Access Is The New Ownership A Case Study Of Unilever S Approach To Open Innovation
1. Access is the
new ownership:
a case study of
Unileverâs approach
to open innovation
2. If âaccess is the new ownershipâ then the open
innovation modes invoked by Unilever are well placed
to provide access to innovative technology for the
future. Unileverâs approach to innovation allows the
development of strong, fruitful relationships with
partners and access to the agile innovation
advantages of small companies, whilst maintaining
openness to new ideas and a focus on core business
and priorities.
1. Executive Summary
1
Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
3. This case study is based on a series of semi-structured interviews conducted at one of
Unileverâs major R&D Laboratories at Port Sunlight, on the 10th October, 2011. Lancaster
University would like to thank the following people for their participation and invaluable
contributions: Jon Hague, Vice President Open Innovation; Dominic Tildeseley, Vice President
R&D, Structured Materials and Process Science; Cameron Jones, Vice President R&D Hair;
Glyn Roberts, Genesis Project Field Leader for Disruptive Sustainability for Growth; and Paul
Jenkins, Group Director Structured Materials and Process Science Expertise.
Unilever is a large and successful multinational company, with a focus on sustainable growth
and a long history of successful innovation. Unilever products are fast moving consumer goods
in four major global categories - Personal Care, Homecare, Refreshments (beverages and ice
cream) and Foods and the companyâs products can be found in homes all around the world.
An estimated two billion consumers use Unilever products on any single day. Unileverâs mission
statement reflects the companyâs aim of growth with sustainability.
âWe will develop new ways of doing business that will allow us to double the size of
our company while reducing our environmental impact.â 1
A key strand of Unileverâs âcompassâ strategy is âbigger, better, faster innovationsâ 1
. To achieve
these aims the company maintains a strong focus on innovation.
Unilever is also a truly international company, with more than half of sales made in emerging
and developing markets and with products sold in more than 180 countries. India and China, in
particular, are huge potential growth points for the company. Unilever describes itself as having
âlocal roots and global scaleâ.
âOur deep roots in local cultures and markets around the world give us our strong
relationship with customers and are the foundation for our future growth. We will
bring our wealth of knowledge and international expertise to the service of local
consumers â a truly multi-local multinational.â 2
This influences both the direction the company takes in terms of products and its approach to
innovation. Unilever innovates broadly, with technical, process and consumer-led innovations
evidenced in the delivery of new products, the development of new markets and through new
ways of working.
2. Introduction â
Unilever and Innovation
2
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
Access is the new ownership: a case study of Unileverâs approach to open innovation
4. The drivers for open innovation within Unilever include emerging developments in science and
technology, changing consumer demand and new markets.
An increasingly rapid rate of change in science and technology is one of the main drivers for
open innovation within Unilever:
ââŚthe bottom line of the way the world is going is that the rate of change of science
and technology outside our walls is greater than inside, itâs clear âŚthe rate of
knowledge generation is exponential as well so itâs pretty obvious that if we donât
open the doors then weâre going to get left behindâŚâ (Interview, Jon Hague: VP
Open Innovation).
However, the core categories of Unilever are large, mature businesses each producing over
âŹ10 billion in turnover. There are issues of risk associated with long established brands in these
mature businesses if innovation is pushed too far and too rapidly. To overcome these issues
Unilever has established both a New Businesses Unit (NBU) and the Unilever Corporate
Ventures (UCV) Group. The NBU (New Business Unit) explores the creation of enterprises
around core categories and the UCV (Unilever Ventures Group) explores opportunities outside
the current core categories. However the NBU draws upon the incubation and business
building skills of the UCV to support its enterprises.
The UCV aims to identify technology assets inside and outside the company that can stimulate
new businesses. Open innovation can play a large part in facilitating the success of these new
enterprises.
a. Drivers for Open Innovation
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Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
5. Interestingly, technology spaces are not the only drivers of Open Innovation for Unilever.
ââŚthe end game is business in partnership and technology is a part of it, not the
absolute sole reason for it.â (Interview, Jon Hague: VP Open Innovation).
Partnerships with suppliers and universities can also encourage open innovation. Unilever has
worked with suppliers for many years and has had long relationships with academia. However
recently âweâve said look, this is something we need to put much higher on the agenda so weâre
going to put a leader in place, weâre going to get people thinking much more earnestly about it
and itâs got to become part and parcel of the way we do innovationâ. (Interview, Jon Hague: VP
Open Innovation). This is part of exploiting fully the quality of innovation that can be created
with supplier partners, such as the big chemical companies and the big packaging companies.
Large firms are one set of partners with whom Unilever can find innovation and co-create
innovation but there are others.
The rise in importance of developing and emerging countries, both in terms of new markets for
Unilever and as âhot spots for innovationâ, also drive Unileverâs quest for innovation. Certain
consumers in rural areas of India, for example, have very different user needs to those of
consumers in the UK, the physical infrastructure (electricity supply, drains etc) and access to
technology in the home is also different. This has led to innovations in products, packaging and
marketing in these areas.
The changing nature of the workforce has the effect of bringing new ideas into the company
but, also, allowing leakage of ideas outside across other industries ââŚthe fact is that nobody is
going to be loyal to one company in the future anymoreâ. (Interview, Jon Hague: VP Open
Innovation). This limits the capacity of firms to lock-in knowledge.
