BM627 Analyse Innovation Activities of Unilever Assessment Answer
Managing Innovation in Business
The report aims to identify and analyse the innovation activities of Unilever, which is a consumer-good company co-headquartered in the UK and Netherlands. Formerly, the company was focused on developing ground-breaking products through open innovation. It means the company partners with external companies that can support the business expansion of Unilever. The organisation was mainly concentrated on partnering with technology start-ups, which can become valuable partners for Unilever. The Foundry launched by Unilever is aimed at working together with the innovative business ventures, so that it can tests the advanced technologies effectively. It is beneficial for the start-ups as well, as they can access the ventures of Unilever and improving financial capabilities. The company is highly focused on innovation and it believes that innovation is the only factor, which helps to manufacture great products loved by the customers. Therefore, innovation remains at the heart of Unilever's business. For improving the living standards of the customers, Unilever continuously focuses on science, product development and technology that have a positive effect on the environment and the community. The company innovates and develops all its products after identifying the changing needs and demands of the customers. The organisation has several capabilities for carrying out innovation throughout the organisation. The outstanding R&D team conducts research, develop new products and launch them in the market. The excellent research facilities in six countries enable the company developing ground-breaking products that attract customers. The research team does not only conduct research but also works with specialist universities and instructions for banging innovation. The product development team of the organisation transforms the innovative ideas int reality. Further, the R&D Deploy group accumulate data on local regulations, competitors and customer preferences for developing products duly. The organisation invests around €1 billion and has more than 20000 patents and application portfolio. The vision of the company is to develop a better future for the world. It also wants to share the vision with its partners and want to achieve it by working together with them.
The report also gives an overview of the industry in 2016. In 2016, the industry faced a rapid convergence of modern technologies, economic turbulence, changing consumer preference and demographics. It was found that at that time, millennials were more in number than baby boomers and showed a tendency toward using online shopping. Amazon gave a tough competition to the companies in the consumer good sector.
The aim of the report is to carry out an innovation audit of Unilever to analyse the history of organisational innovation, the present degree of innovation activities and future requirements of innovation. First, the report talks about the organisation and its history of innovation. Then, it identifies and discusses its current innovation capabilities and performance. Lastly, innovation in the consumer goods industry in the future is analysed for identifying the trends and future of innovation with the industry. Based on the potential changes in the consumer goods industry, Unilever would be suggested to bring the necessary innovation to the business.
The organisation and overview of the industry
The organisation and its innovation history
Unilever is a British-Dutch global consumer goods organisation, co-headquartered in UK and Netherlands. It offers foods products, beverages, energy drinks, ice cream, personal care products, cleaning agents and beauty products. It is the biggest maker of soap in the world and one of the oldest international organisations. The products of the company are available in near about 190 counties. It possesses more than 400 brands and €52 billion turnovers as of 2019. Unilever has been innovators, future-makers and pioneers for more than 120 years. Today, 2.5 billion people use the products of the company to look good, feel good and extract more from life. The brands provide it with a unique chance to make positive changes to expand the business and attain its purpose of making living sustainable every day. Some of the major brands include Dove, Lifebuoy, Sunlight, Knor and so forth (Unilever, 2020).
