Fei Presentation 2010

FEI 2010: Feb. 8, 2010 Sam Saguy1

Helmut Traitler – Nestlé

and

Sam Saguy – Hebrew University of Jerusalem

[email protected]

and

Brigit Coleman – swissnexSan Francisco

www.swissnex.org

Sharing-is-Winning Paradigm for Reinventing R&D in Open Innovation Culture

mailto:[email protected]

http://www.swissnex.org/

Outline

Open innovation (OI)

Nestlé’s Sharing-is-Winning (SiW) model

Few examples

Reinventing R&D in OI Ecosystem: SiW

roadmap to co-invention.


P&G OI model ("Connect + Develop")

Target (2000): “50% of the innovation to be acquired outside of the company”.

Very successful outcome

– 1,500 external ideas, 5-7% were acted upon.

– A dramatic increase in OI: From ~15 (2000) ~47% (2008).

Diversifying risks, sharing market and technological uncertainty.


OI – A Buzzword?

Overexploited: frequently utilized with no real base, or understanding, too many definitions (excuses?) for (not?) OI.

Consumer driven: defined as "open,” although practiced for decades.

SMEs: are struggling with implementation. P&G’s OI model: prohibitively complex &

expensive a “perceived” impediment.


OI – A Buzzword (cont..)?

Cost: substantial upfront investment (sieving, assessing, selecting, and negotiating).

Organizational changes: required for embracing and implementing OI, are only partially implemented.

Nestlé’s: Sharing-is-Winning (SiW) model


Nestlé Economic Data in the Nut Shell

Established in 1866 by Henri Nestlé. Very successful, strong R&D, vertical integration

innovation. The largest global food company (2008):

– Revenues CHF 109.9 Bn– EBIT of 14.3%– 2.8% Real Internal Growth (RIG)– Presence in 84 countries– 283,000 employees– More than 1 Bn units of products sold daily.


Nestlé R&D (R&D: 3,700; Application:1,300)

1-Central research center. 27-Global R&D and Product Technology Centers

(PTCs). Application Groups: 280, located in 456 Nestlé

factories ensuring compliance with high quality and local requirements, and taste preferences.


R&D Spending (millions; CHF 1~ $0.97)


1.2%

1.8%

Nestlé: #2 in R&D spending within the consumer companies, following P&G (Jaruzelski, 2009)

Nestlé Venture Capital (CHF 1.5 Bn, 10 years): focusing on start-up growth-phase food, NH&W companies.

Booz Allen Hamilton Global Innovation 1000 Research (Jaruzelski et al., 2005)

Excess resources may be counterproductive

impeding innovation.

Successful R&D requires much more!


Nestlé: Sharing-is-Winning (SiW) Model

A strategic decision and a paradigm shift was

required.

Innovation Partnerships (INP) created (2006).

Integration (bigger, bolder, faster execution and

implementation).


Nestlé Innovation Partnerships (Traitler and Saguy, 2009)


Development stageEarly Mature

Focus

BenefitAreas

BusinessNeeds

INP withUniversities, Medical Centers & Start-Ups

Monetary contributions

Products

Mid

Venture capitalINP with

SMEs & Inventors

In-kind contributions(expert ressources)

INP with Key Suppliers

Nestlé SiW Model: 5-Pillars

1. Innovation Partnerships (INP): partner selection.

2. IP: early stages joint co-creation. The guiding rule of thumb: - physical solution is owned by the competency-

providing partner, - smart application solutions is owned by the

receiving partner.

3. Joint creative problems-solving: bringing together many scientific disciplines and people with different skills and large knowledge base.


Nestlé SiW model: 5-Pillars (cont..)

4. Implementation: – best practices – nourishing the innovation process flow

5. Continuous evolving process:

management, strategy, consumers-center, insights, partnerships, champions, internal experts, education, mindset, metrics, culture….


Nestlé SiW model


CREATEVALUE

BUILD GOODWILL

INDISPENSABLE DIALOG

ESTABLISHTRUST

Value creation: ultimate goal of the partnership

Alignment of all the value chain to consumer-centric innovations.

Linking profit function (tangible/perceived) is key for catalyzing innovation.