Social media is another driver and Unilever is using sites such as Facebook for consumers to
submit ideas. This goes beyond technology to consumer preferences and enables consumer-
led innovation. Social networking enables fluid and real time âcustomer pushâ. Rather than
consumer research steering development, social networks allow consumers easy and direct
contact with firms, to voice their needs and preferences and to experience dialogue with
individual companies.
For example:
â..consumers are asking for different flavours in their Magnum ice cream or things like
that so the idea, there, is simply to listen to consumers and what they want. So, if 10,000
people around the planet are saying they want strawberry flakes in their Magnum we
would probably go out and do it!â (Interview, Cameron Jones: VP R&D Hair).
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Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
6. Open innovation is a term which has been used by Chesbrough3
to describe a new model in
which innovation is sourced by firms from external, as well as internal, sources. In addition,
external routes to exploitation of innovation may also be used. Chesbrough states:
âThe Open Innovation paradigm assumes that firms can and should use external as
well as internal ideas, and internal and external paths to market, as they look to
advance their technology. Open Innovation assumes that internal ideas can also be
taken to market through external channels, outside a firmâs current businesses, to
generate additional value.â
Chesbrough lists the open innovation principles which support the view that this approach
âoffers novel ways to create value â along with new opportunities to claim portions of that
value.â4
âOpen Innovation Principles
⢠Not all of the smart people work for us so we must find and tap into the knowledge and
expertise of bright individuals outside our company.
⢠External R&D can create significant value; internal R&D is needed to claim some portion of
that value.
⢠We donât have to originate the research in order to profit from it.
⢠Building a better business model is better than getting to market first.
⢠If we make the best use of internal and external ideas, we will win.
⢠We should profit from othersâ use of our IP
, and we should buy othersâ IP whenever it
advances our own business model.â5
3. Open Innovation â
a brief synopsis
a. Definition
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Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
7. 6
Access is the new ownership: a case study of Unileverâs approach to open innovation
b. Benefits
In essence, the open innovation model describes new ways for companies to capture value
both through using and adapting external innovation and through external routes for the
exploitation of internal technical developments.
âOpen business models enable an organisation to be more effective in creating as
well as capturing value. They help create value by leveraging many more ideas
because of their inclusion of a variety of external concepts. They also allow greater
value capture by utilising a firmâs key asset, resource or position not only in that
organisationâs own operations but also in other companiesâ businesses.â 6
In this case study, the open innovation approach at Unilever is explored and related to the
context of the North West of England regional innovation system.
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
8. The concept of regional âinnovation anchorsâ has relevance in the discussion both of the
regional innovation system of the North West of England and, specifically, to Unilever within that
region. Innovation Anchors have been described as:
âOrganisations that provide a pivotal research, technology or creative base for a
particular locality (nation, region or sub-region), sector or group of firms. These
organisations can be large multinational firms, universities, public research
establishments or newly emerging creative, knowledge-based service firms but are
important in underpinning their local innovation system or sector through their
research or knowledge activities, high level procurement patterns, demand and
supply of highly skilled knowledge workers and through more intangible leadership
in the fields of science, engineering, design and creative knowledge-based
activities they undertake.â7
Examining the potential of Unilever as a regional innovation anchor necessitates a view not only
of the companyâs position in the UK, but also of its global positioning. This requires a shift in
mindset:
ââŚif you look just within the UK ecosystem people donât think like that. There is a
blind spot and I suppose the big unlocking thought is this is a gateway to the big
growth markets of the world.â (Interview, Jon Hague: VP Open Innovation).
Unilever can act as a supporter, as well as a consumer of regional innovation. The global
positioning of companies such as Unilever may also act as a conduit, a âglobal gateway to
marketâ for other firms. This conduit can act into the region for operating companies to access
research and infrastructure and out of the region for universities, partners and suppliers. This
role fits well with new views within the company itself.
4. UK Innovation
Environment â Regional
Innovation System â
North West of England
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Access is the new ownership: a case study of Unileverâs approach to open innovation
a. Regional Innovation Anchors
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
9. ââŚas weâve got a new leadership structure in place at the top of Unilever for R&D
where there is a chief R&D officer, she has actually said âlook these sites really are
important and their place in the world is really important. And, so, weâve put a new
emphasis on sites and their role in the nation, I would say, but also the role in the
region theyâre inâŚâ (Interview, Jon Hague: VP Open Innovation).
Public private partnerships are seen by Unilever as a way forward in building scientific
infrastructure for the region, which would be too expensive to create for any single organisation.
Innovation through these large scale projects is only possible if industry, academia and
government are prepared to work in partnership.
âThe model Iâve just tried to create for high performance computing captures my
vision of what the future really is, so that is a public private partnership, which I think
is really important for the UK moving forward. So to take an area like high
performance computingâŚwell you look at the risk and you look at the investment
and the investment for a single company is too high and for Rolls Royce itâs too
high and for Astra Zeneca itâs too high and certainly for a large number of small to
medium enterprises (SMEs), itâs off the planet.â (Interview, Dominic Tildesley : VP
R&D, Structured Materials and Process Science).
This provides benefits for regional industry but also for universities; both through access to
leading edge instrumentation and through exposure to real industry challenges.
âThatâs got to be good for everybody, thatâs got to be good for academia because it
gets them closer to real industrial problems and to their knowledge transfer mission.
