The importance of internal alignment for open innovationUnilever logo

An interview with Graham Cross, Collaborative Innovation Director at Unilever, June 2006

By Vareska van de Vrande

Graham Cross is a Collaborative Innovation Director, which is a new role in Unilever. This role comes close to Open Innovation Director, but is not solely focused on R&D, and is rather focused on getting the maximal benefits for Unilever of having Unilever collaborate with providers of any kind of capability in the advantage of our innovation performance, such as other companies and academic institutes.

How did this new role emerge?

I have a PhD in Organic Chemistry and have had several roles within Unilever before becoming collaborative innovation director. During my last role I developed a view towards the fact that collaborating with other companies is mainly a mindset issue (how you set your targets, how you decide what capabilities you want and how you decide where to look for them). According to me, there is a continuum between doing that in an open innovation classicum (research mode), which is the more academic part versus supplier innovation, which is much closer to the market. This requires a single approach towards collaborating and open innovation, which calls for the R&D management and Supply Chain Management to work as one; selecting a partner is done partly because of their capabilities and partly because of their reliability as a business partner, which is much closer to procurement than it is to R&D. As a result of that I was nominated as the collaborative innovation director.

How was at that time the attitude within Unilever towards this kind of collaboration?

No different to what you see elsewhere. If you look at Connect and Develop project within Procter & Gamble: they say it was a big culture change, a big change in the way of working also inside P&G to be able to move more towards more collaborative and open innovation. The same is true for any company. The shift in the world is about the fact that the small enterprise has become increasingly a more and more important source of capabilities, relative to the old situation where the majority of the R&D money was being invested in the big companies. There are also other things out there such as globalization. What I first thought about globalization was: “big companies ruling the world”. But I think the opposite is true, what you now see is that networking power of an individual is almost as big as the networking power of a big company. Everybody has Google, everybody has internet, and everybody can get to everybody quickly. And information flows around the world very quickly. You can manage as a one-man company and network very effectively, whereas in the old days you had to be big to be able to get the information to flow.

You have said something about how Unilever works together with suppliers. In what other ways does Unilever get access to external technologies (corporate venturing, VC investments, R&D consortia, etc)?

There is a whole scale of these things; if you go to ideas4unilever.com (which is our corporate external website for this kind of things) you immediately get a bit of a feel for what’s going on. We have Unilever Ventures and Unilever Technology Ventures and both institutions provide opportunities for people either with total business systems to seek investment from Unilever, or people with specific technology looking for investment. So we have the overall business channel for co-investment as well as the technology channel. What we also do of course in addition to our internal R&D is that we invest in external respected institutes like Wageningen Center for Food Science, and many other examples. I think we have a broad scale of these things. Open Innovation is not new, it’s just the innovation performance of big companies who have really embraced open innovation well appears to be favorable.

You could also ask yourself the question: if everybody is working with everybody everywhere, than where does competitive advantage come from? In the end after a certain cycle of this, what’s going to be the thing we visit next? I think you have to start asking yourself that question now, also in order to be ahead of the game next time. And in the end it does come down to your own identity, your own core competences, and your ability to envision the future, and then certainly in the future you have to then find the right place to join in to create that new future. Without vision nothing happens.

What is the importance for Unilever of intrapreneurship? How does Unilever handle the Not-Invented-Here syndrome?

In a big company inevitably (Unilever has more than 200,000 people), it’s possible to be at the center of that and be surrounded by so much that you can’t see the world. Being big is something you have to manage well to prevent yourself from just being tied up and internally focused. Next to that, because you’re big, then certainly in your key areas you have really great experts. Many of those experts are some of the best people in the world, in their respective areas, and very well respected outside the company. If an idea comes up or if a technology becomes available, you want to go to your leading expert to ask the question: do we need this? But if that leading expert is already one of the greatest experts in the world in that topic, then probably, they’re ahead of the game and there’s actually nobody else around who can judge. So there is a danger that this wonderful phenomenon called not invented here can crop up. That’s inevitable. And I think again P&G said the same thing: it’s just too easy as a reflex to reject stuff that other people are doing. “How can that one man working in his garage behind his house have a better idea than I do? I am the leading player in this field – how is that possible?” The problem is that in so doing you start to shut your eyes for the capabilities of others. Then, in the end you just remain good at what you can do now, but you never go beyond that. I think there is in every company, in every culture, the problem of not invented here, actually it’s got a lot to do with human pride: “I am proud of being good, therefore how can you be better?”