Unilever mainly started innovating by developing new great products for the existing brand portfolios. However, today, innovation lies in the way the new brands are developed. The company is required to review its strategy to innovation in the new background. The company has long held the belief that open innovation collaborating with external stakeholders like academics, start-ups and individual investors is major to remaining relevant in a growingly competitive and international world. It began its application of the concept with the efforts of research and development. In 2010, Unilever understood that despite having €1 billion of research and development and 6200 R&D staff, no all innovative ideas pertinent to the brands would develop from within the organisation. The company applied open innovation to remove feed storage of R&D and started carrying out innovation across brands by partnering with the outside world. In the past few years, the company extended its meaning of open innovation to incorporate reinforcing technology start-ups, which could become important associates for the brand. These start-ups concentrate on fields such as digital marking channels and enterprise technology. Pursuing these collaborations in the medium-term aim is related to open innovation. In May 2014, the company introduced The Foundry to collaborate with advanced start-ups, which can allow the organisation to experiment with contemporary technologies more speedily, effectively and efficiently. The Foundry draws the attention of start-ups by offering three major benefits including financial rewards for those, whose ideas solve the briefs posted by Unilever, marketing mentorship and access to the ventures of Unilever. This strategy provided start-ups with an access idea to work with a big corporation like Unilever and it offers the opportunities to see the modern technological innovation s more readily. To date, the Foundry gas not resolved the competition issues rather it focuses on bringing developing technological capabilities to the already established brands of Unilever. Since 2015, the company has acquired 18 companies that demonstrate the cost of its innovative approach. For example, the company spent $1 billion in 2016 for acquiring an e-commerce shaving organisation named Dollar Shave Club (Technology and Operations Management, 2020).
The organisation existing innovation performance and capabilities
Unilever believes that innovation makes new great products, which customers love. At Unilever, the R&D teams work on innovations, which will make a brighter future. Therefore, innovation is in the core of organisational ambition to develop sustainability. Technology, product development and science are core to the company’s plans to keep offering customers with high brands, which enhance their lives when having a constructive effect on the society and environment. It always focuses on finding new processes to improve sustainability. All the innovations are based on major understandings in what customers need and want. It aims at making products, which have the aim so that customers select them repeatedly. It works on a wide variety of projects integrating the search for innovative technologies with the rapid influence to respond to rivals, enter new markets and make goods sustainable. The products, Unilever develops by innovation whether by itself or through its wide partnership with leading academic institutions, scientists, specialist businesses and suppliers, play a critical role in its aim to make a constructive effect on the world around. Several of challenges of developing wellbeing and health, decreasing environmental effect and enhancing well-being health, enhancing nutrition, decreasing environmental effect will be fulfilled through technology and science and it wants to be at the head of the work. The innovation capabilities of Unilever are (Unilever global company, 2020):
Excellence from T&D lab to shelf- The innovation process includes three main steps research, product launch and development.
World-class research facilities- The six major R&D centres of Unilever include the UK, US, India, China and Netherlands work on technologies and science, which can be used to the product development process. The research aims to collect all the ideas and best thoughts from wherever they have a presence. Unilever does not just bring all the scientific expertise together, but it also works thoroughly with specialist organisations and universities. The company has a robust record for attaining advanced innovations, disruptive technologies, which satisfy customer needs more effectively comparing to any other alternative available and that can have a huge impact.
Product development for meeting buyers’ needs- The product development team takes its innovations in technology and science one step ahead, transforming innovative visions into goods, which customers need and want. Developing products and examining modern technologies occur until it convulsions the product specifications, completing a preparation so that it looks awesome and is steady when warehoused, for instance, packaging, developing that fit into the product format, please the customers and reduce the environmental effect. Next, it examines the product carefully for ensuring that it is safe and meet the performance standard, and then tests whether it meets customer expectations and needs.
Introducing new goods into the markets- The R&D Deploy group of Unilever collect local information like regulatory framework, consumer preference, competitors’ products and legal considerations, as they prepare a product for promotion into a new market. They perform closely with the co-workers in supply chain and marketing for ensuring that the new products can be produced properly and satisfy consumer needs.
Capitalising in a brighter future- Over 6000 R&D experts of Unilever are developing the brands by innovation. The company spends near about €1 billion in T&D every year and it owns a portfolio of over 20000 patent applications and patents.
Unilever has a vision of developing a better future for the world and its business and it wants its associates to share the vision. If a company has a novel technology or design, which could help Unilever to expand its business and address the challenges it has sets, t would like to collaborate with the company by open innovation. The USLP or Unilever Sustainable Living Plan is at the core of the business model of the company. The plan sets out the way Unilever is growing its business besides decreasing its environmental footprint and improving its constructive social impact. Innovation plays an important role in this. Therefore, the organisation wants effective technological concepts to become certainty fast for whoever understood them first. If a company is working on a program that matches the ambition of Unilever, the company wants to be a partner of that company.
