{"id":30923,"date":"2018-11-13T13:08:09","date_gmt":"2018-11-13T18:08:09","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/the-unilever-foundry-bringing-innovation-to-400-brands-under-one-roof\/"},"modified":"2018-11-13T13:08:09","modified_gmt":"2018-11-13T18:08:09","slug":"the-unilever-foundry-bringing-innovation-to-400-brands-under-one-roof","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/the-unilever-foundry-bringing-innovation-to-400-brands-under-one-roof\/","title":{"rendered":"The Unilever Foundry \u2013 bringing innovation to 400 brands, under one roof"},"content":{"rendered":"

The CPG sector is enduring a challenging period especially in the US where \u201cthe organic-growth rate\u2026has declined\u2026and shareholder returns have lagged the S&P 500.\u201d [1] Consumer profiles and habits are continuing to rapidly morph depending on life stage, socio-economic status and location, which means a \u201cone size fits all\u201d strategy is destined to fail today more than ever before. [2] The internet has fueled the growth of upstarts that sell direct to consumers and pose a threat to traditional categories. These brands, small and large, are growing at speed: according to Nielsen, the \u201c16 largest CPG manufacturers\u2026saw their collective share of the US brick-and-mortar market decline to 31% whereas 16,000 smaller manufacturers\u2026with combined sales of $145 billion, saw their total share of the market rise to 19% from 17%\u201d. [3] These upstarts are at an advantage due to their agile structures that allow them to develop deeper relationships with consumers. As a result, large CPG companies are starting to partner up with these very entrepreneurs to influence how they do business through the use of open innovation, defined as the process of \u201crelying on outsiders both as a source of ideas and as a means to commercialize them.\u201d [4]<\/p>\n

Unilever launched its own innovation system called The Foundry in 2014: a \u201cglobal platform for partnering with the world\u2019s best startups to accelerate business innovation on a global scale.\u201d [5] Startups are invited to submit ideas across enterprise tech, social & sustainability, marketing & e-commerce and the very products & ingredients that could evolve Unilever\u2019s product portfolio. [6] A select number then enter into a pilot program with one of Unilever\u2019s 400 brands. [7] For startups, it provides the unique opportunity to have access to million-dollar brands and their budgets, along with mentorship from experienced marketers and the opportunity for funding through Unilever Ventures. For Unilever, it allows them to crowdsource ideas to help their brands reach customers in new ways. Projects include inviting customers to personalize their own jars of Marmite via their Facebook page and using AI chats to help them create more meals using Knorr products. [8] Unilever\u2019s focus is now on scaling select projects in other markets. Since launch, The Foundry has accomplished its short-term goal and worked on over 100 pilot projects, scaling 48% of them. [9]\u00a0 A longer-term priority is to ensure that open innovation is integrated in its internal working culture and Unilever has created co-working spaces to physically bring these startups together with its brand managers. [10]<\/p>\n

\"\"<\/a><\/p>\n

The majority of partnerships to date appear to be marketing-driven with a goal to form deeper connections between Unilever brands and their target audiences. However, true future-focused will need to address Unilever\u2019s core business models; for example, supply chain development and the creation of cutting-edge products and services. The Foundry also has a key role to play in CSR initiatives: Unilever\u2019s Sunlight laundry soap partnered with Altered in developing economies to enable families to conserve up to 98% of water used in everyday activities. [11] Prioritizing these efforts will be key to making sure The Foundry does not remain siloed as a source of gimmicky marketing campaigns. Unilever also needs to focus on longer term partnerships, versus one-off executions, in order to validate external open innovation as a true business advantage. [12] This requires ensuring consistency in how start-ups are evaluated and how their solutions are escalated internally to achieve buy-in given the operational intensity of ideas that are truly disruptive. The ability to successfully scale pilots around the world will also depend on how partnerships are managed and nurtured on an ongoing basis and therefore will rely on the remit of Unilever employees. What is also key is how Unilever will begin to internalize these capabilities and start cultivating entrepreneurialism from within. This will evolve superficial collaborations with entrepreneurs to provoking a fundamental shift in thought and approach at the core of the organisation. For instance, Unilever should amend recruitment practices and hire managers who have had start-up experience as well as consider putting together integrated teams of Unilever employees and startup partners to evolve the internal development processes that govern how ideas go to market.<\/p>\n

