Innovation: The next CEO performance metric

April 18, 2013 | by Darrel Suderman
Innovation: The next CEO performance metric

Food innovation has become cheap talk within many food manufacturing companies and restaurant chains. The term is slapped on building entrances, R&D Kitchens, and employee business cards; but rarely do we see the results of true innovation like we do in the high tech industries. Building a new "Innovation Center" makes employees and CEOs burst with pride, but communicates very little about their ability to deliver true innovative products.

I have one simple way to measure the success of true food product innovation — Does it significantly increase shareholder value over a sustainable time period? If a restaurant chain can't point to a single innovative product in the past couple years, then there is no innovation going on — so rip the innovation sign off the front of your R&D Center and stop misleading people! For example, what innovative new product has emerged from KFC over the past 10 years — and don't count their non-fried chicken. Or what equipment or packaging innovation has emerged from KFC with its legions of R&D, Marketing, and Operations personnel?

Who is ultimately responsible?

The CEO is ultimately accountable for his/her company bringing innovative new products to the marketplace. It's time for shareholders to make an innovation scorecard a part of every CEOs annual performance review. Another name would be a Key Performance Indicator with specific performance metrics. Over the past 10 years, CEOs covered their tracks with an avalanche of new recipes from newly hired corporate chefs, but now it's time to take it up a notch!

Restaurant competition is tighter than ever

The reason for highlighting the need for innovation is the lack of differentiation in other aspects of the food business. For example, a small restaurant chain can hire equivalent talent to large restaurant chains by putting more money on the table — and more attractive stock options. The food cost differential between small and large chains is reaching parity, as purchasing managers continue their "old school" arm twisting cost squeeze methods with their suppliers. Instead, why don't CEOs hold purchasing managers responsible for setting supplier innovation expectations?

The only point of differentiation

At the end of the day, new product innovation is the only difference maker in the restaurant industry. New innovation drives corporate sales and profitability. It represents the difference between a baby step and a full runner's stride. Sounds good, but most CEOs don't have a clue about how to implement a highly effective new product innovation process.

The process

The process is simple, straightforward, but difficult to execute without the proper training. The CEO needs to:

  • Set the vision for new product innovation
  • Assemble a Dedicated Innovation Team – reporting to CEO
  • Define the Innovation Team mission and objectives - to the entire company!
  • Hire complementary skill sets
  • Hire the best people you can find
  • Create a creative atmosphere
  • Train (and retrain) the team the principles of innovation
  • Hold them accountable
  • Keep stamping out the smoldering ashes of discontent by jealous employees
  • Build your retirement as the profits roll in

Change is in the way

I know a CEO of a major food corporation that has started this process, and hired a dedicated innovation team leader. I also know of two other leading restaurant and food manufacturing companies that are planning to start the process. Slowly, but surely, some CEOs have started to calculate the potential of new product innovation.

As a footnote, I will also be speaking on restaurant and food innovation the Korean Food Show/3rd Annual Asian Food Forum in Seoul, Korea, the week of May 12. They are excited about food innovation!

Food Technical Consulting ( is sponsoring its next industry workshop titled "Boxology 101: Food & Beverage Packaging Basics" during a 3-day industry workshop in Denver June 10–12. FTC will also sponsor another industry workshop titled "How to Start & Maintain a Food Truck Business" in Denver, June 24–26. Contact us at or 303-471-1443.

Topics: Food & Beverage, Operations Management, Research & Development / Innovation

Darrel Suderman
Darrel Suderman, Ph.D., is president of Food Technical Consulting and founder of Food Innovation Institute. He has held senior R&D/QA leadership positions at KFC, Boston Market, Church's Chicken and Quiznos and led KFC’s development team of “Popcorn Chicken”, now a $1B international product –invented by Gene Gagliardi. wwwView Darrel Suderman's profile on LinkedIn

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