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Lauren Sammel Associate Principal Scientist Kraft Foods-Oscar Mayer
MercoAgro September 20, 2012
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• Competitiveness -of, involving, or determined by competition
• Competition – the act or process of competing
• Compete - to strive consciously or unconsciously for an objective (as position, profit, or a prize) : be in a state of rivalry
Ability and performance of a firm, sub-sector or
country to sell and supply goods and services in a
given market
Ability and performance of other firms, sub-sectors or countries in the same
market.
in relation to
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• Oscar Mayer – The company
• Oscar Mayer Finding a Better Way Vision
• Open Innovation Introduction
• Examples of How Oscar Mayer uses Open Innovation as a Tool for Competitiveness
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• The company was founded in 1883 by Oscar F. Mayer in Chicago, Illinois
• 1919 – Headquarters move from Chicago to Madison WI
• 1981 - General Foods acquires Oscar Mayer
• 1985 - Altria, which Kraft is a part of, acquires General Foods
• 2007 - Kraft splits from Altria
• 2012- Kraft splits into Kraft Foods Group and Mondelēz International
• American meat company owned by Kraft Foods known for its cold cuts, hot dogs, bologna, bacon, and Lunchables products
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• 12 brands with more than $1 billion in revenue • 70+ brands with more than $100 million in revenue • 40 brands over 100 years old • 80% revenue from #1 share positions
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Major North American grocery company • Approximately 80% of its revenues from categories in which it has #1
market position • Highly-competitive retail presence • Strong innovation pipeline • Significant scale across categories
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Worldwide leader in global snacks • #1 Biscuits, #1 Chocolate, #1 Candy, #2 Gum • Leading market shares in each major region of the world • Strong presence in fast-growing developing markets and instant
consumption channels • Strong stable of global and local brands
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1. Columbia, MO – hot dogs 2. Coshocton, OH - bacon 3. Fullerton, CA - Lunchables 4. Newberry, SC – sliced deli meats 5. Kirksville, MO – bacon, sliced deli meat 6. Davenport, IA – sliced deli meat, Lunchables 7. Madison, WI – hot dogs, sliced deli meat 8. Woodstock, IL - pickles
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• We found a better way to use simple ingredients to improve our food and became the first brand to offer a complete line of meats that have:
• No artificial preservatives • No artificial flavors • No artificial color
• By using simple ingredients such as celery juice, half of our new products will have no artificial preservatives in 2012
• Sodium reduced by 20% across our portfolio, by end of 2012 • Our goal is to have 20% of our portfolio made with no artificial
preservatives by 2015
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Oscar Mayer Selects = Competitiveness
Competitiveness requires Technology
Technology requires Open Innovation
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• Leveraging the capabilities and expertise of others to deliver noteworthy and distinctive innovation
• Model that assumes for businesses to advance their technology they can and should use
• External ideas as well as internal ideas
• Internal and external paths to market
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Competition is fierce in today’s world - requires companies to
develop innovative products with short development times
Goals unattainable by single companies are attainable when
companies join forces
The world is a vast pool of resources.
Easy access with internet
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• Define strategy and priorities
• Decide which projects or parts of projects to execute outside
• Decide how and where to execute outside
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Want • What external skills, technologies, or resources
Find • How will these critical external resources be found
Get • How will the resources be accessed
Manage • How will the new partnership be managed
*Source-Reinventing Corporate Growth (Gene Slowinski, 2005)
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• The skill, technology, resource required for innovation that will result in competitiveness • Make-Develop a technology internally with internal resources (Closed)
• Buy-Purchasing or in-licensing a technology that already exists in the market (Open)
• Partner-Create a technology by joining forces with external resources through a strategic alliance (Open)
• A Want needs to be
Clearly defined and understood Prioritized Communicated
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Want Brief
• Many different forms exist
• Should contain at least:
• Business opportunity
• Technical needs
• What is already known
• What is in scope
• Ideal solution
• Solution must have
• Budget and timeline
When done well it is the essential element of problem solving
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• Going about finding a solution
• Great ideas are everywhere and can be
hidden in other industries and countries
• The challenge is uncovering the ideas
Small Firms
Internet Search Engines
Universities
Start-ups
Government Large Firms
Customers Vendors
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• Partners of choice • Have internal structure that allows for creating and maintaining high quality
relationships
• Can make decisions fast and efficiently
• Supports team members and provides them with the tools they need to perform well within the framework of the partnership
• Can identify disputes early and handle in an effective manner to resolve quickly
• Have a history and reputation as an excellent partner to work with
Resource Fit
Shared Value Creation
Strategic Fit
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• Employee Networks • Internal and external to the company in Industry, Academia, and
Government
• Beyond area of expertise
• The Internet • Wealth of information and leads for investigation