Is The Foundry really the answer? It begs further questioning. Can external sources truly drive business transformation or should this only be fostered from within? How can Unilever act like a start-up without compromising the consistency and quality that has brought it success?<\/p>\n

[788 words]<\/p>\n

 <\/p>\n

Sources<\/strong><\/p>\n

[1] McKinsey & Company, \u201cAgility@Scale: Solving the growth challenge in consumer packaged goods\u201d (PDF file), downloaded from McKinsey & Company website, https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/agility-at-scale-solving-the-growth-challenge-in-consumer-packaged-goods<\/a>, accessed November, 2018.<\/p>\n

[2] McKinsey & Company, \u201cThe consumer sector in 2030: trends and questions to consider,\u201d https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/the-consumer-sector-in-2030-trends-and-questions-to-consider<\/a>, accessed November, 2018.<\/p>\n

[3] \u201cFive Challenges for the CPG Sector in 2018\u201d, E-marketer, https:\/\/retail.emarketer.com\/article\/five-challenges-cpg-sector-2018\/5a4537eeebd40008a852a266<\/a>, accessed November, 2018<\/p>\n

[4] K. Boudreau and K. Lakhani. \u201cHow to manage outside innovation.\u201d MIT Sloan Management Review<\/em> 50, no. 4 (Summer 2009): 68-76<\/p>\n

[5] The Unilever Foundry, \u201cAbout Us,\u201d https:\/\/foundry.unilever.com\/about-us<\/a>, accessed November, 2018<\/p>\n

[6] The Unilever Foundry, \u201cOpportunities,\u201d https:\/\/foundry.unilever.com\/opportunities<\/a>, accessed November, 2018<\/p>\n

[7] The Unilever Foundry, \u201cOpportunities,\u201d https:\/\/foundry.unilever.com\/case-studies<\/a>, accessed November, 2018<\/p>\n

[8] The Unilever Foundry, \u201cOpportunities,\u201d https:\/\/foundry.unilever.com\/case-studies<\/a>, accessed November, 2018<\/p>\n

[9] The Unilever Foundry, \u201cThe State of Innovation\u201d (PDF file), downloaded from The Unilever Foundry website, https:\/\/foundry.unilever.com\/documents\/12788\/92070\/The+State+of+Innovation\/7c946425-8316-4323-8ed3-8011f9d3dfef<\/a> accessed November, 2018.<\/p>\n

[10] \u201cUnilever launches its first co-working space to encourage collaboration with startups,\u201d The Drum, https:\/\/www.thedrum.com\/news\/2017\/02\/14\/unilever-launches-its-first-co-working-space-encourage-collaboration-with-startups accessed November 2018<\/a><\/p>\n

[11] The Unilever Foundry, \u201cArticles,\u201d\u00a0https:\/\/foundry.unilever.com\/blog\/-\/blogs\/innovation-in-water-multiple-solutions-for-multiple-challenges<\/a> accessed November, 2018<\/p>\n

[12] \u201cBringing David and Goliath together: Inside Unilever\u2019s startup incubator,\u201d Digiday, https:\/\/digiday.com\/marketing\/bringing-david-goliath-together-inside-unilevers-incubator-foundry\/<\/a> accessed November, 2018<\/p>\n

[Cover image] “Unilever Foundry Seeking 50 New Stellar Marketing Tech Startups,” Google Images, https:\/\/goo.gl\/images\/rvfSoa, accessed November, 2018<\/p>\n","protected":false},"excerpt":{"rendered":"

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