Why is this significant?
Too many big food companies are admitting technological innovation bankruptcy. These companies simply start VC arms and everyone says wow, what a good idea! They then buy much more innovative, agile startups and incorporate them into their structure. The big question is, will any of these acquisitions survive, or will they just become another technologically innovation bankrupt part of the parent company?
At least one food company, the world’s largest, Nestlé, believes that in-house innovation is a “strategic imperative”. So said Nestlé USA director of new business ventures Doug Munk in an interview with FoodNavigator-USA in March 2019.
He says that Nestle’s strategy is “three pronged:”
“One part is about reimagining our base brands, so a large part of why a lot of our marketing and cross functional groups come to a show like Expo West is to see what are the trends, and how do they translate to their brands. So, for example, our Coffee Mate Natural Bliss brand is launching an oatmilk creamer, which has incredible texture vs some of the nut based products consumers say are not meeting their quality or taste standards.
The second part of the strategy is around cultivating our M&A pipeline, so we’ve acquired or made investments in brands such as Chameleon Cold Brew, Blue Bottle, Sweet Earth, and Garden of Life.
The third part is developing new innovation models, so I like to say we’re innovating innovation.”
So what’s important about this approach?
Most important is that they’re “innovating innovation”. But to do this they’ve had to form an “internal incubator” which is separate from the main business as this is the only way they can innovate from concept to launch in a comparable timeframe to small, agile startups. They’ve released 2 products from this new incubator, a refrigerated probiotic yogurt bar GoodBe, and a functional ingredients containing chocolate snack, goodnight, “designed to help the body relax and prepare for sleep.” Interestingly they’re both in the growing category of “Food as Medicine”, one which Nestlé itself says is a key trend.
They seem to embracing the lean innovation concept of fail early, fail fast and fail cheaply which is hardly new but at least it’s encouraging! In keeping with this they’re crowdsourcing ideas from the 23,000+ employees of Nestle USA. They had over 550 ideas, of which 6 are going to launch with “the speed and agility of an entrepreneur, but the capabilities and resources of Nestlé.” If they can truly deliver on that claim Nestlé will be a formidable force in technological innovation, to say the least! Add in their USD2+ bn of R&D and they’re looking pretty good on the global innovation stage.
Whilst I despair of big food companies generally Nestlé looks to be on the right track, with a true internal technological innovation strategy.
Can’t wait to look back in 2024 and see whether this strategy’s been successful!