Beiersdorf presentation at InnoCos Paris

Open Innovation across the value chain

Presentation InnoCos Europe

Paris, June 9th, 2011 – Dr. Ralph Schimpf

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Value chain in the FMCG industry

Materials, technologies

Compounding, Production

Distribution, trade

Consumer Suppliers, External Know How sources

Culture of (open) innovation

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Open innovation by integrating consumers

 Open innovation by integrating external partners

 Open innovation at point of sale

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Innovation by integrating consumers

 Innovation by integrating external partners

 Innovation at point of sale

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Leading brands. Innovative skin care.

Beiersdorf – Global Player Skin care

 Founded 1882

 Company sales 2010: 6.194 Mio. €

 More than 19.000 employees in more than 150 subsidiaries worldwide

More than 125 years of innovative skin care

1882! 1900! 1909! 1911! 1922! 1951! 1991! 2002! 2007! 2009!Foundation Beiersdorf#

IntroductionEucerin#

IntroductionLabello#

IntroductionNIVEA Creme#

IntroductionHansaplast#

Introduction8x4#

AcquisitionLa Prairie#

AcquisitionFlorena#

AcquisitionC-BONS#

3. NIVEA Hausin Berlin eröffnet#

* Depending on market, NIVEA Lip Care or Labello. Labello had 16 #1 positions in 2009 and 2010. Source: AC Nielsen / IRI, Status as of December 31, 2010

Focus on What We Do Best

Full Year Results March 2011

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Open innovation by integrating consumers

 Open innovation by integrating external partners

 Open innovation at point of sale

The philosophy: Different management styles in early and late phase of innovation

Discovery Concept and Feasibility

Development and Scale-up

Production and Roll-out

GATE 3

GATE 2

GATE 1

Creative phase Executive phase

Freezing zone

G2

PHASE 1 PHASE 2 PHASE 3 PHASE 4

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Discovery Projects

R&D Discovery Management

Innovationpipelines R&D Search fields

GATE 1

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Open innovation by integrating consumers

 Open innovation by integrating external partners

 Open innovation at point of sale

Open Knowledge Management 13

… is more than collecting data and facts, it‘s the ability to

  group data in a meaningful context,

  acknowledge and show relations and rules,

  and to distribute and share knowledge as efficient as possible. !

Trust – a prerequisite for an open innovation culture 14

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Share knowledge

Acknowledge performance

Have fun together

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100 m

Short paths – open (= simple) communication

R&D

Marketing

Patent departm.

Packaging

 Maximum distance in R&D headquarter: 220 m

 Average distance to international marketing: 200 m

 Distance to Packaging Development & Patent department: 500 m

R&D

Marketing

Packaging Development

Patent departm.

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We invest in short paths

FuE

Marketing

Patentabteilung

Packaging

Legende:

Bridge 4th floor, 70 m

100 m

Tunneling residential buildings

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Build up of know How and open network building

Training course for new R&D employees,

8 Months with 30 lectures & guided tours

(R&D, Supply Chain, Intellectual Property,

Marketing…)

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La Prairie Zurich New York,

Corporate R&D HQ

C-Bons China Wuhan

NKO R&D Center Tokyo, Japan

R&D Center USA (Wilton)

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Open innovation by integrating consumers

 Open innovation by integrating external partners

 Open innovation at point of sale

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Worldwide Consumer Insight program

We invest in consumer & shopper understanding

  Regular consumer visits and shopper safaris

  1,200 employees have been trained under the frame of a consumer insight program

  Top management participates regularly

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Web-based insight generation: Netnography

  Analysis of community communication & blogs in the net community

  Unfiltered insight generation

  Creation of new product concepts

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R&D: Technology, as close to consumers as possible

  In our Testcenter premises more than 300 consumers per day test our newest ideas

  Consumers are directly involved into discovery projects

Bringing together scientists, engineers and consumers allows to develop products with utmost consumer relevance

