Is Crowdsourcing a Sustainable Value Proposition For Innovation: A Unilever Case Study

Point of view on the impact of open innovation on Unilever's sustainability agenda

Has crowdsourcing turned into a barrier for transformative thinking and operational excellence? Many open innovation and crowdsourcing examples have been documented across fast moving consumer goods (FMCG) and are credited with sparking innovation spurring the development of new products, services, and business lines. Over time, crowdsourcing has been leveraged across many traditional organizational functions from R&D to marketing to supply chain and manufacturing.

Partnering for Sustainability:

With the stated goal that ‘By 2020 we (Unilever) will help more than a billion people take action to improve their health and well-being’1, Unilever has turned to the crowd for assistance with their sustainability agenda.

Exhibit 1 Unilever Foundry Open Innovation Platform2

Through the Unilever Foundry2, Unilever has developed a platform to collaborate with innovators globally in developing opportunities across six distinct areas:

  1. Products & Ingredients
  2. Consumer & Market Intelligence
  3. Marketing, AdTech, & e-Commerce
  4. Social & Sustainability Tech
  5. Enterprise Tech
  6. Disruptive Business Models

Given the magnitude of this task, conventional wisdom holds that although Unilever is one of the world’s leading FMCP companies, making and selling around 400 brands in more than 190 countries3, it needs to rely on the input of willing partners. Unlike traditional crowdsourcing prompts focused on a specific task, as seen by Frito-Lay’s Do Us a Flavor Contest4, Unilever is looking to connect and collaborate with mature startups working on industry-disrupting business models.

Setting Up for Success:

As a result, Unilever has shifted steps of their product development process (ideation, concept, and prototyped) to external partners while focusing efforts on commercializing proven applications. It can be argued that this change in innovation responsibility frees up internal resource capacity to focus on Unilever’s core competency, which is to bring high quality consumer friendly products to market at scale. On the contrary, this may be viewed by outsiders as an apparent step to removing some of the innovation responsibility from internal personal, which in turn decreases the overall culture of innovation.

In the short term (next two years), my belief is that Unilever will use this open innovation platform as a pipeline to generate ideas, business models, and ventures that will connect Unilever with entrepreneurs around the world determined to improve consumer’s health and well-being. However, I am not as bullish on their ability to achieve the stated goal of helping a billion people act on their health by 2020 because it requires the following factors to hold true:

  • Large and consistent pipeline of sustainable ideas that enable individuals globally to act in a dynamic marketplace
  • Rapid commercialization or implementation of these ideas and opportunities
  • Tight portfolio management, resource allocation, and project prioritization
  • Incremental opportunities which drive additional action as compared to the status quo

To counter these concerns, Unilever has encouraged both brand and function teams to add briefs to the Unilever Foundry which ‘outline problems that need solving, or opportunities we are seeking to grasp.’5 Likewise, in order to encourage entrepreneurial talent to work on these briefs they are engaged typically in paid pilot programs that are refined and built through in an incubator approach.

In the medium term (two to ten years out), in order to maintain and expand this open innovation capability Unilever must become proficient in a handful of areas. First, the corporate, innovation, and sustainability strategies must be aligned and integrated in order to continue to fund and allocate resources to open innovation. Second, managing an open innovation platform long-term requires a dedicated team of resources skilled across a handful of fundamental competencies including – innovation, consumer insights, technology, and market trends. These skills are essential to being able to develop a criterion for vetting news ideas, prioritizing partnerships, and ensuring alignment to Unilever’s mission and culture.

Future of Open Innovation:

While largely successful since it’s inception in 2014, the Unilever Foundry has ‘launched over 100 pilots with start-ups and Unilever brands’5, it brings to question whether this approach to innovation is sustainable or rather a short-term enabler. Considering the cost benefit trade-offs, between creating a world-class innovation organization with the supporting tools and capabilities in house to one that manages and encourages external innovation, I am curious to see which approach is more advantageous in the long term.

In reflecting on Unilever’s approach to solving their sustainability agenda, I am left asking myself the following questions:

  1. Is crowdsourcing an enabler or impediment to innovation and what are the constraints?
  2. Is there ever too wide a net (brief/question) for open innovation?
  3. Is the power of many truly greater than the power of one, when the ‘one’ is an industry leader?

