Open innovation in the agri-food sector
What is open innovation and why is it a good thing?
The business world has seen unprecedented change that has been driven in large part by technology, changing demographics and the increasingly creative thinking of entrepreneurs and consumers themselves.
Traditionally, corporations succeeded by creating a single product that became popular with the public and built more products around it. Research and development departments were exclusively focused on improving existing products, without ever looking outward.
Today, however, there are more and more startups contributing with innovative ideas to the global marketplace, many of which have the potential to become major corporations that will change the world.
It is easy to imagine how this inevitable reality can make traditional, established companies uncomfortable. However, instead of presenting a threat, startups can bring opportunity for all, thanks to the concept of open innovation, a term coined by Professor Henry Chesbrough, executive director of the Center for Open Innovation at the Haas School of Business at the University of California and co-founder of the Open Innovation Community.
Open innovation is a way for companies to collaborate with startups, rather than compete with them. This includes incorporating new technologies and outside ideas that the startup can bring to the table, which has many benefits, as open innovation not only fosters creativity within corporations, but also serves to reduce internal investment in the R&D process.
It is now a fact that when established corporations form alliances with startups, problems find solutions, a synergy that defines open innovation.
Internal innovation is the generation and implementation of positive and disruptive change at a specific time and environment. The difference from open innovation is that, during this process, the use of the company’s own resources is prioritized.
How does open innovation work?
Open innovation can be defined as the process in which companies implement new opportunities to the existing business model. Currently, the most effective way to achieve this goal is through corporate alliances.
There are multiple ways in which such alliances can achieve their goals, including through in-house research and development and through corporate accelerators.
In a Plug and Play Tech Center study, 26 corporate alliances were analyzed, a majority of which have an innovation team of more than 20 people. Their main objective is to incorporate what is called proof of concept (POC). This is the process by which startups demonstrate to a corporation that their technology is economically viable. The startup must create a prototype to prove that its technology is capable of working on a large scale.
If the startup demonstrates that it is viable through POC, proving that its product is safe, it can be integrated into the corporation’s business model. The innovation team is responsible for evaluating the startup during the testing phase to determine that it can move forward with the adoption of the new model.
Open innovation in the agri-food sector
Innovation is always present in the agri-food value chain. We can find it in every of its phases, from agriculture to the restaurant’s service.
Open innovation is reshaping the agricultural outlook. Agriculture, more than any other industry, needs to update itself in the technological field. Advances in high-tech systems using drones, sensors, and data analytics have created a demand for expertise that isn’t often associated with [ag]. Consequently, most agricultural companies that still don’t take advantage of open innovation will do so by the end of this decade. The rest will not last much longer.
In respect of the food industry, studies have revealed that open innovation, collaborative networks and mergers and acquisitions can represent a viable perspective to increase competitiveness, customer satisfaction and sustainability.
An excellent example of open innovation in this sector is the case of Unilever, which invested 85 million euros in the creation of a new center called “Hive”. This center can be found in some of the most renowned academic research centers as well as emerging companies. Its location is Wageningen University. Unilever plans to make this the most important global food research center in the world.
Technology also plays a central role with respect to cell cultured meats. According to Iñigo Charola, the CEO of Biotech Foods, a Spanish company working on the scale-up phase of cultured meat, “The food industry has always been very innovative, but I believe that, thanks to different technologies that are starting to be applied to the food sector, the future of this space will bring us a great variety of attractive, sustainable, healthy and safe products. I think this revolution is going to happen at an unprecedented level.”
It is undeniable that there are more and more startups aspiring to supply the demand of the future, with more creative teams and innovative ideas that are revolutionizing the food industry globally. Traditional food corporations are taking notice of this big change, and they don’t intend to be left behind.
What does Eatable Adventures have to say about open innovation?
Open innovation is a formula that is gaining increasing traction as a model for adopting new talent, technology and disruptive business models. By embracing open innovation companies can literally transform their organizations, achieving goals that would otherwise be impossible without the use of these methodologies.
Eatable Adventures is one of the top three global food technology accelerators, with more than 20 open innovation programs launched, a deal flow of 1.400 foodtech startups analyzed each year and operations on three continents.
Eatable Adventures detects, promotes and invests in the most disruptive startups that promise a relevant impact on the agri-food value chain, through successful collaboration models with corporations in the food industry, generating innovation opportunities, in line with their strategic and business challenges.
Eatable Adventures has developed an entrepreneurial ecosystem in the food sector by a global community with more than 25.000 members and multiple events that bring together industry, investors, universities, governments and entrepreneurs of food innovation.