SiW Main Benefits

Accelerate innovation: reducing the burden of upfront-resources and time to market.

Sharing of resources: postponing out of pocket investments to the point where the project is ready to be launched.

Gaining critical mass: motivated, talented and highly skilled human resources...

Embracing culture openness: networks, social impact…


Selected Key Nestlé INP Collaborations

Barry Callebaut BASF Cargill Cognis DSM DuPont Firmenich


Fonterra Givaudan IFF Kerry Mane Symrise Tetra Pak

Results from collaborations with these innovation partners contributed more than $200 million in new businesses by the end of 2008.

Typical example: Nestlé-DuPont


Solllys® soy-based products a co-development with an innovation partnership

Nestlé USA – DSM & Cognis: Glowelle Nestlé USA – DSM & Cognis: Glowelle Beauty DrinkBeauty Drink


Glowelle - The ultimate beauty drink dietary supplement sold at high end US retail (Bergdorf Goodman, Neiman Marcus). Contains: antioxidants, vitamins, botanical & fruit extracts (cocoa, apple, grape seed, maritime pine bark, goji berry and white tea). Beauty from within – a new category

swissnex San Francisco

Sharing is Winning:Innovation Partnerships with external networks.

Birgit Coleman

Initiative of the State Secretariat for Education and Research SER Annex of the Consulate General.

Swiss Knowledge Network with outposts in Boston, San Francisco, Shanghai and Singapore

20

Novel collaborations for a fast moving consumer goods industry:

Global swissnex network, www.swissnex.org as a match-maker to players across industries and disciplines

Doing business as ‘unusual’ - Partnerships with:

unusual technology partners

e- and retailers

media

21

Examples for the ‘Sharing is Winning’ Paradigm

Nestlé moves among Top 50 ranks of “Top global 50 most innovative companies” thanks to its dynamic interactions with its global partners.

Nestlé shares with media trickle-up innovation stories.

Nestlé shares best practices and challenges among peers at public & private roundtable discussions such as:

What is the Future of Doing Business? – How to innovate Business with a Strategy for Sustainability”

Does Design Matter? Roles and Interactions between Design, Technical Innovation and Business Relevance.”



Reinventing R&D in OI Ecosystem: SiW roadmap to co-invention

Continuous evolving process



1. Leadership & Management


Leadership & Management

SiW doesn’t come easy paradigm shift. Vision/culture/tools embracing, promoting and

sustaining innovation.

Quantifiable/crystal clear goals.

Reward mechanism(s).




2. Strategy


Strategy

Strategize a roadmap for SiW utilization, emphasizing the importance of external co-development and partnerships.

Create a sustainable platform for all the value chain participants to benefit from the innovation outcome.

Promote top-down, bottom-up, outside-in, and buys in.

Support structured/disruptive entrepreneurships.




3. Metrics


Metrics

Develop appropriate metrics for quantifying ‘innovativeness’ to overcome impediments.

Link innovation metrics (qualitative, quantitative, base line) with KPI (Kew Performance Indicators) and reward.

Benchmarking – wide scope metrics.




4. The consumers and customers


The consumers

Consumer-centric business model and

innovation process.

Personalization.

The utmost importance of sharing, social

network, crowdsourcing.




5. Internal experts and champions


Internal Experts and Championships

Market successes are due mainly to the people that drove them, and more so for a successful SiW.

Finding the “yellow brick road” to attract, support, nourish, sustain, educate and reward.

Internal experts - networks (inside/outside).




6. Partnerships


Partnerships – A way of life

‘Partner or perish’ is the new mantra.

Random collisions/interactions not an option.

To survive/thrive, seek alliances/partnerships (downstream and upstream) based on compatible differences that are paramount for cross fertilization and synergism.




7. Passion


Passion

Innovation requires passionate and committed leaders, people and organizations.

“Passion-based organizations stop at nothing to accomplish their goals and are able to attract people and resources to their causes. A passion economy can arise that unleashes both a new era of prosperity and solutions for the big issues of our time” (Saul Kaplan, 2009).

Join us in Sharing-is-Winning to co-innovate the future.