Itâs good for industry because it enables us to buy into stuff that individually we
wonât be able to afford to do. Itâs good for our growth. Itâs good for the suppliers,
both the hardware and software suppliers because they are selling into a more
orderly environment and itâs good for the countryâŚâ (Interview, Dominic Tildesley:
VP R&D, Structured Materials and Process Science).
The creation of an advanced scientific infrastructure can also have benefits for inward
investment as companies will be attracted to the region since there is an existing infrastructure
which they can use on a âpay as you goâ basis. The funding for such multi-partner infrastructure
projects has, historically, utilised both EU and regional funding, which may be an issue in the
future with the dismantling of the regional development agencies.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
b. Public Private Partnership
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
10. The cluster of excellent universities within the N8 is attractive to Unilever as an area for further
potential developments.
âSo, the North West of England, itâs in our interest to see it develop as a cluster in
the ways that we innovate âŚthe idea that you can look to the N8 for that absolutely
world class capabilities in concert with local industry, I think thatâs quite an
interesting opportunity for us.â (Interview, Jon Hague: VP Open Innovation).
Given the importance of proximity to effective working, the possibility of collaborative projects
across the North West, in particular is seen as desirable.
ââŚwhat if you could put something together across Liverpool, Lancaster and
Manchester that formed a world class community, all within two hours drive of you.â
(Interview, Jon Hague: VP Open Innovation).
The company sees itself as a potential conduit for intra-regional research interactions as well.
The possibility of access to research excellence from Unileverâs R&D labs outside of the UK is
proposed. This may form part of an effort to achieve the desirable effects of proximity for other
groups in the company and to build relationships with a core network of research institutions in
a coordinated way.
â⌠in terms of collaboration weâre interested in leveraging government
infrastructure by working with universities, so we canât afford to do neutron
scattering or high performance computing or some leading edge measurements,
but we can do this if we can collaborate with those measurements in industry. Also
weâre looking to leverage government funding, do EU Framework Proposals,
Regional Development funding, TSB.â (Interview, Dominic Tildesley: VP R&D,
Structured Materials and Process Science).
Such work takes place largely in the pre-competitive space or utilises firewalls between
competitive partners. It can have the effect of influencing the mission of the university beyond
research and teaching, to a role in stimulating private public partnership around large scientific
infrastructure.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
c. N8 and the North West of England
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
11. âWe are trying to now engage with the N8 to try to understand what role we can play
there and the idea of playing with the N8 dream team is ⌠what we would like to be
doing. Weâre looking at the site here as a conduit for building program into the
major partners in the north west of England âŚSo, for example, if there is somebody
in our Dutch laboratory who wants to set up a relationship with Manchester
University why wouldnât we use the steering group we set up here to make that
happen instead of it being a separate and different interaction.â (Interview, Jon
Hague: VP Open Innovation).
The development of the Daresbury Science and Innovation Campus as a site for significant
research, development and innovation has been noted over the last ten years.
ââŚ10 years ago we went to look at itâŚAnd Daresbury ⌠it was a backwater, it was
very slow and there wasnât much going on there and Colinâs come in and heâs
actually, to be honest with you, heâs turned it around. I was there twice last week
seeing IBM and Intel and American visitors, and itâs a real hothouse.â (Interview,
Dominic Tildesley : VP R&D, Structured Materials and Process Science).
âWeâve talked to the science parks, been to Daresbury, had a look at what theyâre
doing and ok, thereâs lots of interesting stuff in Daresbury and the little start up
companiesâŚâ (Interview, Jon Hague: VP Open Innovation)
In particular there are strong connections between Unilever and the Theory and Computational
Science Group at Daresbury involving work on modeling polymers and surfactants, the basic
ingredients of many Unilever projects.
Daresbury Science and Innovation Campus is a good example of the critical mass and greater
impact that can be gained through university cooperation. As evidenced by research and
knowledge transfer initiatives involving Lancaster, Liverpool and Manchester universities in the
areas of accelerator science, computing and business and management development. The
recent awarding of the Enterprise Zare status to Daresbury Science Innovation Campus further
supports the siteâs position as a regional innovation anchor.
The challenge of balancing traditional science education with a better understanding of the
needs of business is an issue in developing the skills of graduates.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
d. Daresbury Science and Innovation Campus
e. Skills and Training
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
12. â⌠itâs quite an interesting challenge that education has and how you prepare
people to understand pure science and driving it forward, pushing the boundaries,
which is what academia traditionally has been about. With balancing the needs of
business, which is where, to be honest, we need people who really understand âŚ
want to push the boundaries of science but have that little bit more financial
understanding in business acumen.... I think the step change would be
phenomenal.â (Interview, Cameron Jones: VP R&D Hair).
Skills and training are also issues for Unilever staff to develop in the move to open innovation
strategies. Amongst these are critical skills which are described below:
ââŚwhen we started to push open innovation a bit more, as we got into the
capability proper we said, âlook, there are some critical skills that are not
necessarily innate to the scientists in the buildingâ and they are actually quite
important if you are going to make this transition into an organisation that can do
this without having a whole load of support mechanisms and departments in place
because when allâs said and done we want a lot more people to be capable of
operating partnerships.â (Interview, Jon Hague: VP Open Innovation).
â⌠there are a few critical skills. So, we put down scouting as a key one. We put
down the ability to do deal architecture as a key one and the ability to do alliance
management as a key skill and those are the three absolutely critical things.â
This represents a new culture for Unilever staff and an advanced open innovation course has
been set up to support the development of these skills for staff. In particular it is the decision
laden aspects of âdeal-makingâ that present a challenge. Mentoring, as well as forming staff
into communities and networks that are going through the process together, improves and
sustains learning.
