By its own analysis, Kraft Foods holds 2.2% of all food-related patents. The percentage may be surprising, given that Kraft is one of the largest global food and beverage companies, employing more than 100,000 people and some 2,000 scientists and engineers. To Kraft, however, the percentage tells a different tale. It says many good ideas for food innovation exist outside its four walls.
"We recognize that we don't know everything," explains Nanako Mura, associate program director, open innovation, at Kraft Foods.
Indeed, recognizing that expertise exists outside of Kraft's core competencies -- expertise that could help the company grow -- has spurred Kraft to adopt the concept of "open innovation." By Kraft's definition, open innovation is about working with external innovation partners to speed the development of new products as well as speed the time it takes to bring new products to market. The partnerships allow access to additional talent and reduce R&D costs. And they complement Kraft's internal innovation networks. (Kraft's open innovation Web site is
www.innovatewithkraft.com.)
"When developing new ideas, innovation leaders say they rely on their customers, business partners and competitors to supplement their own internal functions. In fact, companies that profess best practices in innovation produce nearly half of their innovations from ideas generated outside the company."
Kraft has multiple avenues of engaging with its external partners for open innovation opportunities. For suppliers, it employs several tools, including a supplier relationship segmentation assessment as well as an innovation potential diagnostic tool. These tools help the company identify which among its suppliers have the most potential to help Kraft bring more innovations to market, explains Mark Barrett, senior program leader, open innovation. Barrett and Mura discussed their company's open innovation efforts during a recent online seminar.
- A consumer brief owned by the marketing department that is clearly written and includes information such as the scope of the challenge, acceptable cost range, competitive positioning and other details. It is critical that the brief be clear, Mura explains, but "not so prescriptive that it inhibits supplier innovation."
- A compressed time frame (two to three months) to work on the innovation.
- A "fair and reasonable" legal framework.
- A showcase in front of a cross-functional Kraft team including marketing, procurement and other relevant functions.
- A 30-day "go or no go" decision on whether to move the innovation to the next step in the development process.
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