1. Lise Berg Kildemark
Open Innovation, Suppliers
Arla Strategic Innovation Centre
Open Innovation in the Food Industry, Copenhagen, 28 May 2014
Confidential. Only to be distributed to participants at the event

2. MILK INTAKE
12.5+ BILLION KG
TURNOVER
10 BILLION EURO
LOCATIONS
IN THE WORLD
PEOPLE
19,000+ EMPLOYEES
12,500+ OWNERS
COOPERATIVE
SINCE 1880
BRANDS
MAIN GLOBAL

3. 02 June 20143
Creating the future of dairy to bring
health and inspiration to the world,
naturally
Vision
To secure the highest value for our
farmers' milk while creating
opportunities for their growth
Mission
Our vision, mission & strategy 2017
The foundation for everything we do
Deliver the growth
Develop
the core
Do it faster, simpler
and leaner
3 strategic axes

4. Cooperative mindset
At the heart of Arla’s identity
02 June 20144
GOOD GROWTH is our identity
We want to grow and we care about how we do it

5. Cooperative growth at Arla
5
Executed in multiple ways
START-UPS
COOPERATIVE GROWTH
SOLUTIONERS
SCOUTING
CROWDSOURCING
COOPERATIVE MERGERS
UNIVERSITIES
STRATEGIC COOPERATION
CONTRACTRESEARCH
ENTREPRENEURS
CONSORTIA
CATEGORY MANAGEMENT
OPEN INNOVATION
JOINT VENTURES
VOLUME SUPPLIERS
ARLA FOODS EXECUTIVE ADVISORY BOARD
INDUSTRIAL ASSOCIATIONS
OUT SOURCING
CUSTOMER GRREEN HOUSE
SMEs
LARGE ENTERPRISES
CO-DEVELOPMENT

6. A structured approach to external cooperation
We call it…
02 June 20146
OI AMBITION
1. Scale up external cooperation as a key lever to the growth of Arla
2. Work with best-in-class external partners

7. Innovation & Open Innovation is EVERYWHERE
7
…along the entire value chain
…and everyone plays a role
Farms Dairies Consumers

8. It is not new
02 June 20148
…..but now a strategic priority
…..and with structure, alignment & governance

9. Innovation at Arla
02 June 20149
Profitable SELL
implementation DO
of en idea THINK
Speed
Cost
How we define it
Differentiation
INCREMENTAL RADICAL

10. A paradigm shift and a game changer
02 June 201410
The lab is my world The world is my lab
Inside Outside
Driven by change, technology and opportunity

11. 02 June 201411
A change of mindset
How can we create and deliver
maximum value most effectively,
regardsless of corporate boundries
We must own everything, invent
everything, gain everything
Inside Outside

12. 12
Empathy
Sharing
Trust
1+1=3
Think ‘WIN-WIN’

13. A structured but simple approach
13
The Arla Open Innovation steps
WANT FIND
GET
MANAGE
Inside Outside
Adapted from The ”Want, Find, Get, Manage” Model of PhD Gene Slowinski, an expert on alliances and co-author of the book The Strongest Link

14. Who are the external players?
14
Development stage
Early Mature
Mid
Business
needs
Benefit
areas
Focus
PRODUCTS &
SOLUTIONS
Consumers
Consumers
Consumers
Consumers
Consumers
Consumers Suppliers
Start-ups &
entrepreneurs
Universities &
consortia

15. Supplier segmentation
Work with the right partners - Work with the partners right
We use a segmentation model to help us identify
the best-fit relationship with our suppliers15

16. Commercial fit and innovation fit goes hand in hand
…for successful and sustainable supplier relations
COMMERCIALFIT
Fitbasedoncommercialobjectives
INNOVATION FIT
Fit based on value contribution & culture
Low High
VOLUME
SUPPLIER
Interdependent
relationship
STRATEGIC
PARTNER
Collaborative
relationship
STANDARD
SUPPLIER
Standard
relationship
SOLUTIONER
Targeted
relationship
High
Medium
Medium
’LIMBO’
Relationship
to be clarified
START-UPS
16

17. Think different
17
Find new ways of innovating and cooperating

18. Opening our doors – annual supplier inno fairs
18
Arla Closer to NatureTM Supplier Inno Fair 2012

19. Opening our doors – Arla Foods Global Innovation Centre
An enabler for excellence in cooperative innovation and knowledge sharing
1. Using the Danish Food Cluster as a stepping
stone
2. Designed for seamless collaboration with
external parties – open space and project rooms
3. Access to and testing of 3rd party technologies /
equipment
4. World class innovation environment – attractive
to talents
19

20. The additional outcome of Open Innovation
Fostering cooperation internally
Source: Forrester report commissioned by InnoCentive, Feb. 2012. Survery on open innovation with decision makers from large companies in US, Germany and the UK
20

21. Does it work?
According to our suppliers…
Source of quotes: Master thesis on Arla and colloborative innovations. Students from Aarhus School of Business and Social Science, 201321

22. Our best results are
created in cooperation
with others….
THANK YOU
likil@arlafoods.com
+45 22 72 85 94