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Reinventing R&D through open innovation: Nestlé

March 11th, 2011

When it comes to innovation, the idea of “partner or perish” has to become the new mantra for the food industry, according to a review published by Nestlé scientists.

The report, published in Journal of Food Science, said that innovation partnership must start with co-innovation already in mind; suggesting that partnerships “are paramount for cross-fertilization and synergy.”

“Innovation is a necessity—probably the only way to survive. The new mantra ‘innovate or die’ combined with open innovation could be the leitmotif for today’s companies,” said the authors, led by first author Helmut Traitler, former vice president of Innovation Partnerships at Nestlé; now CEO at Life2Years, Inc.

“Every innovation program should ultimately furnish an increase in a profit function that can either be tangible or take another form, such as increased market share, expanding consumer base, perceived value or image, consumer experience, and so on,” they said.

Open innovation

Traitler and his colleagues said that in order to keep pace with “growing technological complexity, bottom-line pressure, acceleration of new product development, changing consumer expectations, and an unstable business environment …innovation is one of the main resources to create, cope with and sustain a competitive advantage.”

The idea of open innovation is established on the reality that, in a world of widely distributed knowledge and faster rates of development, industry can no longer afford to rely on their own research, and so needs to make the most of outside sources.

The authors explained that open innovation “diversifies risks and shares both market and technological uncertainties of innovation.” However, they noted that ‘open innovation’ has become “an over-exploited buzzword.”

The Nestlé way

The authors explained that adapting an open innovation philosophy “was not easy for Nestlé”; nevertheless, they said that a paradigm shift was recognized in 2006 with a strategic change to create Nestlé’s Innovation Partnerships (INP) group, originally headed by Traitler.

They said that the INP group allowed the company to turn to the outside world for bigger, better, bolder, and faster innovation.

“Its execution and implementation were prompted by the recognition that universities, academia, small startups, biotech companies, and large industrial suppliers are important sources of co–development and partnerships,” explained Traitler and co-workers.

“In particular, academia has been shown to play a very significant role in most breakthroughs and provides a natural and critical partner,” they added

The authors said that the Innovation Partnerships, along with a ‘Sharing-is-Winning’ model “represent a paradigm shift toward accelerating co-development of sustainable innovation, with alignment of the entire value chain with consumer-centric innovations being one of its main pillars.”

Integration

Traitler and his colleagues explained that integrating the whole innovation process, that is, from conception to final outcome, “is a cardinal requirement” if companies want to thrive in the global market

They said that the typical ‘not invented here’ syndrome has ceased to be an effective option for industry. Instead a sustainable co-development and innovation “becomes feasible with a change in mindset from ‘attempting to do everything within’ to ‘seeking out the most appropriate partners for success’,” said Traitler and his co-workers.

 

Source: Journal of Food Science

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