Consumer integration – without filter 24

  Observation rooms

  Bath rooms with camera equipment

  Consumers test products and prototypes

  Observation followed by common interpretation of test person and observer

Consumer integration - „online“ lab 25

 Group discussion and development in direct neighbourhood

 Adaptation of product with direct feedback

 Product optimisation within hours

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Open innovation by integrating consumers

 Open innovation by integrating external partners

 Open innovation at point of sale

Attracting partners – it’s more than business numbers

 High investments in one of the biggest skin research labs in Europe: A magnet for scientists & suppliers

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Ways of Collaborating with suppliers: Open doors

Incubation Lab

Collaboration between BDF and external partners „at the bench“ to

jointly find solutions for scientific challenges

In-house Seminar

Promotion of existing technologies and raw materials by suppliers as a trigger for further activities

Open market place or symposium with a privileged external partner to

identify innovative ideas and solutions which lead to collaborations

Trusted Network to invite external innovators to propose ideas and

solutions addressing BDF´s scientific challenges

Cooperating with fragrance houses 29

 Integration of 2 partners

  2 external employees with permanent office in our R&D headquarters

  Defined projects

  Common evaluation of fragrances

  No direct competition between partners

Incubation Lab 30

  Employees from selected raw material suppliers in our labs

  Typically 2 to 6 weeks

  Mutual deployment of employees

  Defined projects

  No direct competition among partners

Incubation Lab – Success factors 31

 Unrestricted utilisation of technology and know how

 Transparence of decision processes and criteria

 Commitment for common projects

 Quicker decisions on both sides of the table

Innovation in an open-minded working atmosphere

Success factor Top Management Commitment 32

Technology Scouting – Open for new perspectives 33

Systematic search in adjacent industries and technology fields

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Technology Scouting

Beiersdorf practices full-time and part-time scouting:

Full-time

+ Broad, long-time experience and special personal qualification and interest

Overflow limits competence of assessment

+ Medium term: Loss of practical-operational basis

-  Competition with line organisation

Part-time

+ Direct link with line organisation

+ Continued education and job enrichment

- Loss of focus on core job

+

-

- -

-

+ +

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Webplatform „Pearlfinder“

  Why creating our own solution?

  Commercial providers (e.g. Innocentive) are only applicable for very special solutions

  Beiersdorf needs a tailor-made platform

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Our approach: the Trusted Network

Pearlfinder is covered by a Nondisclosure Agreement:

 Beiersdorf ensures no IP activities related to the external ideas provided to Pearlfinder.

  Through Beiersdorf´s openness the external partner can better understand our needs.

Key elements of Pearlfinder – 3 Briefing types

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 Open Briefing (Open community) Non-confidential search fields, e.g. new preservatives

 Technology Briefing (Selected partners, typically >10) Scientific challenges to get ideas, e.g. specific anti-aging principles

 Engineering Race (Selected partners, typically 2-3) Request for solutions, e.g. formula with special attributes

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AGENDA

 Company Beiersdorf

 Innovation process

 Key factor innovation culture

 Open innovation by integrating consumers

 Open innovation by integrating external partners

 Open innovation at point of sale

Importance of Point of Sale

Emotional encounter with the brand; orientation and advice

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The NIVEA houses: Open doors for consumers 40

 Nivea Houses in Berlin, Hamburg & Dubai

 Direct selling of products

 Wellness & beauty treatments for consumers

  Important learnings on consumer needs

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Scientific consumer advisory service

 Demonstration of dermatological know how and skin competence creates trust

 Intensive dialogue with consumers

 Targeted questions, evaluation of data and feedback generates insights

Computer-aided product advice: NIVEA

Skin   Moisture   Elasticity   Lipids   Skin type with recommendation for sun protection

Hair   Degree of damage   Lipids   Colour

Used at   NIVEA-Houses   Shop-in-Shops

Computer-aided product advice: Eucerin

Take home messages

 A healthy (open) innovation culture is a prerequisite for a running strategy („Culture eats strategy for breakfast“ – P. Drucker)

 Creative integration of external know how is a key influencing factor

 (Open) Innovation does not only mean product innovation (e.g. POS)