Will a different kind of ‘innovation hub’ open the future to food growth opportunities?
Through a special arrangement, presented here for discussion is a summary of a current article from the bi-monthly e-zine, CPGmatters.
Mondelēz International has launched an “innovation hub” called SnackFutures that aims to harness both internal and external resources, including early-stage entrepreneurs, to invent and reinvent products, brands and entire businesses in key strategic areas.
Many other consumer packaged goods (CPG) companies have initially kept dealings with startups more segregated, such as incubators and accelerator programs.
“The structure is indeed unusual, and that was intentional,” Brigette Wolf, head of SnackFutures Innovation, told CPGmatters. “SnackFutures is dedicated to unlocking snacking growth opportunities and is unique in several ways. We believe the best way to serve consumers in the future is by connecting world-class internal experts and talent with cutting-edge external partners to create exciting, forward-thinking solutions.”
Ms. Wolf said that Mondelēz was “mindful in how we wanted to set up SnackFutures’ approach to innovation. We are building relationships across our ecosystem of partners and entrepreneurs to be collaborative, flexible, experimental and grounded in curiosity and passion for consumers. It is not a one-size-fits-all.
“SnackFutures utilizes existing innovation approaches and gives us more dedicated resources to really accelerate our innovation activity. We’re learning and adjusting our approach based on what we see, and we think we’ve both a unique proposition here with inventing, reinventing and venturing under one roof.”
What’s more, the SnackFutures’ team reports to Tim Cofer, Mondelēz’s chief growth officer. “This means we will be able to fast-track development and iterations of certain products or steps in the R&D process as well as have a suite of capabilities on hand,” Ms. Wolf said.
Digital snack platforms and capabilities are one of the three high-growth areas that will be the focus of SnackFutures, including exploring snacks online and order and delivery of Mondelēz products. The other two main targets will be “well-being” snacks and ingredients, such as innovations that involve fruits and vegetables and gut health, and premium snacks and ingredients, such as those tailored to demographics or diet, such as seniors and vegans.
The parent of iconic snack brands including Oreo, Ritz, BelVita, Cadbury, Toblerone and Sour Patch is positioning SnackFutures to contribute a robust $100 million to revenue growth by 2022.
Discussion Questions
DISCUSSION QUESTIONS: What challenges do major CPG companies face trying to collaborate with entrepreneurial talent? What advantages and disadvantages to you see in the way the SnackFutures program was designed?
Poll
BrainTrust
Neil Saunders
Managing Director, GlobalData
David Katz
EVP & CMO, Randa Accessories
Innovation culture at successful legacy companies is linear. One thing leads to another. Efficiency and optimization are highly valued. And innovation strategy is deliberate. Everyone knows where the company has been, where it is, where it is headed, and the plans to get there.
Start-up culture is nonlinear. It values novelty. Start-up innovation is often inefficient at its onset, and strategies are emergent — they bubble up from all directions.
Reid Hoffman, the founder of LinkedIn, once said; “start-up innovation requires that you to throw yourself off a cliff … and build the plane on the way down.”
For incumbents, the larger you are the faster you fall. It’s a common misconception that legacy cultures fail to identify non-linear innovations, that they’re stuck in the “old” way of doing things. In our experience, this is plain wrong.
The real problem is that most non-linear innovation does not serve current customers, it disrupts the legacy process — which drives the bulk of the sales and cash flow — and it is often a big distraction for little immediate gain.
Conversely, start-up cultures are inspired by disruption. And these teams are usually free from the encumbrance of comp sales and increased profits that the other cultures face.
Legacy and start-up cultures fiercely compete for limited resources — A-level talent, capital, and technology. They don’t play nicely in the sandbox together.
The solution: create an environment where both cultures will thrive, and separate the opposing forces.
From all my discussions with CPG firms large and small, the biggest issue always comes down to culture. Many small firms are open, innovative, responsive and fast moving – mainly because they don’t have the scale or complexity of bigger organizations. The large CPG firms, by contrast, can be very sclerotic and out of touch with consumers.
It will be interesting to see how Mondelēz’s plans develop. Bringing innovation into the heart of the business is a bold move and it will only succeed if there is a willingness to engage across all parts of the business.
The Mondelēz approach to innovation centers looks more like the model found in technology companies or large scale solutions providers like IBM or Accenture. That same model is successfully used by base materials suppliers like Corning Glass to work with resellers to develop new uses for their core technology.
Innovation centers in CPGs have often drifted toward industry knowledge centers for retailers and creative spaces for customer meetings. Perhaps this approach from Mondelēz will avoid that tendency and yield innovative new products instead.
I like that SnackFutures is looking to entrepreneurs and external partners to move forward with ideas to improve a pretty traditional category. It’s important look outside your own four walls – and the capabilities of the talented people who run your day-to-day operation. Having worked in a corporate office for a large part of my career, I know how hard it can be for a company to embrace new directions, let alone turn a big ship around.
But great ideas come from the least expected places, and there are a lot of people out there with amazing ideas who will never work for a big company. I am looking forward to seeing what SnackFutures does. Although Cadbury is one of the brands owned by its parent company – let’s just leave Cadbury Cream Eggs alone… you can’t improve on perfection. #CadburyAddict
I’m very happy to see well-being and health as pillars of this program instead of just extensions of current foods. There’s a growing nutritional conscious in America that most CPG companies have failed to address. Kudos to Mondelēz!
It’s great to see innovation being explored across new segments. The word innovation is typically associated with technology. It’s inspiring to see a global CPG giant like Mondelēz thinking like a technology company. It shows how the digital transformation and its effect of shopper expectations are influencing all stakeholders in the broader consumer and retail ecosystem.
SnackFutures is a great way to collaborate with Mondelēz’s ecosystem of partners and entrepreneurs to invent and reinvent products, brands and entire businesses. It is not a new concept, as many companies do this. The challenge is to keep the collaboration vibrant. Frequent communications and incentives and rewards will be key to keeping partners and entrepreneurs engaged.
I love the idea and wish the best for the SnackFutures team. As some of my peers have noted below, the success will hinge on openness of the broader Mondelēz team to take on broad new ideas. I understand that the team has already had a few successes that they plan to roll out in the next year. Let’s see if SnackFutures achieves change rather than just acting as a PR platform for the company’s innovation proof point.
Mondelēz is taking the right approach by leveraging the talents, expertise and entrepreneurial talents via their innovation hub SnackFutures. However, CPG firms are even more challenged compared to retailers in regards to organizational change and becoming more agile. Introducing the culture of innovation to the Mondelēz team will have to be a crawl, walk, run proposition, as it’s difficult to introduce significant changes to such a large organization.
The consumer preferences have changed, and it’s a losing proposition for CPG companies to continue to operate as they always have. Key to the Mondelēz and other CPG firm’s transformation plans is being far more agile, flexible and responsive to the changing customer tastes and shopping habits.
It will be very intriguing to see how this plays out, with all the expected incremental innovation improvements to come.