ââŚthe whole advanced course is a free standing thing which is learning on the job,
if thatâs what you call action learning, with a mentor; sharing with a group and then
building your individual skills through distance learning.â (Interview, Jon Hague: VP
Open Innovation).
Beyond these skills for staff undertaking programmes of development, there are more strategic
aspects for senior staff around the issues of integrating capabilities to complement Unileverâs
in-house capabilities.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
13. In common with many long established technology based companies Unilever, historically, had
a very vertically integrated structure and a culture which focussed on in-house product
development. This began to change with the new millennium, however, and new structures and
a move towards a more open culture with regard to technology development have emerged.
âBecause, we were so vertically integrated ⌠We did the chemicals, forestry, export,
transport, if we couldnât do it ourselves we werenât interested. So, that started to
change from 2000 onwardsâŚâ (Interview, Glyn Roberts: Genesis Project Field
Leader for Disruptive Sustainability for Growth).
Research and Development is an important part of the Unilever organisation. It accounts for
approximately 2% of the total Unilever turnover. This equates to spending of roughly âŹ1 billion a
year on research and development. The current research and development function is called
âDiscover, Design and Deployâ. Figure 1, below, is a model of Unileverâs R&D funnel, Discover
is at the left hand, wider end, close to the universities and the sourcing of new ideas and
concepts. Discover delivers programs of technology, building the right capabilities for the future
and resourcing the right skills for future developments.
Design, further to the right of the funnel, is less about science and more about applications and
new business models. Then Deploy takes these from the centre of Unilever out to the 180
operating countries and ensures that the products work locally. This entails both legal and
safety concerns as well as the sensorial point of view. For example, âwhatâs a good perfume in
Runcorn, is not necessarily a good perfume in Sao Paulo âŚ. We have to make products right
for the rest of the worldâ. (Interview, Glyn Roberts: Genesis Project Field Leader for Disruptive
Sustainability for Growth).
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Access is the new ownership: a case study of Unileverâs approach to open innovation
5. Open Innovation at Unilever
a. Research and Development
Design Deploy
Discover
Figure 1. Below is a model of Unilever's R&D funnel.
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
14. Three modes of open innovation have been described at Unilever. The first is âinside outâ in
which ideas flow into Unilever from elsewhere. This may include from the broad range of
partners and suppliers, SMEs, academics, lone inventors, entrepreneurs or âanybody who has
got a good ideaâ. (Interview, Jon Hague: VP Open Innovation). Ideas coming from this route are
mainly technology focused.
The second area is through the âoutside incubationâ policy delivered by the New Business Unit
(supported by Unilever Corporate Ventures Group). Essentially, the New Business Unit find
entrepreneurs who want to build businesses in areas of interest to Unilever. The technology is
then licensed to the entrepreneur who subsequently builds the business outside of Unilever.
The third mode is co-creation where Unilever looks for companies with complementary
capabilities and form enduring relationships. This can result in the production of a portfolio of
complementary innovation projects with a specific partner.
These open innovation modes have been explored in more detail below.
Ideas from outside Unilever can come from a variety of sources. In order to seek ideas that fit
well with Unileverâs objectives, grand challenges are put forward to potential suppliers.
â⌠what we will typically do ⌠but weâll put a brief out for a new piece of
technology. So, sometimes thatâs by standing up at a conference and putting up
our grand challenges. I do a lot of that because they are the kinds of things that do
excite people, weâll say Unilever is open for business. Sometimes weâll go and
actively solicit those companies because we think theyâve got an interest in a certain
area; sometimes they proactively come to us. Sometimes weâll use brokerage
agencies âŚWhat then will typically happen is they will come and present ⌠and
weâll outline what we want and they will outline their technology âŚâ (Interview, Glyn
Roberts: Genesis Project Field Leader for Disruptive Sustainability for Growth).
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Access is the new ownership: a case study of Unileverâs approach to open innovation
b. Modes of Open Innovation at Unilever
i. Mode 1: The Flow of Ideas from Outside
There are around 6,200 staff in R&D and of those about 1,000 people work in the âDiscoverâ
function. Unilever has six basic laboratories, one in the North West of England which is
approximately 800 people, and another quite significant lab at Colworth, just north of Bedford,
in Bedfordshire. As an Anglo-Dutch company â there is also a lab near Rotterdam at
Vlaardingen. In addition, there are labs in the US, India (Bangalore) and China, close to
Unileverâs growth markets.
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
15. The second mode of open innovation at Unilever involves the use of intellectual property (IP)
which is not central to the core business, or which has other potential routes for exploitation.
Unilever Ventures is one of the Venturing Groups that belongs to Unilever Corporate Ventures. It is
a vehicle used for spinning out IP that is unlikely to generate a return for the core business. These
spin out companies nurture ideas and potential technologies that do not fit with Unileverâs core
categories or brands and are therefore different from business incubated outside Unilever but
which Unilever may bring back in. Most often the IP is of value in creating new technology
companies that have markets outside the fast moving consumer goods (FMCG) industry. This is a
route to creating value from IP that would be wasted or worthless if auctioned as a raw patent.
The characteristics of the source of innovation can bring with it some issues relating to
relationships between differing types of organisations.