But I think life is a learning process, and although it’s hard to say on a scale from 1 – 10 where Unilever sits on that scale of being externally oriented versus being internally oriented, we’re certainly not the worst. And there are people within the company who are very highly externally oriented which is wonderful and you see the results, but there’s no doubt that we can do more. And there’s no doubt that as a result we’ll be better.

How does Unilever motivate its employees to become more externally oriented?

I think there’s a combination of exposing people and making sure people get exposed to what’s going on outside the company. There’s a quite conscious effort to make sure people see the things that are happening outside. That’s one thing. And of course people who do then themselves have an externally oriented mindset will pick up very strongly on the signals and start to do something with them. On top of that, clearly there are ways of making it more concrete in people’s targets to force the issue by actually saying: “I’m sorry but it’s now part of your job to have thoroughly looked outside before you decide to do something inside”. So you can actually force the issue. Of course the ultimate measure would be to take away the internal resources, but my personal believe is that that’s not the right way forward, because first of all you create negative energy, which shouldn’t be there. Secondly, there is a great deal of skill involved in choosing which external capability is the right one for you and how do you do that without people who are leading edge in the field? Hence, in my opinion, what’s happening is that the roles shift from being internally focused to more externally focused and I suppose the word you would look for is “brokerage”. People would now be not only great in their technology area, but being great at brokering external technology that they understand into the company. I think that’s a shift. If I were to give you a mental model I would say instead of being at the center of Unilever looking out and being surrounded by Unilever so it’s tough to see the outside world, we want to put people on the periphery of Unilever so they can always see the outside world but can also always look in to see Unilever and they can therefore be the bridge in both directions.

If you put people on the periphery of Unilever, how do you manage the balance between being connected to Unilever on the one hand and looking outside on the other hand?

I don’t see a conflict there. What I see is that your job is to find the best technology there is, relevant to Unilever’s brands and innovation plans, and to find the best way of bringing that to Unilever. Sometimes the best technology there is can be found in your own research lab, sometimes not. The key point is when you choose for the technology that comes from the inside to be doing that conscious of which alternatives there were outside. And not just to be doing because that’s what we do; that’s not good enough. I think that’s the point. Essentially, what you’re doing, is saying: “I insist on being benchmarked versus external standards and I will take the best I can find and not just the one that happens to be internal”. The other point, is that if there’s technology available out there, and I choose not to incorporate it because it’s not as good as what I have then I am not at a competitive disadvantage, because what I had was better. But if I choose not to take it because I didn’t look, then it could easily be the case that I am at a competitive disadvantage in the market, because I will launch a product pointing in a given direction, with given functionality, and somebody else can then easily acquire better technology outside and beat me in the marketplace. Therefore, a fundamental matter of being the best, being cutting edge with your products, is that you are choosing the best technology – wherever it comes from.

Are these technologies always available?

Sometimes they are, sometimes you’re looking for someone who has the knowledge to develop the technology with you. What you recognize in a partner might sometimes be their skills, rather than the thing they have already achieved. And if those skills are highly relevant to what you yourself want to achieve then you might be able to find a way of working together to deliver.

Another question that came up is: what if a researcher has a brilliant idea which really doesn’t fit the business, what does Unilever do to support these ideas and maybe further develop then outside the company?

This comes back to the ventures area: one sort of business which could get funded through Unilever Ventures is internal people if they have ideas that don’t fit Unilever strategy or brands. A nice example is Rituals, a brand set up by a senior marketer of Unilever. At the time he came up with the idea, it didn’t fit with Unilever’s strategic plans but Unilever agreed it was actually a great idea. And despite it being an external company, Unilever is still involved in it.

