being tested are touch screen operated, enabling consumers to select from more than 100 calorie and no-calorie brands – including varieties of waters, juices, teas and sparkling beverages that have never been sold in the United States.

The Coca-Cola Freestyle dispenser uses proprietary PurePour Technology™ to make dozens of branded beverages fresh to order, in the same amount of space as the current eight-valve machine. It will be tested in select quick-serve restaurants in Orange County, Calif., and Atlanta this summer before a wider introduction currently planned for early next year.

The particular exciting part of this story is the data side. The new dispenser helps Coca-Cola enhance its new product testing process and helps its retailers manage inventory. InformationWeek describes it here:

Freestyle will let Coke more easily test new drink flavors and new beverage concepts, such as adding various vitamin combinations to flavored waters and juices. The dispensers each contain 30 cartridges of flavorings that mix up 100 different drink combinations. The cartridges are tagged with radio frequency ID chips, and each dispenser contains an RFID reader. The dispensers collect data on what customers are drinking and how much, and transmit that information each night over a private Verizon wireless network to Coke's SAP data warehouse system in Atlanta. The company will use the data to develop reports that assess how new drinks are doing in the market, identify differences in regional tastes, and help fast-food outlets decide which drinks to serve.

Test marketing via Freestyle will be a lot cheaper than the model Coke's been using: bottling and bringing to market new products that sometimes don't gain traction and get canceled after a year or two. "This is a huge jump from our current fountain dispensers," says Christopher Dennis, Coke's IT director of e-business transformation. "It's like going from the dial phone to the BlackBerry."

Besides collecting data on what customers are drinking, Freestyle also lets Coke know what flavor cartridges each dispenser holds, so the company can advise outlets on when to order more. Coke also will use the wireless network to send out new drink formulas to the beverage machines with instructions on how to mix them up. And should the soda company ever need to recall a flavor cartridge, the network also lets it instantly disable dispensers across the nation.

Finally, here's a video by the mobile technology supplier that partnered with Coca-Cola.

I suppose that pretty soon machines like these will have their own twitter accounts!

Canada's Innovation Gap (#innovation #Canada @globeandmail)

An excellent article by Konrad Yakabuski in the July 1 issue of the Globe and Mail describes why Canada is lagging in its innovation imperative. The key vital sign for Canada is a 20% drop in Canadian R&D spending as a percentage of GDP since 2001.

Other numbers mentioned in the article:

- 3.5% of Finland's GDP is spent on R&D, compared with less than 2 per cent in Canada

- 100, number of engineers employed in R&D by General Motors of Canada

General Motors of Canada Ltd. currently employs about 100 engineers engaged in R&D activities, according to spokesperson Stew Low. It has promised to spend "almost $1-billion" on R&D in Canada over the next seven years as part of its $10.6-billion bailout by the federal and Ontario governments. But even that amounts to barely 1 per cent of annual sales, based on GM Canada's pre-crash revenues.

Also cited is the report "Business Innovation in Canada" recently published by the Council of Canadian Academies. The report addresses the key questions:

• How should the innovation performance of Canadian firms be assessed?
• How innovative are Canadian firms, and what do we know about their innovation performance at a national, regional and sector level?
• Why is business demand for innovation inputs (for example, research and development, machinery and equipment, and skilled workers) weaker in Canada than in many other OECD countries?
• What are the contributing factors, and what is the relative importance of these contributing factors?

A few highlights from the report's 14 point summary include:

• Canada has a serious productivity growth problem. Since 1984, relative
  labour productivity in Canada’s business sector has fallen from more than
  90% of the U.S. level, to about 76% in 2007. Over the 1985-2006 period,
  Canada’s average labour productivity growth ranked 15th out of 18
  comparator countries in the OECD group.
  
• Canada’s relatively poor productivity growth is due mainly to weak growth
  of multifactor productivity (MFP), which measures broadly the effectiveness
  with which labour and capital are used in the economy. The problem is not
  caused by shortcomings in Canada’s workforce or inadequate capital
  investment (with the exception of significantly lagging investment in
  information and communications technology (ICT)).
  
• Investment at the leading edge of technology (which represents the indirect
  acquisition of innovation) has also lagged. Empirical evidence suggests a
  correlation between investment in machinery and equipment and MFP
  growth. The most significant and puzzling area of lagging investment has
  been in ICT where average investment per worker in Canada was only about
  60% of the U.S. level in 2007. Investment in ICT is an important driver of
  productivity growth, particularly in many service-producing industries that
  are the main source of job growth in advanced economies. The ICT
  investment picture is consistent with the view that Canadian businesses on
  the whole — but always with notable exceptions — are technology
  followers, not leaders.

It's an important article at an important time, as the world struggles to emerge from recession. One can only hope that this article is a wake up call for Canada on Canada Day!