Innovation Management Watch Summary: “The Role of AI in Reshaping Product Innovation” by BCG

This week’s Innovation Management Watch Summary features BCG’s article on how AI and generative AI are changing the product innovation cycle in consumer packaged goods (CPG). BCG argues that many large CPG firms are stuck in an innovation squeeze: growth is harder, challenger brands move faster, and roughly three-quarters of product launches don’t succeed. 

AI offers a way to respond by speeding up the end-to-end cycle, widening the idea space, and improving how teams spot which concepts are most likely to win with customers. Yet BCG’s core point is that AI remains underused for innovation in many CPG organizations because most transformations have prioritized productivity gains over demand creation. 

Key Findings 

Innovation is the missed value pool. 

Many AI programs default to time-saving and cost-cutting because impact is easier to measure. BCG emphasizes that using AI to stimulate demand, through stronger innovation, can be just as powerful in tough markets. 

Faster cycles are realistic. 

BCG estimates AI and GenAI can accelerate the innovation cycle by up to 30% when applied across stages from insights to concept to launch support. 

AI can do “heavy lifting” across the pipeline. 

BCG highlights practical use areas, including: 

• Distilling unstructured data to detect trends faster 

• Running in-silico testing to evaluate virtual product iterations 

• Supporting formulation and reformulation, including recommending ingredient combinations 

• Drafting product descriptions and regulatory documentation 

• Producing launch materials and marketing assets 

• Monitoring post-launch signals and feeding rapid iteration 

Forward-looking signals matter. 

A major advantage is using AI to detect “future buyer signals” from multiple data sources, then organizing those insights by meaningful consumer segments so brands can move faster as trends shift. 

The Leadership Imperative 

BCG’s message: avoid treating AI as a stack of disconnected tools. Winning requires a transformation that redesigns the innovation cycle end-to-end, starting with where time and effort are actually spent and mapping the best AI support to those bottlenecks. 

BCG also stresses that the hardest part is not the tech. It’s the people and process shift: upskilling, new ways of working, and changes in how cross-functional teams interact. Their rule of thumb is striking: 10% algorithms, 20% technology and data, and 70% people and processes. 

Finally, leaders should keep one eye on what’s next. AI-assisted “breakthrough” invention may not be common in CPG yet, but it’s becoming more common in other sectors (like drug discovery). Teams should also watch how GenAI can extend the offering beyond the product itself through personalization and service layers (for example, conversational guidance that improves decision-making). 

At a Glance 

• BCG cites that three-quarters of yearly product launches fail in CPG. 

• AI and GenAI can speed up the innovation cycle by up to 30% when used across stages. 

• The biggest unlock is not point tools, but an end-to-end innovation redesign. 

• The heaviest investment is people and processes, not algorithms. 

• Competitive advantage comes from spotting trends early, acting fast, and iterating post-launch with real-time signals. 

This summary is based on BCG’s article “The Role of AI in Reshaping Product Innovation” (updated September 22, 2025). All rights to the original content remain with the respective copyright holders.