However, the advent of digitally natural brands generates the query of whether the company should expand its meaning of open innovation ahead. The company can increase the aim of the Foundry to incorporate hatching developing consumer brands. It already directs the effort of Unilever to collaborate with external members. It should widen its directive. Further, in medium-term, it can draw the attention of start-ups to an incubator program by providing benefits, which is most important for the entrepreneurs. The Foundry can provide things such as marketing, discounted workspace, access to money and branding mentorship.
The industry in 2016
The consumer goods companies in the UK experience a convergence of constantly developing technologies, changes in consumer demographics, economic uncertainty and consumer preferences. As per the Deloitte Consumer Tracker, stance for customer activities in 2016 in the UK stays significantly positive with low-interest rates, low inflation, reducing unemployment and increasing wages, which are influencing purchasing power of consumers positively. The consumers in the UK have long signed of international problems like rising in the interest rate in the US, strike in Chins and the declining price in China. However, the rapidly changing patterns of consumer demands offer significant opportunities to the consumer goods industry in 2020 (the Deloitte United Kingdom, 2020). The statistics of the second quarter of 2016 on the worth of sales of FMCG (fast-moving consumer goods) in the UK show that the ambient foods are sold the most followed by alcoholic drinks, chilled foods, non-alcoholic drinks, personal care products, household, frozen food, confectionery and pet care and pet food. The biggest sales value of the ambient food category was 22 billion euros and the sales value of the alcoholic drink was 15.2 billion (Statista, 2020). In the middle of 2016, Amazon entered the consumer goods industry of the UK and offered fresh food and that too with a same-day delivery option. It increased competitiveness. With digital networks offering the retail development in grocery, the consumer goods retailers and brands have an essential to understand it right. With the fine margins in the category, retailers were applying their data to direct and customise the customer experience while brands were using a paid search on retail websites to attract consumers toward their products on the full online shelf. Innovation was evident in the shopping style of customers from consumer goods. In 2016, mobile commerce started to increased rapidly, mostly during the festive season. However, in terms of marketing, it offered a very restricted variety of foods view. Brands needed to stand in the product field, not the hundreds, which the shoppers generally absorb when going to a supermarket walkway. By influencing sponsored goods, companies could increase their product visibility. Amazon's hose brands and pricing imposed significant challenges to online brands. Auto re-ordering was an innovative step in the consumer goods industry in 2016 that allowed customers to click on the box 'subscribe and save', which was extremely useful for busy shoppers. In the same years, millennials were the larger group comparing to baby boomers also. As the first generation was attached to the internet closely, their expectation was high from the online retailers. As per the data of the 3rrd yearly Browsing & Buying Survey 2016 that was conducted with 600 UK online customers to decide the usage and attitude toward online grocery websites, it was found that 60% people prefer buying products online. The sales rate of supplements and vitamins increased to 34% from 23% and the number of buyers of wine and beer increased to 37% due to online shopping. The most important factor was pricing and ingredient label, which was preferred by 39% grocery shoppers, 30% baby care and 24% health and beauty products (Criteo, 2017).
With a rapidly globalised world and increasing marketing competition, it has become critical for organisations to adopt continuous innovation for ensuring its competitive position in the marketplace. Unilever if focused on open innovation and its R&D team works with different start-ups, which can help the firm meeting its customer needs. It is found that in 2016, the consumers became inclined toward online shopping and in the same year, Unilever acquired an e-commerce shaving company, which helped it understanding and satisfying the emerging needs of the consumer successfully. However, currently, the company is suggested to allow the brands in the Foundry program, so that they can tap into the brands like Dollar Shave Club and include the mentorship for accessing pertinent subject-matter experts.