Dealing with other large companies is most straightforward as they have, like Unilever,
established core expertise, and similar timescales and cultures. Moves toward strategic
alliances with large companies have also simplified the process as multiple problems and
programs can be examined without the need for multiple agreements.
Breakthrough technologies come from predominantly two places, either coming out of
universities and new university spin outs, or SMEs (small and medium enterprises). Universities
as innovation partners will be discussed separately.
SMEs are often not suppliers, but owners or creators of technology that Unilever will buy, either
through purchasing the patents or licensing. However, for both sides, the risk profile of working
with an SME is different to that of a large company.
âIf itâs an SME âŚitâs R&D. So, if we say to themâŚthe excited techie guy talking to
the excited techie guy at the SME and weâre thinking âoh, itâs only three FTEs and
thatâs absolutely fine, theyâre just doing a piece of work for usâ without thinking
about the fact this is 50% of the guyâs resource. Itâs probably at least five years
away from market launch. He puts those two people on, it comes back three years
later with an answer and weâve moved on and got marketing campaigns because of
the way our funnel works and the poor guy is out of business.â (Interview, Glyn
Roberts: Genesis Project Field Leader for Disruptive Sustainability for Growth).
There are potentially serious consequences for an SME to commit, what is for the SME, high
levels of technical resources and not reaching a marketable product or technology within
Unileverâs timeframe. Also, often, technology based small firms lack the business and
management skills to develop their ideas into commercially viable products. In addition, SMEs
may be overwhelmed by the legal implications of working with a very large global multi-national.
These factors continue to make working relationships with SMEs more problematic than those
with other large companies.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
ii. Mode 2: Outside Incubation Policy
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
16. âQuite a number of other companies have made quite a big deal out of licensing IP
,
extra IP
, and I would say thatâs not really our game, weâve hung onto our patent
portfolios, really to cover the pipelines that we want to launch in our categories, plus
existing market products.â (Interview, Jon Hague: VP Open Innovation)
There is an additional problem in that the main interest in Unilever IP is from competitors, which
encourages a cautious approach. However, in some cases IP has been deliberately taken
outside the company to be incubated. This policy sees the development of small businesses
around Unilever IP
, but taking place outside the company: a way of Unilever capturing the
innovation and speed of a small, agile, company without the risk to established business.
ââŚthe thing that we have done is find entrepreneurs who are conducive and want
to build businesses in the areas where weâre interested and licensed the technology
to those people and they go away and build the business outside of Unilever.â
(Interview, Jon Hague: VP Open Innovation).
The outside incubation policy captures the potential benefits of the small fast moving SME and
avoids the sometimes slow âinternal machineryâ of a large multinational company. The option of
buying these new entrepreneurial businesses at a later date is also possible with the outside
incubation approach.
An example of this outside incubation policy is the company âOwn Productsâ8
which is a
skincare business, with a ânaturalsâ positioning. The technology behind the company has been
licensed by Unilever. The rationale for the outside incubation is that existing internal Unilever
brands did not fit well with the âOwn Productsâ business ethos.
The opportunity presented by the outside incubation policy is a dramatic expansion of the
innovation pipeline, without the potential for risk to the existing Unilever brands. In terms of the
innovation funnel these enterprises help to expand the marketplace.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
17. 16
Access is the new ownership: a case study of Unileverâs approach to open innovation
iii. Mode 3: Co-creation
The third mode of open innovation involves much closer ties with Unilever. The first two modes,
ideas from outside and outside incubation are at âarms lengthâ from the company. Co-creation,
also referred to as co-development or co-innovation, involves the development of a portfolio of
complementary innovation projects with a partner. Complementary capabilities are sought and
enduring relationships with other companies developed.
Co-creation can happen with a range of different partners, from large companies to SMEs,
universities and more recently NGOs.
ââŚif you ⌠look at it, most of the big companies that we deal with, you ⌠know
what kind of technologies theyâre going to bring you so their core expertise set is as
established as ours is so we can go and talk to âbig companiesââŚ.. So, when we
want breakthrough technology ⌠itâs coming from predominantly two places, either
coming out of universities and new university spin outs or it does tend to be SMEs
that weâve worked with before and ⌠thereâs a third one which is ⌠NGOs which
Iâve never worked with before. So, itâs very different.â (Interview, Glyn Roberts:
Genesis Project Field Leader for Disruptive Sustainability for Growth)
Currently, co-creation relationships such as with the companies described above provide
external biotech capability for Unilever. This is a deliberate choice for Unilever to keep a position
at the leading edge of molecular biology. In-house experts play a different role to in the past
when they would be involved in the in-house practice of molecular biology. Now their job is to
orchestrate co-creation partnerships to develop innovations in molecular biology.
An example of co-creation with the supply base involves major strategic innovation relationships
with enzyme manufacturers. Unilever does not conduct enzyme discovery in-house and relies,
instead, on deep relationships with a range of biotech companies to create the innovation
pipeline for enzyme technologies. This partnership in enzymes is a good example of co
creation, as it is fundamentally important to the competitiveness of the Unilever laundry
business, within the companyâs core categories, yet, the expertise is provided by co-creation
partners who are often looking for breakthroughs in the same areas. SME - Supplier - Unilever
collaborations can accelerate these innovations for all the partners.
This has been a successful model of open innovation for Unilever because of the essential and
deliberate nature of the match between Unileverâs capabilities and the capabilities of partners.
