Vice President of Innovation Partnerships, Nestlé
It’s no exaggeration to say that Helmut Traitler is fearless about embracing the new world order of open innovation. He is not alone in this conviction, but as Vice President of Innovation Partnerships at Nestlé, he has done what many have failed to do: re-orient a behemoth multi-national corporation around the proposition that “sharing-is-winning.”
Open innovation is the deceptively simple idea that companies integrate external ideas and capabilities into their internal innovation strategy. At its most robust, open innovation implies a high degree of intellectual and technological openness, wherein ideas, advances and innovations move across organizations. The central tenet is that in today’s world of unprecedented technological and intellectual growth, cloistered companies can’t compete.
Until a few years ago, Nestlé, like most organizations with fully developed R&D capability, depended almost entirely on its internal R&D capability to drive its innovation agenda. “The only area where external innovation was traditionally used was in packaging, where we probably had 70% of all innovation were coming from outside,” says Traitler.
All this changed in 2005 when the team deepened its focus on open innovation. Nestlé set out to expand its network of global partnerships and fully embed the “sharing-is-winning” slogan in its corporate strategy.
Innovation is not an option for Nestlé , it’s a necessity. Nestlé’s growth targets hinge on the company’s ability to create an additional $5 billion in growth each year. The immensity of this figure speaks for itself because a significant part of this growth must be generated through innovation. This explains why even during the recent economical crisis, Nestlé continues to spend more than $2 billion annually on R&D.
Although Traitler acknowledges that there were hurdles in making the paradigm shift to embrace open innovation, the results speak for themselves.
“If I had to measure where we stand on open innovation today, some three and a half years later, I would say that on a scale of one to 10, we started at two and today we’re at a six. We have made significant strides, but there is still a long way to go,” explains Traitler, who now oversees a strong portfolio of partnerships with organizations across the globe.
Nestlé's size was both an advantage and a hurdle to building momentum for a truly open innovation framework, he points out.
“Of course, the company is aligned to meet its strategic objectives and disruptive innovation of any kind will face hurdles,” he says. “With 270,000 employees worldwide, each individual within the organization is more anonymous and less exposed and not everyone knows everyone else. In this environment, projects can stall out due to entropy, or they grow and multiply, but their chances to succeed are not growing in parallel.”
To overcome these barriers the team has adopted a few rules of the road. The first: move fast. Then move faster. It’s important to demonstrate results and successes quickly. Traitler also contends that it’s important to give some individuals the freedom to ignore systems and controls when they are a hindrance to making bold moves.
Being the largest food company in the world—with $100 billion in revenue each year—has clear advantages. “Being a large organization helps, as people often listen to you more eagerly and willingly,” Traitler notes. And it’s no surprise that Traitler relishes having Nestlé ’s resources at hand, including an ability to quickly scale-up good ideas.
High-quality internal R&D is also an important piece of the puzzle, says Traitler. “Having an outstanding internal R&D capability is vital for our open innovation and partnerships model to work, especially as we need to share our expert resources with our external partners in co-creation and joint development projects,” Traitler points out.
Beyond the organizational hurdles open innovation advocates must clear, he cites an organization’s authenticity as a major driver of whether an effort succeeds or fails.
“You have to listen, because there is a lot more out there than you think,” says Traitler. “Potential partners can be easily threatened or put off by a command and control approach to collaboration. Effective partnerships are based on trust. You only get back if you give, and give sincerely, not just pretend.”
In many ways, the modest Traitler makes open innovation look easy. But most executives-in-training aren’t learning these skills in business school. And maybe that is a good thing, says Traitler.
“Why should open innovation be taught in business schools? I believe that this might be the wrong place. Based on my experience, business leaders don’t do open innovation, even if they were taught to do so. They can only have a general understanding of it, and foster the pursuit of open innovation in their organization,” he says. “Open innovation needs to be taught where innovators receive their education, such as universities, high schools or even at an earlier age.”
And with his trademark clarity, Traitler adds, “Only innovators work in open innovation mode.”