• Current Suppliers • Supplier challenges
• Open Innovation Partners • Your Encore
• NineSigma
• Innovia Technology
• And many more
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• Process for negotiating a mutually acceptable agreement
• Involves cross-functional teams
• R&D, marketing, procurement, legal, manufacturing
• Requires planning and collaboration
• Must identify and share value between partners
What not to do
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• Negotiation guide • Project description with deliverables
• Roles and responsibilities of each team
• Length of partnership and termination guidelines
• Confidentiality
• Intellectual property and right to use
• Field of use and exclusivity
• Often most challenging part of Open Innovation Framework for researchers • Training and practice essential
• Discussions and negotiations should occur before legal documents are drafted
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Intellectual Property
• IP can be used in multiple ways to create value for all
• It is not necessary to own IP for competitive advantage
• Rights to IP patents can be licensed and defined by: • Field of use
• Time
• Territory
• Royalty or royalty free
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• Establishing and maintaining working principle so both parties work and act as one team • Managements’ roles
• Researchers’ roles
• Sharing of information formally and informally
• Problem resolution
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• Defining and managing technical needs and challenges
• Monitoring and evaluating external activity
• Negotiation of agreements
• Leading and managing projects or portions of projects with external development
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• Inventing Delicious Framework • We innovate by integrating the competencies and best
practices of Knowledge Management, Open Innovation and Intellectual Property into the technology development process
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• Derived from the business strategy
• Review make, buy, ally and differentiate needs
• Develop Open Innovation Needs list
• To do well must have
• Devoted resources
• Cross functional buy in
• Continuous process
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Technology Needs
No Artificial Preservatives
Sodium Reduction
Simple Ingredients Consumers Recognize
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• Expanding our Supplier network to drive innovation and competitiveness
• Supplier Innovation Summit 2011 • Identified new partnerships to drive
growth
• 45 participating companies
• 110 Kraft participants
• 35 Open Innovation needs
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• Defining the Problem
• Identification of the aims and goals of the QuickScan
• Key Findings and Trends
• Highlights important findings and current picture of the developing landscape
• NineSigma Mind Map
• High level view of the search areas and technology groups
• Identify trends
• Highlight specific capabilities
• Find commonality/areas of overlap
• Specific Technology Examples
• Options for pursuit and further consideration
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• Long term food safety partner
• Partner of choice
• Strategic Fit
• Resource Fit
• Create shared value
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Oscar Mayer’s Strengths: • Consumer based insights • Experts in the chemistry of our food systems • Applications of ingredients in our food
systems • High standards for product quality and food
safety • Leadership and scale – lead the way in
implementing new ingredients like Lactate in the 1990’s
• Regulatory insight on final products especially USDA expertise
• High volume/long term customer
Purac’s Strengths: • Fermentation • Downstream processing • Food safety modeling • Ingredient solubility modeling • GRAS and USDA approval of ingredients • Specification development and scale up
of ingredients • Scientific/research depth • Proven long term partner
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• University of Wisconsin-Madison •Close proximity • Strategically aligned • Meat Color • Food Safety • Lipid Oxidation
•Bi-Annual research reviews and information sharing •Member of the Food Research Institute
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• First brand to offer a complete line of meats that have: • No artificial preservatives • No artificial flavors • No artificial color
• Half of new products in 2012 will have no artificial preservatives • 20% sodium reduction across our portfolio by end of 2012 • 20% of portfolio made with no artificial preservatives by 2015 • Continued evolution using simple everyday ingredients people
trust
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Step into your consumer’s worlds, listen and observe with open minds
• You will find competitive insight
Inspire those that you work with to dream
• Allow for thinking and playing outside the normal workplace constraints
• Rules and attitudes of organization can inhibit innovation
Create an innovation strategy
• Have a vision to work for and people will surprise you
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Embrace the global research community
Encourage and incent employees to build both their internal and external networks within and
outside our industry
Build skills in:
• Program management
• Partner orchestration
• Problem definition
• Relationship management
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Optimize internal and external resources to
• Have the right talent at the right time
• Develop technical strategies to deliver strategic plans
• Share risk outside your organization
• Accelerate innovation
View and treat external companies/universities as partners not adversaries
Think about your profit assets differently
• Manage IP portfolios to create numerous streams of value
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• “Many corporations are modern dinosaurs. They can choose to adapt to new challenges in front of them” –The Open Innovation Marketplace
*Source-The Open Innovation Marketplace (Alpheus Bingham and Dwayne Spradlin, 2011)
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