This allows for a series of projects to be developed between Unilever and the partners making it
an effective system of development.
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
A traditional model of company IP would see development in-house in the companyâs core
categories. As the open innovation modes described above illustrate, there has been a revision
of this traditional view at Unilever.
In the co-creation mode this extends to allowing partners to take technologies to the
marketplace if Unilever has not commercialised the technology within a certain period, which
makes the company an attractive partner in such ventures. This ensures that Unilever is
ââŚvery serious about commercialisation. Itâs a big decision not to go to market
because we are playing use it or lose it and that is something weâve instilled in the
past couple of years quite deeply.â (Interview, Jon Hague: VP Open Innovation).
It is ââŚa very different mindset to the past where if you go down the corridor and
talk to the patent guys they want to own everything.â
âweâre trying to get much more enlightened about the freedom to allow a partner to
generate value even if itâs not with us because then you are a much more attractive
partner.â (Interview, Jon Hague: VP Open Innovation).
There is recognition here, of the value of relationships with partners, but also of the limitations of
IP and patents.
âI think we get hung up too much, everybody gets too much hung up on IP and
patents. To be honest, I could have fantastic patents and never put a product out.
⌠they see a massive big box and if they just step back and say âyou know what,
Iâm going to open it up and share itâ you would get a better problem defined, a
better solution and then we would all end up making more money.â (Interview,
Cameron Jones: VP R&D Hair).
Particularly in the consumer goods markets in which Unilever operates, it is vital not only that
customer problems are recognised and solved but, also, that customers are able to recognise
that the new products offered are addressing these needs. This means that technology and,
therefore, IP issues are just one small part of the product package.
c. âAccess is the new ownershipâ - the
Changing Role of Intellectual Property (IP)
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
19. 18
Access is the new ownership: a case study of Unileverâs approach to open innovation
âSo, you have a consumer âŚthey give you info. You turn that into a technical
problem; you then get a technical solution; now, is that the problem solved? No, itâs
not because what youâve got to do is put that back into consumer language so the
consumer recognises the problem and this is the product to sell for the problem.â
(Interview, Cameron Jones: VP R&D Hair).
If âaccess is the new ownershipâ then the open innovation approach invoked by Unilever is
placed to provide access to innovative technology for the future. In addition, these policies allow
the development of strong, fruitful relationships with partners, access to the agile innovation
advantages of small companies, whilst maintaining openness to new ideas and a focus on core
business and priorities.
The motivation for working with universities is twofold: access to new sources of knowledge and
recruitment of capable graduates. This reflects the emphasis on open innovation through the
flow of new ideas into Unilever.
âIâm responsible for trying to push new science into Unilever. And, increasingly, we
do that by collaboration with the outside world, so you canât do anything like as
much work inside, or tap as much knowledge or get hold of as many interesting
people as you can outside.â (Interview, Dominic Tildesley: VP R&D, Structured
Materials and Process Science).
The company is working towards having a group of senior leaders in each of the laboratories
that owns a relationship with a top university in that proximity.
ââŚletâs talk about academia ⌠in many ways where the deepest individual
relationships between scientists and the external world have always been there but
theyâve always tended to be individual relationships / networksâŚwhat weâve been
looking to do more recently is take that up a step. ⌠there are a number of places
where weâve looked to get ⌠relationship agreements in place, a portfolio, weâre
looking at the institute as not just a place where there are a cluster of funded âŚ
post-docs or PhD students but weâve actually got a deliberately constructed
portfolio.â (Interview, Jon Hague: VP Open Innovation).
d. Universities as Sources of Innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
A range of possible connections within a university relationship is desirable.
ââŚwe look around for good places to work with locally, and when one thinks of
Lancaster, I know youâve got a good physics department ⌠and I know that you
have closed your chemistry department, but that youâre having a think about
whether you want to re-open it at the moment, and I also know that if I wanted to do
work on water and environmental science, Lancaster is a place I would come to -
have been to talk to people. And if I wanted to work on consumer understanding,
the politics of science, Lancaster is also a place that I would come to work.â
(Interview, Dominic Tildesley: VP R&D, Structured Materials and Process Science).
Proximity has proven to be important, historically, in developing good external relationships.
â⌠in Unilever a few years ago ⌠the zeitgeist ⌠was the ability to partner was
inversely proportioned to one over r to the six, where r is distance. âŚI think where
we need to move to is that one over r to the six doesnât need to be me being able to
touch the other person, but I need to be able to interact with them in a way that
feels like weâre touching as opposed to the old days where I need to go there or Iâll
send an email. So itâs actually ⌠about how you enable that as if itâs one site
working.â (Interview, Paul Jenkins: Structured Materials & Process Science
Expertise, Group Director).
An example of the problems produced by distance is illustrated by collaboration with one
English University.
â⌠we helpedâŚ(one university based in another region)âŚto refurbish a department
attached to the chemistry department and we provided them with funding to run
academics through the department, ... we havenât ⌠made it part of that contract
for our guys to work side by side with their guys actually down there. I think in
hindsight everybody would say itâs not been that successful because weâll do a big
trip every three months to find out what theyâve been doing and then three months
is like why did you do that? Why are you going off over this way? âŚI donât think it
worked because ⌠I donât think we ever had a secure partnership. We looked at is
as âwe want to package out this entire area and weâd like you to come back with
some best practice and then weâll work out how we put that into a ⌠programme.â
(Interview, Paul Jenkins: Structured Materials & Process Science Expertise, Group
Director).
