From Open Innovation to Sharing-is-Winning
by Kelly Frederick
Helmut Traitler, who just retired as Vice President of Nestlé Innovation Partnerships, began Monday’s symposium on open innovation (session #121) with one vital message for companies: “Open up.” Both Traitler and Todd Abraham (Senior Vice President of Research and Nutrition for Kraft Foods), who also presented, instructed attendees that if they weren’t involved in the process already to get started with an open innovation strategy at their companies. Abraham and Traitler described that it can be tough to convince management in large organizations, such as Kraft and Nestlé, to change the way they are operating that that the pace of innovation is going to have to speed up in order to continue being successful. Afterall, innovation is one main resource to create and sustain competitive advantage.
Traitler took the attendees through the process that Nestlé went through to implement open innovation, which they began in 2007. As they developed a strategy they realized “traditional open innovation is getting more and more between a rock and hard place,” according to Traitler. He explained that the term “open innovation” has a somewhat negative connotation, especially with larger companies who hear it and think it is all about “giving stuff away.” However, there was no going back to the way business used to be conducted—all internally—so they had to find a way forward. For Nestlé, they developed a process termed “Sharing-is-Winning,” a balanced combination of internal R&D and external solution providers. While it may seem counterintuitive to normal business practices, this new way of conducting business “takes guts” and is based on symbiotic situations. Of course, this requires a framework of legal precautions to prevent antitrust issues as well as a commitment to ethical conduct. In 2007, Nestlé’s first year with the new strategy, the company partnered with a group of 10 suppliers. Today, Nestlé has 18 such partnerships. The process has paid off for Nestlé, which has seen an increase of over 30% in development, and an increase of more than 10% in product launches.