These kinds of things are however relatively unusual. This doesn’t happen all the time because you have to maintain focus on executing the company strategy. But there are examples and this is one of them. Intrapreneurship is in that sense a fine balance, because in the end if you have your senior leadership design a strategy and then within that strategy design concrete plans for what you want to do, then the last thing you want to have happen is to have everybody working on something else. Consequently, there has to be a high level of discipline: at a certain level in the company we decide what we’re going to do and others then have to do it. But that mustn’t make the company blind to alternatives. I think the key point is to have an appropriate opportunity for people who want to bring ideas to the table and in case these ideas are seen as being very interesting, then to have enough space in the organization where a little bit of pre-work can be done, some initial assessment. I guess you can argue that strategy survives until somebody has a better idea. Don’t forget that Nokia used to make rubber boots! (It probably wasn’t in the strategy plans of the rubber boots company to move into telecom).

Sometimes seeing an opportunity changes your strategy. And you would not see a strategy change that is so radical in a company like Unilever, but might see a specific idea create a pocket of activity and that that one day grows out into a big business. And it might grow out into a business that doesn’t fit Unilever and gets sold. That’s no problem, but you need to maintain enough focus inside the company. In the areas that are synergistic, in the areas that benefit from each other.

What do you see as the critical success factors for open innovation.

1. Knowing what you want and aligning the key functions of marketing, supply chain and R&D around that.

There’s a big world to search in, so if you don’t know what you’re looking for, you’re going to have a pretty full day. I think there is a fundamental challenge in achieving a high degree of alignment inside your company across functions around what it is you think you’re looking for. If that’s not in place, then the rest is going to be noise. If you got that in place, and shared and understood, then I think you have got to hold on to it for a while. You can’t switch strategies every two years in an open innovation environment, because the outside world won’t know where you want to go. In fact you won’t know it yourself either, but it will be even tougher for the outside world.

2. Be effectively networked.

You need to start to develop a culture internally which is appreciative of external capabilities. It needs to become almost a matter of pride to be the one who found something wonderful outside. Historically research labs were judged on the number of patents they delivered, which is very internally focused. Maybe now you have to judge a research lab on the number of patents it finds and manages to get access to. Some of the classical metrics were opposed to open innovation, pointing people towards doing experiments with their own hands in a small corner not telling everybody and patenting it.

3. Being professional in building deals.

In the end, what you’re doing is taking something that somebody else owns and finding a way of getting to use it. In this case it all comes down to doing the right deal. I think within that, you need to start to become the partner of choice, the one that people do want to work with. That’s important because they will come to you with ideas and keep coming, and the opposite is also true, if coming to you with an idea is a bad idea than you don’t do it anymore. And you go to somebody else and that’s a competitive disadvantage.

4. Senior commitment in the company around the things that you’re looking for.

This is especially important when you actually find a potential partner. In that case, you find very quickly that Unilever being big and many of the partners being small, you can easily get a situation where relatively junior people within Unilever are dealing with the CEO of another company. And that’s weird because the guy on one side of the table can decide everything on his own, because he’s the CEO of the company. The guy on the Unilever side of the table might have several decision layers on top of him, whom he can actually only advise. Therefore it becomes really important if you’re going to shake hands and do a deal that the guy inside the big company is extremely well aligned with his bosses above him.

5. Being able to build relationships that are able to survive the turbulence that is automatically created thought innovation.

A relationship exists of two parts, on a contractual level and on an emotional level, the latter of which is the more important in the case of innovation, where you don’t know what is going to happen. This is not about straight forward procurement; this is about buying something which doesn’t exist yet, and might never exist. For that reason, there’s a different skill involved.

Within Unilever this process is managed through the Want Find Get Manage (WFGM) approach, which comes originally from Hoffmann-La Roche and comes down to being clear about what you want, before you go out to find it and search for partners and before you get the deal or build the deal and then manage the consequences. The WFGM approach gives a great opportunity for a high level of internal alignment as you go through from your innovation strategy through to deciding the targets you aiming for and then bringing the capabilities into the company. Within that, good internal discipline is needed around how you build deals.

website: www.unilever.com