Tag Archives: startup

Think Inside the Box

think-inside-the-box

Think Inside the Box – Where is your Food Coming From?

Strolling the many beautiful aisles of BiG (Ben’s Independent Grocer) in Kuala Lumpur earlier in the year with an awesome Aussie food client I was suddenly struck by one product that jumped right off the shelf and slammed me in the face!  Amongst a sea of 50,000+ products (the average number of skus in a supermarket) and BiG is one of the best supermarkets I have ever visited and that’s quite a few in quite a few countries.

What captured my attention from One Degree Organic Foods was firstly a QR code front and centre of pack with a call to action to discover the ingredient story and what’s actually inside the box!  Funny you would think you could just read the ingredients panel for that information wouldn’t you?  You might also expect to see the usual blah blah blah statements that hide the truth on that same ingredient panel. Statements like “made from local and imported ingredients”, “sourced locally where possible”,…etc etc.  Not here, the family who own and operate One Degree Organic Foods are farmers themselves or as I like to call them farmpreneurs – the new breed of farmers who are entrepreneurs taking their value added brands and food products directly to consumers and baring their all in the name of authenticity and pride and passion!

We can not say it better than the owners so I will just quote what they say on their website: “We’re not a conglomerate, nor a big-box retailer, nor a chemical company with a food division. We’re a family who cares deeply about family farmers and the integrity of your food.” Does that resonate with you? It did with me in a busy brilliant independent grocer in KL, Malaysia in a cereals aisle that had local and imported options from the 4 corners of the globe to choose from.  I ended up standing at the shelf scanning QR codes and watching engaging YouTube videos of Pecan farmers in Peru, Buckwheat growers in central Canada and connecting with the passion these farmers showed to their land and the ingredients inside the box!

This is example is not only good social business its smart business and its smart marketing.  The best of the best in my mind.  Brilliantly efficient and transparent in a modern age where BIG is bad – who trusts large Multinational Profit Shifting Corporations anymore these days?  In fact in food, many have resorted to ‘faux branding’ creating cottage brands and hiding behind PO Box or Head Office Addresses with ABC Pty Ltd passing off a mass produced food item as something akin to a cottage industry startup family food brand.  If they are not creating ‘faux brands’ they are buying the genuine article and bringing them into their fold – founders and all to run alongside their mainstream food brands.  I have spoken  and written about this recent trend at Food&DrinkLive! in Sydney, Australia 2015 and in an earlier CreatoBlog Think, Act, Adapt and Innovate like a Startup!

Shoppers and consumers are asking nowadays – where is my money going? When I shop whether locally at an independent grocery store or with a major national supermarket chain they are already making a decision as to where they invest their hard earned $$$.  After get to the supermarket shelves or jump online you faced with 100s upon 100s of brands to chose from before you make another decision as to which company will you support. That support is being consciously or unconsciously driven more towards small, independent, family owned businesses more than ever before and there are many reasons for those choices.

Think about your own shopping decisions you take.  Of course price is important and as the famous jingle goes “everyone loves a bargain! ”  However do you also think of the following factors in your decisions at the shelf or when shopping online?

  • How is this food grown? How are the animals treated? Is it sustainably farmed?
  • Is this a genuine real article?  How much has my food been processed, added to, tampered with and packaged up?
  • Where is this food from? What about the ingredients that go into making it? Is it safe to eat and feed to my family?
  • Who am I supporting here? A large multinational or a family owned or small business?

Brands BIG and small need to start to think! act…and adapt to these fast changing times.  Technology is making it practical and cost effective for small to meet BIG and beat them on the playing field. Why? Because they come from a place of realness and not marketing puffery. Consumers connect with founders and their startup stories cooking on the stovetop, growing and processing their own farm produce and packaging up and telling their story in a way that is authentic and real.  You can not copy that if you are a large Corporate and it outpositions BIG as BAD and small is GOOD!

The examples we can list of brands that are doing this well is long and numerous but the list of brands NOT doing this is 100+ times longer.  Why not, take the opportunity to use technology to connect with consumers and customers and share your story? The time is now – there has never been a better time to be a farmpreneur or a small food producer. Here is a few other great examples you might like to explore and if you are interested in taking your own business to the next level of consumer connectivity give us a call or drop us a line.

We love working with independent family owned fast growth businesses @Creatovate.  In fact, we have by accident or choice managed to specialise in it with a focus on the twin pillars of sustainable (profitable) growth – Innovation and International Business – what are you waiting for? Get out and tell your story – its real, it’s authentic and consumers and customers want to hear from you!

If you are interested to come and hear Dermott talk about creating value for consumers and customers in consumer packaged goods you might like to come to Changing the Landscape – The Flexible Packaging & Label Makers Association on 10-11 November 2016 in Melbourne, Australia.  Dermott will give a keynote talk on 11 November titled – Creating Value for your customers in the 21st Century for FMCG’s

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

Bibliography & Additional Sources:

http://www.consumerreports.org/cro/magazine/2014/03/too-many-product-choices-in-supermarkets/index.htm viewed on 16/9/2016

The Big Group: http://thebiggroup.co/BIG/?p=about

Transperant Supply Chain https://www.onedegreeorganics.com/transparent-supply-chain and our team https://www.onedegreeorganics.com/our-team

 

 

 


Can BIG FoodCo Think! Act & Adapt like a Startup?

