To put its mantra “Brewing a Better World” into practice, Heineken runs crowdsourced competitions on its Innovators Brewhouse online platform, seeking the best solutions related to sustainability and product design. Heineken’s commitment to open innovation has paid off; within just three years of launching its “Brewing a Better World” strategy in 2010, over $1.1 billion in revenue was traced to new innovations.1
Open innovation can be messy and logistically challenging.2 So why does Heineken remain so committed to it?
The first reason open innovation is important to Heineken is category-specific; consumer-packaged-goods companies oftentimes find it difficult to change their fundamental product (a new Heineken “recipe” wouldn’t make it Heineken anymore), so instead innovate through packaging “makeovers.”3 Second, within a fiercely competitive/overcrowded beer market, Heineken views co-creation as a powerful “marketing tool” to build customer loyalty and keep Heineken top of mind.4 In fact, marketing products as “customer-ideated” has been found to enhance the product’s market performance by up to 20%!5
Last, but not least, this megatrend is important because of the economic implications; Heineken’s Innovators Brewhouse helps collect ideas for the fraction of the cost (and time) that it would traditionally take. Other CPGs are realizing these tangible benefits; Colgate-Palmolive paid a mere $17,000 for ad campaign ideas for Speed Stick, one of these which became its submission for a $4 million Super Bowl buy.6
What Heineken is doing:
Heineken’s open innovation development process holds true to their statement that “great ideas and innovative solutions can come from anywhere.”7
In its 60+ Design Competition, Heineken invited collaborators to reimagine the drinking experience for the 60+ consumer. The top six candidates traveled to Heineken Headquarters in Amsterdam to fine-tune their ideas with innovation experts at a two-day workshop.
One of the top three submissions, called the Easy Star Bottle, made it easier and simpler for older folks with limited dexterity (and many suffering from arthritis) to open and share a Heineken8:
The top three ideas (out of 150 submissions) came from innovators in Finland, Australia, and the USA,9 validating that the best ideas can indeed come from anywhere. Believing deeply in transparency in its product design process, Heineken makes everyone’s submissions viewable.
While many of Heineken’s open innovation processes thus far have focused on packaging design, longer-term Heineken will increasingly incorporate novel technologies. For example, Heineken’s FutureBottle, a crowdsourced idea, uses new temperature-sensing inks that indicate when a beer needs to be refrigerated.10
Heineken will increasingly combine open innovation with another megatrend, machine learning. BruVue, the winner of the 2018 Innovators Brewhouse Challenge, provides a data feedback loop to track beer volumes inside draft systems.11 This IoT solution will benefit many different stakeholders in the beer retail ecosystem, such as bars that can now track their beer inventory, and also distributors who can see customers’ inventory real-time and practice just-in-time supply. It’s particularly interesting that this innovation also helps Heineken’s competitors as they can get feedback on consumer product preferences. This is open innovation and co-collaboration at its finest.
A near-term recommendation is for Heineken to rethink its open innovation process. Under the idea generation vs. selection framework, most of Heineken’s Innovators Brewhouse competitions currently fall in the “Innovation Tournament” bucket:12
I would recommend that Heineken crowdsource more idea selection to collaborators as well. This will send a signal that consumers, not only Heineken executives, can have a voice in building the future of Heineken.
Additionally, I would recommend creating unique crowdsourcing challenges distinct from competitors who are also doing open innovation. A few years ago Budweiser developed a new beer called Black Crown crowdsourced from consumers.13 To differentiate itself, Heineken could support opportunities for in-person co-collaboration such as local community meet-ups hosted by passionate collaborators. As Heineken continues seeing high ROI on its open innovation efforts, they may be more likely to invest in new co-creation strategies like this.
In the longer term, I would also recommend that Heineken encourage more open innovation through bearing more of collaborators’ costs and risks of submitting a design. This could mean Heineken provides open access software to mock-up designs, or grants monetary awards for participation (rather than just to the competition winners). This would result in even more contest entrants and help Heineken generate the best possible ideas and solutions.
A couple open questions remain for me:
- How can Heineken tailor its open innovation processes more locally/regionally in the midst of growing competition from craft brewers?
- The Heineken brand is only 15% of Heineken’s volume14; should Heineken leverage its Innovators Brewhouse platform to innovate their 300 smaller portfolio brands? If so, how?
(Word count: 763)
1 Heineken. “Annual Report: 2013.” Heineken Website (2013).
2 King, A. and Lakhani, K. “Using open innovation to identify the best ideas.” MIT Sloan Management Review 55, no. 1 (fall 2013): 41-48. https://sloanreview.mit.edu/article/using-open-innovation-to-identify-the-best-ideas/
3 Hurley, R. A. “Cracking open packaging innovation.” Packaging World (September 2018). https://www.packworld.com/article/package-design/strategy/cracking-open-packaging-innovation
4 Drew, P. “Can crowdsourcing really crack corporate sustainability?” The Guardian (April 2012). https://www.theguardian.com/sustainable-business/crowdsourcing-crack-corporate-sustainability
5 Schreier, M., Nishikawa, H., Fuchs, C., and Ogawa, S. “Crowdsourced products sell better when they’re marketed that way.” Harvard Business Review (November 2016). https://hbr.org/2016/11/crowdsourced-products-sell-better-when-theyre-marketed-that-way
6 Boudreau, K. and Lakhani, K. “Using the crowd as an innovation partner” Harvard Business Review 91, no. 4 (April 2013): 61-69. https://hbr.org/2013/04/using-the-crowd-as-an-innovation-partner
7 Heineken. “Heineken unveils Ideas Brewery winners.” Heineken. https://www.theheinekencompany.com/media/features/heineken-unveils-ideas-brewery-winners
8 Steeman, A. “Heineken’s Ideas Brewery.” Best in Packaging (July 2013). https://bestinpackaging.com/2013/07/14/heinekens-ideas-brewery/
9 Bark, E. “Ideas Brewery 60+ challenge workshop.” Youtube video
10 Reynolds, P. “Heineken finds package designs through crowdsourcing.” Packaging World (August 2013). https://www.packworld.com/article/package-design/strategy/heineken-finds-package-designs-through-crowdsourcing
11 “BruVue raises 1 million in seed funding, wins Heineken Innovators Brewhouse Challenge as company gains momentum with its revolutionary beer ecosystem technology.” Business Wire (February 2018). https://www.businesswire.com/news/home/20180219005115/en/BruVue-Raises-1-Million-Seed-Funding-Wins
12 King, A. and Lakhani, K. “Using open innovation to identify the best ideas.” MIT Sloan Management Review 55, no. 1 (fall 2013): 41-48. https://sloanreview.mit.edu/article/using-open-innovation-to-identify-the-best-ideas/
13 Hines, A. “Budweiser Black Crown: stodgy brand’s crowdsourcing play for hipster cred.” Huffington Post (November 2012). https://www.huffingtonpost.com/2012/11/08/black-crown-budweiser-crowdsourcing-beer_n_2094434.html
14 Trentmann, N. “Heineken’s strategy in a stagnant beer market.” Wall Street Journal (August 2018). https://www.wsj.com/articles/heinekens-strategy-in-a-stagnant-beer-market-1533826082