In challenging times where companies are trying to cope with the uncertainty surrounding the COVID-19 outbreak, many have turned to new innovations to remain competitive in a post-pandemic environment. In doing so, they often equate innovation with the latest technology. However, it is crucial that companies also focus their attention to fostering a culture of innovation through their people. Mark Piper, director category, strategy and innovation, Fonterra, outlines the need for companies to embrace diversity to drive innovation, and the potential to create value through open innovation.
For decades, industries across the world have moved into an innovation-driven business model, but in the pursuit for growth, a common misconception has emerged. Companies often look towards a new technological invention or product development for immediate solutions to keep up with today’s fast-changing environment, but innovation is more than that – the people and culture during ideas forward also play a crucial role in enabling successful innovations.
The emphasis on people has never been timelier, as the world considers its next move in a post-COVID-19 era. As leaders seek to rebuild their organisations and safely navigate through the global crisis, trust established from long-standing, deep relationships with stakeholders will be more important than ever for businesses as they work to regain their footing and restart innovation pipelines.
While it is important to be agile to seize opportunities, companies must also make a conscious effort to better understand consumer needs in the new normal. Instead of simply embracing on a new tech bandwagon, they need to focus on deriving insights that will guide them in delivering products and services that meet consumers’ needs with empathy and care during such uncertain times – valuable traits that can be gained from a people-focused approach to innovation.
Embrace diversity within companies
Living in an interconnected world driven by globalisation, it is hard to overlook the importance of diversity and the advantages it brings to companies. Not only does it push teams to consider new perspectives and better anticipate how products will be received in different cultural contexts, diversity also fuels creativity. According to a study conducted by the Boston Consulting Group, companies with a more diverse management team achieved 19% higher revenues as a result of increased innovation.
This observation is being adopted at Fonterra Research and Development Centre (FRDC), where the company displays its agility through a team of 350 people representing over 40 nationalities. Working in such a diverse environment minimises the occurrence of disruptive ideas when members from the same background with similar perspectives come together.
Furthermore, the complexities of Fonterra’s products require the team to work in cross-functional teams with employees across different professional backgrounds, from nutritionists and dieticians to food scientists, process engineers, and clinical researchers. Such diversity is similarly observed across the regional technical teams, who provide local insights for product development and innovation.
The perspectives that diversity offers have sparked some of the most resilient and effective solutions observed in the dairy industry. With collaboration and knowledge-sharing by teams from across different specialities, Fonterra has advanced in dairy protein innovation, and led the development of critical advances over the past century. For example, Fonterra introduced the heat-stable whey protein in 2012, which has since been successfully applied to a range of product categories. This innovation involved several years of research and importantly, a willingness from the research team to embrace different viewpoints to find a solution.
Enabling diversity in the teams has translated to an equally varied application of dairy protein in food products today, often in ways consumers could never have imagined before. But that is not all – the focus on diversity also needs to be underpinned by a culture of honesty and openness, so that everyone within the company feels comfortable speaking up to share their insights, and is willing to work collaboratively in developing new ideas.
Encourage risk taking and experimentation
Companies that take risks with new thinking can differentiate themselves from competitors, but too often they might be reluctant to do so due to the fear of failure. Consequently, employees become too nervous to try anything different.
Unshackling innovation needs to being with encouraging each employee to think creatively, and push boundaries by cultivating an environment that welcomes a healthy level of risk and experimentation.
Only by embracing this culture will employees feel more empowered and less pressured by the possibility of failure. Even if the desired outcomes are not achieved, such as not being able to launch a new product after several rounds of experimentation, companies need to recognise that it is not necessarily a failure as long as there is new learning from the process, and being able to apply the knowledge gained to future attempts.
In a step forward, Fonterra is seeing more companies willing to embrace risk and new challenges as they recognise the value it could bring to their business. For instance, more cosmetic brands have branched into supplements, vitamins and powders for skin health in response to an improved understanding among consumers that physical appearance is affected by what they choose to consume and not just what they apply to their bodies. This phenomenon has set the industry on an entirely new trajectory, and companies that have successfully expanded their product portfolio are better placed to reach new consumer segments.
By challenging the status quo, companies also show that they are willing to embrace experimentation, and such behaviours will naturally trickle down to employees.
Levering new skills through open innovation
Despite the transition to people-focused business models to spur innovation, companies still find it challenging to deliver a consistent pipeline of innovation due to the rapid pace of technological transformations, complex product ecosystems, and evolving consumer needs.
In this case, open innovation allows companies to tap on the strengths of external partners and even competing players within the industry, in the search of solutions. This is particularly relevant in today’s world as innovation ideas are in high demand to tackle unprecedented challenges. Such collaborations not only benefit the business, but also provide employees with an opportunity to learn from the best practices of other firms and enhance their skills.
Partnerships are similarly a key driver of growth for New Zealand’s dairy industry – with food companies, universities, start-ups, and research institutes – and this has placed Fonterra in a better position to harness the power of open innovation to unlock new products and solutions. Leveraging its presence across markets and close ties with local partners, Fonterra proactively relay insights and on-the-ground observations to researchers so that the company’s innovations can address new consumer needs and trends.
Putting the human touch back into innovation
Innovation has become an important competitive differentiator for businesses, with many quickly jumping on the bandwagon to tap on new technologies. However, organisations that are able to sustain their success throughout the years are those that realise the innovation pipeline cannot be sustained with just technological advancements. The real enablers of disruptions and growth are the people – not the technology, and companies that embrace this belief can create a positive shift in corporate culture.
This article was published in the October/November 2020 issue of Food & Beverage Asia.