{"id":29270,"date":"2018-11-12T18:43:12","date_gmt":"2018-11-12T23:43:12","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/brewing-a-better-world-with-open-innovation-heinekens-innovators-brewhouse\/"},"modified":"2018-11-12T18:45:06","modified_gmt":"2018-11-12T23:45:06","slug":"brewing-a-better-world-with-open-innovation-heinekens-innovators-brewhouse","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/brewing-a-better-world-with-open-innovation-heinekens-innovators-brewhouse\/","title":{"rendered":"\u201cBrewing a Better World\u201d with Open Innovation: Heineken\u2019s Innovators Brewhouse"},"content":{"rendered":"

To put its mantra \u201cBrewing a Better World\u201d into practice, Heineken runs crowdsourced competitions on its Innovators Brewhouse online platform, seeking the best solutions related to sustainability and product design. Heineken\u2019s commitment to open innovation has paid off; within just three years of launching its \u201cBrewing a Better World\u201d strategy in 2010, over $1.1 billion in revenue was traced to new innovations.1<\/sup><\/p>\n

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Figure 1: Innovators Brewhouse logo (source: Heineken Innovators Brewhouse website)<\/figcaption><\/figure>\n

Open innovation can be messy and logistically challenging.2<\/sup> So why does Heineken remain so committed to it?<\/p>\n

The first reason open innovation is important to Heineken is category-specific; consumer-packaged-goods companies oftentimes find it difficult to change their fundamental product (a new Heineken \u201crecipe\u201d wouldn\u2019t make it Heineken anymore), so instead innovate through packaging \u201cmakeovers.\u201d3<\/sup> Second, within a fiercely competitive\/overcrowded beer market, Heineken views co-creation as a powerful \u201cmarketing tool\u201d to build customer loyalty and keep Heineken top of mind.4<\/sup> In fact, marketing products as \u201ccustomer-ideated\u201d has been found to\u00a0enhance the product\u2019s market performance by up to 20%!5<\/sup><\/p>\n

Last, but not least, this megatrend is important because of the economic implications; Heineken\u2019s Innovators Brewhouse helps collect ideas for the fraction of the cost (and time) that it would traditionally take. Other CPGs are realizing these tangible benefits; Colgate-Palmolive paid a mere $17,000 for ad campaign ideas for Speed Stick, one of these which became its submission for a $4 million Super Bowl buy.6<\/sup><\/p>\n

What Heineken is doing:<\/u><\/strong><\/p>\n

Heineken\u2019s open innovation development process holds true to their statement that \u201cgreat ideas and innovative solutions can come from anywhere.\u201d7<\/sup><\/p>\n

In its 60+ Design Competition, Heineken invited collaborators to reimagine the drinking experience for the 60+ consumer. The top six candidates traveled to Heineken Headquarters in Amsterdam to fine-tune their ideas with innovation experts at a two-day workshop.<\/p>\n

One of the top three submissions, called the Easy Star Bottle, made it easier and simpler for older folks with limited dexterity (and many suffering from arthritis) to open and share a Heineken8<\/sup>:<\/p>\n

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Figure 2: Easy Star bottle design from Innovators Brewhouse\u2019s 60+ design competition (source: Best in Packaging)<\/figcaption><\/figure>\n

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The top three ideas (out of 150 submissions) came from innovators in Finland, Australia, and the USA,9<\/sup> validating that the best ideas can indeed come from anywhere<\/em>. Believing deeply in transparency in its product design process, Heineken makes everyone\u2019s submissions viewable.<\/p>\n

While many of Heineken\u2019s open innovation processes thus far have focused on packaging design, longer-term Heineken will increasingly incorporate novel technologies. For example, Heineken\u2019s FutureBottle, a crowdsourced idea, uses new temperature-sensing inks that indicate when a beer needs to be refrigerated.10<\/sup><\/p>\n

Heineken will increasingly combine open innovation with another megatrend, machine learning. BruVue, the winner of the 2018 Innovators Brewhouse Challenge, provides a data feedback loop to track beer volumes inside draft systems.11<\/sup> This IoT solution will benefit many different stakeholders in the beer retail ecosystem, such as bars that can now track their beer inventory, and also distributors who can see customers\u2019 inventory real-time and practice just-in-time supply. It\u2019s particularly interesting that this innovation also helps Heineken\u2019s competitors as they can get feedback on consumer product preferences. This is open innovation and co-collaboration at its finest.<\/p>\n

Further Recommendations:<\/u><\/strong><\/p>\n

A near-term recommendation is for Heineken to rethink its open innovation process. Under the idea generation vs. selection framework, most of Heineken\u2019s Innovators Brewhouse competitions currently fall in the \u201cInnovation Tournament\u201d bucket:12<\/sup><\/p>\n

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Figure 3: Idea generation vs. selection matrix (source: King and Lakhani)<\/figcaption><\/figure>\n

I would recommend that Heineken crowdsource more idea selection<\/em> to collaborators as well. This will send a signal that consumers, not only Heineken executives, can have a voice in building the future of Heineken.<\/p>\n

Additionally, I would recommend creating unique crowdsourcing challenges distinct from competitors who are also doing open innovation. A few years ago Budweiser developed a new beer called Black Crown crowdsourced from consumers.13<\/sup> To differentiate itself, Heineken could support opportunities for in-person co-collaboration such as local community meet-ups hosted by passionate collaborators. As Heineken continues seeing high ROI on its open innovation efforts, they may be more likely to invest in new co-creation strategies like this.<\/p>\n

In the longer term, I would also recommend that Heineken encourage more open innovation through bearing more of collaborators\u2019 costs and risks of submitting a design. This could mean Heineken provides open access software to mock-up designs, or grants monetary awards for participation (rather than just to the competition winners). This would result in even more contest entrants and help Heineken generate the best possible ideas and solutions.<\/p>\n

Open questions:<\/u><\/strong><\/p>\n

A couple open questions remain for me:<\/p>\n