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venkatesh-ganapathy
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Innovation in Kraft Foods
How Kraft Foods Continuously Innovates with an Idea Management System
Introduction
• Kraft Foods – largest global food and beverage companies
• Employs 2000 scientists and engineers.
• Kraft says that many good ideas for food innovation exist outside its four walls.
Kraft & Open Innovation
• "We recognize that we don't know everything," explains Nanako Mura, associate program director, open innovation, at Kraft Foods.
• Recognizing that expertise exists outside of Kraft's core competencies -- expertise that could help the company grow -- has spurred Kraft to adopt the concept of "open innovation."
Open innovation - Kraft
• Working with external innovation partners to speed the development of new products as well as speed the time it takes to bring new products to market.
• Access to additional talent and reduce R&D costs.
• Complementing Kraft's internal innovation networks.
Open Innovation: The next frontier in innovation management
• "No single company is large enough or inventive enough to be an innovation leader without collaborating with an array of partners," write the authors of the A.T. Kearney report, "Open Innovation: the next frontier in innovation management."
Reliance on Open Innovation
• Innovation leaders rely on their customers, business partners and competitors to supplement their own internal functions.
• Best practices in innovation result from ideas generated outside the company."
Using Suppliers in innovation efforts
• For suppliers, Kraft employs several tools, including a supplier relationship segmentation assessment as well as an innovation potential diagnostic tool.
• These tools help the company identify which among its suppliers have the most potential to help Kraft bring more innovations to market.
Kraft’s Supplier Innovation Challenge
• A formal, disciplined engagement of one or more suppliers to address a Kraft business need, and it follows five principles:
• A consumer brief owned by the marketing department that is clearly written and includes information such as the scope of the challenge, acceptable cost range, competitive positioning and other details.
• A compressed time frame (two to three months) to work on the innovation.
• A "fair and reasonable" legal framework.• A showcase in front of a cross-functional Kraft team including
marketing, procurement and other relevant functions.• A 30-day "go or no go" decision on whether to move the innovation
to the next step in the development process.
Metrics to track the Supplier Innovation Challenge
• number of challenges conducted
• number of ideas generated by the suppliers;
• number of ideas advanced in the process;
• number of ideas that remain in the development pipeline;
• number of ideas commercialized.
Co-creation : Can it improve innovation?
• Kraft Foods innovates using “co-creation” with their customers.
• An ongoing dialogue between the two about what improvements Kraft can make.
• This practice has led to new ideas, packaging guidance, and insights into cooking habits.
• Signs of crowd sourcing?
Kraft’s Methods of Co-Creation
• Kraft began by creating an online employee community known as “FOODii”
• Kraft needed to name a new Jell-O product, so they used FOODii to request employee input.
• Within 24 hours, employees had submitted over 100 ideas.
• The marketing team passed the top 10 on to consumers for evaluation.
• Thus, employees and consumers both had a hand in choosing “Chocolate Mint Sensation” as the winning name.
Idea Cafe
• Kraft hosted “Idea Cafe,” a three-week innovation convention.
• 50 consumers invited to offer their ideas.
• Consumers worked with industry professionals to fine tune these ideas.
• This convention led to the generation of 60 new ideas for improving the company.
The Outcome
• Kraft Foods enjoyed a wealth of benefits from opening up to customer and employee input.
• How can other organizations reap similar rewards?
• What was unique about Kraft’s innovation strategy?
The Benefits of Co-Creation
• Using consumer knowledge as an organization’s asset
• Creating an active dialogue between the company and its consumers
• Offering employees and consumers the chance to invest in the success of the organization
To sum up….
• Kraft Foods’ FOODii and Idea Cafe are excellent models of combined innovation and collaboration.
• Use of an idea management system.