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
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Access is the new ownership: a case study of Unileverâs approach to open innovation
One challenge driven by the open innovation culture is how to access some technology
ecosystems. Currently labs ââŚdonât necessarily sit in the footprint of those great ecosystems so
we donât have anybody on the west coast of the US for example. Yet, that is I would say, an
absolutely hotbed of creation in the creation of the new chemical industry thatâs about to
happen.â (Interview, Jon Hague: VP Open Innovation). This issue also applies to innovative
packaging of device work in Japan. Unilever Ventures allows some access to technology
clusters in other parts of the world, but it is a challenge as there is not a group of Unilever
scientists in close proximity to some of the, potentially, most innovative partners and strategically
important technology clusters.
The laboratories in India (Bangalore) and China (Shanghai) do provide access to an IT cluster
and manufacturing and developing scientific clusters respectively. Currently, this proximity issue
is important as the nature of Unilever products is physical, rather than virtual (as in other
industries such as internet and mobile communications). The geographical footprint is quite
important and most Unilever companies have a âlegacyâ footprint, as a result of their history,
rather than a âfuture facingâ footprint, presenting an interesting challenge. That is, understanding
how to be âpresentâ despite the lack of a physical presence such as a laboratory.
The structure of the company and new and burgeoning markets in developing and emerging
countries challenges the practice of locating R&D facilities in western, developed areas of the
world. However, historical connections and a strong university research system, eager for
industry funding, provide the rationale for this strategy.
âAnd so it regularly asks itself the question about why would it continue to do its R&D
in the West? When it could move and continue its R&D in the East⌠one of the
reasons I always give is because of the superb university base that we have here in
Europe⌠(and) the very strong connections we have, I mean we do have strong
connections here to Liverpool, to Manchester, Lancaster, Salford, Daresbury - really
important to us and of growing importance.â (Interview, Dominic Tildesley: VP R&D,
Structured Materials and Process Science).
University collaborations in some developing countries, for example India, can be problematic as
the universities are less in need of university funding.
ââŚwe tend to do a lot of quite good local collaborations and a lot of good UK
collaborations, we have a few in the US, but collaborations in the Far East is still
difficult for us and the reason is actually that if you go to India⌠they would say âwell
we donât need any students, weâve got them, we donât need any post-docs, weâve
got plenty, we donât need any equipment ⌠because they are so well-funded by their
governments, thereâs no pressure on them to work closely with industry. So itâs quite
a different situation to the situation here in the West. So thatâs one of the reasons that
we continue to work very locally.â (Interview, Dominic Tildesley : VP R&D, Structured
Materials and Process Science).
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
22. 21
Access is the new ownership: a case study of Unileverâs approach to open innovation
ââŚwe choose good places âŚnow whatâs a good place? So, two things about
being âgoodâ, you have to be clever, so it has to have a high research rating, but
youâve also got to be hungry, youâve got to want to work with Unilever, otherwise it is
a waste of space âŚyouâve really got to make sure that youâre working with places
who need it, who want to work with you and who then produce the goods.â
(Interview, Dominic Tildesley : VP R&D, Structured Materials and Process Science).
In regions where Unilever labs are based there are some established research collaborations
with universities. Proximity of the Unilever R&D centre at Port Sunlight to Liverpool University
facilities has seen many benefits. The easy access to the facility (20 minutes away) has the
added convenience of visits to the university being easy to fit into a working day.
âAnd itâs an opportunity because there are lots of players in the bio-chem arena
here and ⌠the Mersey Partnership, thinking about the knowledge economy itâs one
of the major themes. So, yes, proximity matters when it resonates like that and so if
you can engage with the local community that is world class in bio-medical, should
we be doing that, then that makes a lot of sense.â (Interview, Jon Hague: VP Open
Innovation).
This involves partnerships in which Unilever staff and university staff are working side by side on
projects. Through this collaborative experience, helpful and sustainable practices concerning
the legal and practical approaches to IP management have been built.
âThe IP arrangements have been crucial, I think, to that. Essentially, because what
the university provides is that facility kept to the leading edge and the skills to be
able to turn that facility to tackle Unileverâs challenges, so the university itself is not
creating IP in our product space, what happens is they will work with our guys who
then do the experiments and ⌠come up with the new technology innovation, so we
take that back and that becomes our IP for our suppliers to work with and launch
our products.â (Interview, Paul Jenkins: Structured Materials & Process Science
Expertise, Group Director).
ââŚwhen we first moved in it was a new world for us, we were used to going into a
lab where here where no one else could come in, whereas there, a big ÂŁ3 million
pounds worth of kit is in an open lab, so what weâve done weâve developed with the
university - and perhaps the university do this anyway - a way of managing the
Intellectual Property in that environment of an open space labâŚ. itâs actually the key
intellect that you bring to the experiment rather than the experiment itself thatâs
important, the way you interpret the data, then itâs less scary because you interpret
that data in your own space.â (Interview, Paul Jenkins: Structured Materials &
Process Science Expertise, Group Director).
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
23. The legal agreements were a key issue as there could be staff from the university, Unilever and
other outside organisations working in the same labs. The importance of trust is crucial to
relationships with universities. Issues around IP can be handled through legal agreements, but
common sense arrangements and an understanding of environment are also clearly important
and Unilever has been successful in the management of these.
