Is a Peanut Butter Pop-Tart Innovation? Kellogg’s CEO Calls It That, but Is He Right?

Is a Peanut Butter Pop-Tart Innovation?

Kellogg’s CEO Calls It That, but Is He Right?


Dec. 3, 2013 8:22 p.m. ET

It measures nearly three inches by five inches, and it’s made from enriched flour, corn syrup and creamy peanut butter. This is Kellogg‘s K +0.89% Gone Nutty! peanut butter Pop-Tart. If you agree with Kellogg CEO John Bryant, it’s one of the cereal company’s important products of 2013. He went so far as to call it an innovation. Listen to the chiefs of America’s biggest companies, and you’ll find the Gone Nutty! Pop-Tart has plenty of company. Most CEOs now spray the word “innovation” as if it were an air freshener. A little spritz can’t hurt. A little spritz can’t hurt.In the last three months, CEOs of S&P 500 companies have put the “innovation” word on Peony & Blush Suede perfume, premium potash and higher-alcohol Miller beer. “Innovation” also describes Dun & Bradstreet credit reports and PetSmart’s temporary tattoos for pets.

Back in 2007, 99 companies in the S&P 500 mentioned innovation in their third-quarter conference calls, according to reviews of transcripts from Capital IQ. This year the number was 197.

When Boston Consulting Group asked 1,500 executives to rank their company innovation from 1-10, more than two-thirds rated themselves a seven or higher.

The word “is way overused,” says International Paper CEO John Faraci. “We’ve been making paper the same way for 5,000 years. We haven’t reinvented that.” As he defines it, “innovation means listening to our customer and producing things of value.”

Next time your boss starts droning on about innovation, it might be helpful to stop and analyze: Is she talking about building the next iPod or the next Pop-Tart? Does “innovate” mean just “stay competitive”? And if so, where is the innovation in that?

The last decade has pressured American business across the board, from labor costs to technical competency. Samsung Electronics, for instance, now ranks second among new patent winners, up from ninth a decade ago. What’s more, core research spending by U.S. federal and private industry is flagging.

In this context, to innovate can often mean falling short of the word’s Latin roots (of “new creation”). It’s more modest: simply keeping pace with rivals.

They used to call it competitiveness—a word fraught with the implication that others might win. Now it has been elevated to innovation, a more regal way to describe what business has always done: Adapt.

When Hewlett-Packard executives addressed shareholders on an Oct. 9 conference call, they used innovation 70 times.

At a Nov. 20 presentation by Red Robin Gourmet Burgers Inc. executives, speakers mention the words innovate or innovation 21 times to describe, variously, pepper hamburger buns, beer-can cocktails and beer milkshakes.

Red Robin also has what it calls an innovation center. A spokesman declined to comment. Red Robin stock is up 113% this year.

But there’s a fundamental difference between a breakthrough innovation and a product extension or upgrade. By definition, “there aren’t a lot of breakthroughs,” says John Hoffecker, a managing director at turnaround firm AlixPartners who has spent years around the auto industry.

A product extension “is different colored diapers. You haven’t changed the functionality, cost or quality. It affects nothing in a significant way.”

Matt Roberts, the CEO of online restaurant-reservation company OpenTable, puts a different cast on the word innovation. For him, lots of those small steps can add up to something bigger. Change comes more from a process than an end product. But he doesn’t use the word innovation. He calls it optimization.

The company “wants to be in a position to try more things versus one thing. We’re testing iterations of our site all the time,” such as variations of restaurant profile pages.

Mr. Roberts says that a lot of companies want to place big bets, and then they have a tendency to overthink. “We have to have the discipline to learn from the data.”

As for the peanut butter Pop-Tarts, a Kellogg spokeswoman says that it had long been one of the most-requested new flavors.

“Development challenges and nut-allergy concerns stood in the way of launching this innovation. Since its launch, Pop-Tarts Gone Nutty has exceeded our expectations.”

There’s nothing wrong with keeping pace. It’s what companies must do. But it’s worth asking at your company, no matter what words the CEO uses: Where does survival end and real innovation begin?

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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