(764 words)

1For the Unilever Sustainable Living Plan outlining the goal of separating growth from the environmental footprint, see Sustainable Living. Available at: https://www.unilever.co.uk/sustainable-living/.

2To view the Unilever Foundry crowdsourcing platform, see Innovation Through Collaboration – Foundry Unilever. Available at: https://foundry.unilever.com/#Home.

3For Unilever 2017 10k, Available at: https://www.unilever.com/Images/unilever-annual-report-and-accounts-2017_tcm244-516456_en.pdf.

4To understand the impact of targeted crowdsourcing though Frito-Lay’s Do Us a Flavor Contest, see Forbes (2014). Crowdsourcing campaign appears to boost brand perception for Lay’s. Available at: https://www.forbes.com/sites/brandindex/2014/10/11/crowdsourcing-campaign-appears-to-boost-brand-perception-for-lays.

5For a series of successful pilots launched in conjunction with Unilever through the open innovation platform, see Consumer and Marketing – Foundry Unilever. Available at: https://foundry.unilever.com/case-studies.

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5 thoughts on “Is Crowdsourcing a Sustainable Value Proposition For Innovation: A Unilever Case Study

  1. Thank you for providing insight into Unilever’s approach to innovation and crowdsourcing tactics. I was surprised to learn that Unilever outsources their product development process to external partners, and instead has decided to focus on commercializing proven applications. Given that information, I found your question, “is crowdsourcing an enabler or impediment to innovation and what are the constraints?” to be thought provoking.

    In response, I would argue that crowdsourcing is an enabler to innovation. The value of crowdsourcing is the ability to generate a large quantity of diverse product ideas. It also allows Unilever to leverage the flexibility of its partners, mainly mature startups, who are focused on developing disruptive products. In addition, by outsourcing this component, it gives Unilever the capacity to pressure test the various ideas it receives while focusing on its core competency, which is bringing products to market on a global scale. While a possible constraint is that this may lead to a less innovative culture at Unilever, I believe this can be avoided as long as Unilever continues to emphasize a partnership structure and collaborative nature with these external third party startups.

  2. As you mentioned, Open innovation proved to offer Unilever a cost-efficient solution to leverage on the company’s core capabilities of commercializing proven applications. However, regarding the three interesting questions you posted, I believe the main question to answer is what kind of innovation Unilever wants to apply. In other words, is Unilever looking for really groundbreaking solutions that open “blue oceans” spaces or, as most CPG companies, are they looking for incremental and fast innovations (i.e., product improvements, packaging re-designs, etc.)? If they are targeting groundbreaking solutions, I believe that, as you stated, crowdsourcing would limit the innovation capabilities due to the difficulties of aligning an externally sourced radical innovation with the company’s structure and of equalling the power of the solution offered by “one” industry leader. For incremental and fast innovations, I think that crowdsourcing, especially when sourced by mature start-ups, is a perfect way to reduce the time-to-market and to reliably develop products at a lower cost.

  3. I really like this idea, but why would someone with an idea go to Unilever? Would the individuals be rewarded in any specific way?

    How would they filter these ideas if they have such a huge inflow? What type of constraints would they put on the application process?

  4. As one of the oldest FMCG companies out there, I find this topic of Unilever outsourcing their product development process very interesting. Companies like Unilever have traditionally tightly held their secrets. It’s great to see them out there collaborating with startups to come up with new ideas. I agree with your point about alignment between innovation and strategy. Without direction, these products could very well end up in the zone. One way to make this work, to your question about crowdsourcing being an enabler/constraint, is to buy ideas that are already developed and fit on the broader strategy map. Unilever’s purchase of Dollar Shave Club illustrates a way to bring more developed ideas in house (http://fortune.com/2016/07/19/unilever-buys-dollar-shave-club-for-1-billion/). This way, a smaller, more nimble team can source the idea, take on the risk to develop it, and Unilever can bring it in house in order to apply their management expertise at scale. There seems to be a lot more growth left in this space!

  5. Great article! To your question about constrains and open innovation as a enabler, I believe that even though there are several benefits in using crowd-sourcing as an innovation driver, I believe that innovation, in this case, can be somewhat limited. Open innovation can generate a lot of new insights and good ideas that increment the company and product strengths but rarely produces disruptive changes insights to true innovative processes/products.

    Example of crowd-sourcing limitations: https://hbr.org/2016/12/a-case-study-of-crowdsourcing-gone-wrong

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