Reasons to collaborate with startups
The reasons why companies should collaborate with startups, i.e. embrace the concept of open innovation, are numerous.
Identify new business opportunities
Collaborating with startups can be the most effective way to identify new business opportunities. Startups usually have younger teams, with fresher ideas and different perspectives, a good area to find opportunities that many long-established companies didn’t think about.
Reduce generating innovation’s risk and cost
Partnering with a startup lowers the risk of innovation since startups, if they have enough experience in the market, can prove that their innovative products are something the public wants. It has also been shown that collaborations with startups decrease the cost of innovation generation.
Accelerate the innovation process and time to market
Startups also accelerate the innovation process, because they are usually composed of young, creative and ambitious teams that already have a clear vision for the future of their products and business model.
Improve internal creativity
Open innovation progresses internal creativity of established companies as they inspire and motivate teams with the flow of new ideas and perspectives. Positive changes and new goals are often a great motivator for established companies.
Improve competitive position
Open innovation boosts the competitive advantage of the companies. This is obvious when you know that open innovation consists of the implementation of new technologies acquired from a very broad group of creative and experienced innovators outside the company.
Companies that have taken the leap to open innovation
There are countless success stories of companies and organizations that have taken the leap to open innovation to grow their own business and change the global food industry. Here we will mention a few that have left behind the traditional and conformist way of innovating to embrace this multifaceted model of the future.
We think that sharing some cases of open innovation that we have developed together with our clients is the best way to show its disruptive potential in this world.
For several decades, the Pascual family of Spanish entrepreneurs were involved in the traditional dairy industry through their company Calidad Pascual S.A.U.
However, with the overwhelming growth of plant-based foods and milks in recent years, and the number of startups taking advantage of this shift to supply the demand, the Pascuals created Pascual Innoventures, a company whose goal is to drive the foods of the future. Through Pascual Innoventures, the Pascuals launched Mylkubator, a global incubator specializing in the development of innovation projects for the dairy sector, in collaboration with Eatable Adventures.
“The entrepreneurial and innovative spirit is in our genes, it comes from the values that my grandfather instilled in us to be nonconformist, dream big and dare to take risks, not only with our heads but also with our hearts. This is how Pascual Innoventures was born, with a long-term vision and the goal of giving our best for the future of food. We will work hand in hand with startups that allow us to move into the future,” says Gabriel Torres Pascual, one of the creators of Pascual Innoventures.
In 2020, Pascual Innoventures, in collaboration with Eatable Adventures, launched another call for projects, the Plant-based Dairy Challenge, to search for the best startups in the plant-based dairy ecosystem.
Another example is the case of Europastry, an international supplier of bakery foods. The company has created Cereal, the new bakery and pastry R&D center, through which it launched the Baking the Future initiative with Eatable Adventures in 2019. The latter is an industry accelerator whose goal is to identify innovative solutions generated by startups from every corner of the world and build an open innovation model for the company. After this first experience of collaboration with startups, the company has decided to launch an accelerator program in 2021 with the aim of identifying innovative solutions generated by startups in every corner of the world and building an open innovation model at Cereal.
For a period of six months, the program will help entrepreneurs develop their products, measure their viability in the market and assist in the creation of new business models, helping startups advance their projects.
The food company Sigma has also partnered with Eatable Adventures to seek out entrepreneurs and promote high-impact projects in the food sector worldwide. This year it presented the second edition of Tastech by Sigma, the startup acceleration program whose first edition registered 123 applications from 19 countries, of which seven developed a pilot program and four will formalize a long-term alliance with Sigma.
In the words of Daniel Alanis, development director at Sigma, “We want Tastech by Sigma to become a benchmark in the sector and for more and more entrepreneurs to present and develop their ideas with us. We are convinced that innovation in the food sector is a collaborative task, and this program is our contribution to young talent revolutionizing what we eat and how we produce it.”
The future of open innovation
By analyzing current market trends, we can predict that open innovation will continue to be an increasingly important factor in the global marketplace. The pace of technological advances is getting faster and more unpredictable, and corporations that do not embrace change and innovation run the risk of stagnating or becoming irrelevant.
It is already a fact that innovation is indispensable to the success of modern and future corporations and is necessary to compete with other corporations and capture the attention of consumers.
By fostering a mutually beneficial relationship with startups and, hence, their innovation teams, corporations can go far beyond just staying relevant. They can achieve their goals and remain key players in the marketplace for many generations to come.