For years multinational consumer food conglomerates such as General Mills have relied on large mergers and acquisitions to help boost sales and expand into new categories. Acquisition targets such as Pillsbury and Yoplait have come with their own legacy, established customer base, and production capabilities, allowing General Mills to increase shareholder value and reduce competition nearly overnight. However, as a plethora of startups continue to flood the consumer packaged food industry (one with a low barrier to entry) General Mills has expanded its acquisition sights to include early stage startups looking to disrupt a particular category and appeal to a changing consumer base. Not only do these ambitious entrepreneurs offer General Mills a new revenue stream and attractive investment, but they are increasingly being leveraged as sources of open innovation used to drive overall brand strategy and product development.
In 2015 General Mills established 301 Inc., an internal venture capital fund aimed at funding and guiding new consumer food startups.  Previously focused on furthering the ideas of its own employees, 301 Inc. was redesigned to make incremental investments in external startups with the prospect of General Mills eventually acquiring the startups outright and bringing the founders on as employees and stewards of the brand. As evident in the table below, many of 301 Inc.’s investments are in companies that offer unique, niche products that are outside General Mills’ grain-based core product lines, Good Culture’s Cottage Cheese Snacks and Farmhouse Culture’s Sauerkraut and Kimchi. By taking relatively small investments in many different startups, General Mills can test a range of innovative products with established operations, marketing, and customer bases.
Given the potential high reward these incremental investments and source of innovation, it seems as if General Mills will continue 301 Inc.’s program into the foreseeable future. Acknowledging the importance of innovation to his company’s success, General Mills CEO Jeff Harmening recently stated, “The reason we are able to outperform our peers right now is because we have some really good innovation.”  This sentiment echoes 301 Inc. Vice President, John Haugen’s belief in General Mills approach to open innovation when he stated, “We believe we can meet consumer needs faster than ever by combining the vision and passion of entrepreneurs with General Mills’ extensive capabilities.” 
Despite the benefits of 301 Inc. to General Mills, the company is aware of the inherent risks and challenges that exist when a large 100-year-old behemoth acquires a new startup. In 2016, General Mills acquired three-year old Epic Provisions, a meat-based protein bar company, for $100m. Founded in 2013, Epic reached annual revenues of $20m in three years with only 12 employees. Despite being a wild success by any standard, the Epic team provided some pushback in assimilating into the General Mills larger organization, one in which their company was now just a small piece of.  While the issues with the Epic team have been resolved, General Mills will undoubtedly face more challenges that result when trying to have small and dynamic startups join the operations and adopt the mission of a much larger parent company. To succeed with this model moving forward, General Mills must find a way to anticipate these challenges in the coming months.
Once General Mills solves the culture shock challenge in the short term, the company will look to discontinue some of its more outdated and declining brands, especially as the new investments through 301 Inc become more profitable.  Over time, General Mills can adopt a cyclical approach for growing new startups with the intention of replacing products or sub-brands with declining revenues. By taking risks now to expand their 301 Inc. program, and establishing practices to deal with the inherent challenges of investing and advising early stage, successful startups, General Mills will be able to maintain a competitive advantage in open innovation in the future.
For future analysis of General Mills’ approach to open innovation, the following two questions should be explored:
- Given the extreme focus on external ideas to fuel innovation, should General Mills maintain an R&D department at all? If so, what should their role be?
- As more large consumer food companies adopt this model, how does General Mills keep a competitive advantage?
 Star Tribune. (2018). As yogurt options multiply, General Mills, rivals strive to innovate. [online] Available at: http://www.startribune.com/general-mills-rivals-strive-to-build-a-better-yogurt/498055251/ [Accessed 13 Nov. 2018].
 Back, A. (2018). The Newest Venture Capitalists: Food Companies. [online] WSJ. Available at: https://www.wsj.com/articles/the-newest-venture-capitalists-food-companies-1533288601 [Accessed 12 Nov. 2018].
 Inc.com. (2018). Can a Startup Transform General Mills? The Saga of Epic Provisions. [online] Available at: https://www.inc.com/magazine/201811/tom-foster/epic-provisions-general-mills-meat-snacks.html [Accessed 13 Nov. 2018].
 Fitzpatrick, A. (2018). Start-up Incubators Will Help Fuel Innovation for These Consumer Giants — The Motley Fool. [online] The Motley Fool. Available at: https://www.fool.com/investing/2018/09/07/start-up-incubators-will-help-fuel-innovation-for.aspx [Accessed 13 Nov. 2018].
 Gasparro, J. (2018). Food Executives Look to Better Integrate Smaller Brands. [online] WSJ. Available at: https://www.wsj.com/articles/food-executives-look-to-better-integrate-smaller-brands-1538218800?ru=yahoo?mod=yahoo_itp&yptr=yahoo [Accessed 14 Nov. 2018].
 Finance.yahoo.com. (2018). Selling a Legacy: Food Companies Seek to Boot Their Dated Brands. [online] Available at: https://finance.yahoo.com/news/selling-legacy-food-companies-seek-110000563.html [Accessed 13 Nov. 2018].