âAnd thatâs an open lab, anyone can access that, Unilever has got funds, we got
grant funding to help it, the university owns all the hard assets; they clearly put
money into it too. And, itâs a centre that anybody can pay to access to use,
including our competitors and, once again, weâre very happy with that, not that
many of them do that we know of anyway, but we donât ask.â (Interview, Jon Hague:
VP Open Innovation)
The collaboration at the University of Liverpool has been important and is a good example of
the type of university relationships sought by Unilever. The Centre for Material Discovery, which
opened in 2006, is the result of a collaborative funding from the North West Development
Agency and the EU (Merseyside European Objective One) and the University. Since that time
Unilever has worked with the University on household products and this collaboration has
recently been confirmed as continuing until 2017. 10
â⌠what Liverpool do provide uniquely here is evoking that facility to be the best in
the world in its area and to be able to help us to be good enough to utilise it to its
capability. What we bring is the knowledge of our consumers and our brands and
our challenges to turn that stuff into things we can then turn into technologies that
benefit consumers, which I wouldnât expect a university to do.â (Interview, Paul
Jenkins: Structured Materials & Process Science Expertise, Group Director).
Unilever is seeking to extend and broaden the relationship with the University of Liverpool and
this could provide a model for other similar collaborations world-wide.
â⌠we are laddering up now to a deeper relationship with the Liverpool University at
large. So, weâre putting in place a similar group that meets regularly that looks across
the whole program that looks to foster relationships, that looks to push programs
where itâs relevant and I think in this particular case there is a lot to be said for
proximity; the fact that we are just across the river from a major university. Who cares
about their ranking in the world, the question is where have they got capability, where
are we able to invest together to get something world class going and thatâs the
conversation that goes on now with Liverpool and itâs at the vice chancellor level, not
at the individual site. And how many of those around the world can we do? Well,
probably 10 â 15 of those.â (Interview, Jon Hague: VP Open Innovation)
22
Access is the new ownership: a case study of Unileverâs approach to open innovation
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
24. âAccess is the new ownershipâ. This quote by Jon Hague, VP Open Innovation, resonates
throughout many aspects of Unileverâs approach to Open Innovation. The acceptance and
consequent action around the belief that greater knowledge, R&D and new technologies exist
outside of the firm in universities, small firms, consumers and through partnerships is central to
Unileverâs success. Access to knowledge â rather than control and ownership - drives Unileverâs
approach to innovation whether through partnering, spin outs, public private partnerships, with
NGOs or through co-creation. In this way risks are mitigated, costs are shared and Unilever
aims to stay ahead of the wave by bringing new products to new markets faster and more
efficiently than its competitors.
The multifaceted approaches to innovation involving outside-in, inside-out, co-creation and the
changing role of intellectual property result in the ability of Unilever to develop cutting edge
ideas and manage risk whilst building and maintaining relationships that are structured, as far
as possible, to deliver a beneficial outcome for all.
The importance and usefulness of proximity is highlighted. The collaboration with Liverpool
University is highlighted as being particularly fruitful and enabled by proximity. Physical proximity
leads to a deeper relationship that means that difficult issues are more easily managed. The
development of deep and creative relationships mean that difficult issues such as IP and
sharing a laboratory and the development of deep and creative relationships are seen to be
more easily managed when partners are physically close. This leaves us with the question of
how Unilever continues to extend and manage its knowledge network to areas where the firm
has no footprint. How can the benefits of proximity be replicated?
The case study also outlines the importance of inward investment on regional R&D. The ability
of Unilever to develop ties with other innovation anchors, such as the N8 universities and with
Daresbury Science and Innovation Campus has been enabled by inward investment, such as
that recently experienced by Liverpool University and at Daresbury.
Unilever has a strong position as an innovation anchor within the North West of England and
within the UK economy. Unilever, through its approach to innovation acts as a conduit for the
flow of new technologies and ideas into and out of the North West. The firm brings significant,
and potentially, beneficial influence on the capacities of all within it its network, including
academic and industry partners to take their innovations to the global stage.
23
Access is the new ownership: a case study of Unileverâs approach to open innovation
6. Conclusions
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.
25. 1
Introduction to Unilever, March 2011, http://www.unilever.com/images/ir_Introduction_to_Unilever_tcm13-
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2
Unilever Fact Sheet, http://www.unilever.com/investorrelations/understanding_unilever/factsheet/,
Accessed Jan 2012
3
Chesbrough, H. W. (2004) Managing Open Innovation, Research Technology Management, 47.1,
Jan/Feb 2004, p. 24
4
Chesbrough, H. W. (2003) The Era of Open Innovation, MIT Sloan Management Review, Spring 2003,
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Chesbrough, H. W. (2003) The Era of Open Innovation, MIT Sloan Management Review, Spring 2003,
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6
Chesbrough, H. W. (2007) Why Companies Should Have Open Business Models, MIT Sloan
Management Review, Winter, 2007, p. 22
7
Mather A. and Howells J. Innovation Anchors - A concept paper for Mini Europe.
8
http://www.ownproducts.com/ based in the USA, Accessed Jan 2012
9
http://www.unilever.co.uk/Images/Transcript%20of%20Unilever%20HIstory_tcm28-237513.pdf, Accessed
Jan 2012
24
Access is the new ownership: a case study of Unileverâs approach to open innovation
Design by www.g1creative.co.uk
Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.