Fast business

Concept of small business running fast!

Is it just us or does it seem today that the small food companies are moving faster than ever before and the big companies are moving more slowly when it comes to innovation in our local food industry?  Perhaps you and I are not alone in our thinking? The literature and newswires in the US have been awash with stories of “the war on big food” (Kowitt, 2015) with big bold claims like “big food is under attack from the rise of startup granola!”

Changes are not only taking place abroad in the US supermarket aisles where shoppers are cruising the periphery of the store seeking out new and trendy, authentic and unique chilled, fresh, natural and healthier food options.  The same trends are evident in Australia and plain as daylight for all to see on the high street where the Fast Food Evolution has seen global super brands like McDonalds, KFC, Subway, Pizza Hut and Burger King scrambling to reinvent themselves against the rising tide of ‘fast, casual dining chains’ like Grill’d, Nando’s and Mad Mex (Brown & Han, 2015).  Let’s not even start a conversation about the global food truck trend that could be today’s incumbent fast food operators tomorrow’s ‘disruptor’.

VIDEO: Can big food and beverage think like a startup?

Big food companies will need to rethink their business models if they want to innovate like startups, according to Dermott Dowling, managing director of innovation and international business consultancy Creatovate.

Speaking recently at the Food & Drink Business Disruptive Innovation LIVE forum, he explained why this is growing in importance, and how some of the world’s largest food and beverage companies are responding.

According to Dowling, the top 25 food businesses in the US lost at least $4bn in market share last year as consumers skipped the core food aisles in favour of the fresh segments, and increasingly sought out innovative products from smaller companies.

In this video clip, Dowling describes how some of the world’s largest companies, including Nestle and Coca-Cola, are responding to the movement, and he shares some examples of local companies that are having a go at digital disruption in the food space. See the full clip here.

Why is this happening all of a sudden?  Is it another off-shoot of the start-up tech trend finally finding its way into the food industry? Like most complex issues of business today it is a symptom of a number of factors and key influences colliding to create the perfect storm for “disruptive innovators” in the food industry.  Let us start with the trends underlying today’s shopping decisions consumers are making today with their wallets – after all is it not the shopper who ultimately controls the marketplace nowadays?

Campbells Soup

  1. Shoppers and consumers are looking for ‘authenticity’ and ‘realness’ more than ever before. Their trust in global multinationals is at an all-time low and most major food companies operating in Australia are global multinationals http://www.slideshare.net/dowlmott/going-global-in-food-grocery-retailing-business . With a smart phone in every shoppers pocket the truth is out there on Facebook, Instagram and Twitter and consumers trust their friends and followers and influencers’ more than super brands blasting the old mass media airwaves. Hirschberg (2015), founder of Stoneyfield Organic Farms sums it up when he says “There’s enormous doubt and scepticism about whether large companies can deliver naturality and authenticity.”  As a result consumers are more connected with small and medium size family owned or startup food businesses and brands.  They feel a closer affinity with the founders than the boardrooms and polished CEO communicators of “Big FoodCo”.  They connect through their social media accounts, love the storytelling of startup founders and the authenticity of the founder(s) stories up all night packing boxes in their garage or cooking new prototypes on their stovetop before racing to the local farmer’s market or grocery shop on their way to fame and fortune.

Back to Natural

2. Mintel (2015) Trends report highlights front, bold and centre Trend #3 Less processed foods, more natural as consumers continue to be concerned with eating natural and ‘less processed’ food products.

aldi-vs-big-brands

3. Consumers and shoppers are more affluent than ever before and yet more sporadic in their shopping and buying behaviour. They fill their trolleys with private label staples and shop at Aldi and CostCo to save on essentials and then simultaneously splash out on their indulgent luxury food treats. They love sharing their discoveries at their local high end speciality independent grocery store or Asian specialty shops with friends and taking something a little unique and special over to their neighbours or friends place for dinner to start a ‘foodie’ conversation.  Again here the shopper leans towards the ‘smaller, more real, and authentic’ food brands.

There are also a few key influences in the background from broader business theory on innovation that are impacting the ability of the smaller and medium size companies to grow faster than ever before and hindering the larger elephants from dancing the same jig when it comes to innovation.

Customer Development Models

Customer Development Model (Blank & Dorf, 2012)

  1. Small and medium size companies by their very nature are ‘searching for growth’ ‘new business models’ and ‘repeatable and scalable business models’ and most importantly they are actively seeking out ‘new customers’. As they seek out new growth pathways for their businesses they discover unmet customer needs and wants, gaps in the market and they scurry back to the lab or pilot plant or co-manufacturer and whip something up quickly in the ever desperate search for sales and a repeatable scalable business model. With those real sales comes learned experience what’s working, what’s not, what needs fixing and so the cycle continues at pace – Build, Measure, Learn or as we like to say @creatovate “earn & learn”.  Less time in research more time spent doing, making, talking to customers and consumers with real prototypes, failing, learning, earning, and eventually success! $:-)
Business Model Iteration

Business Model Iteration (Blank & Dorf, 2012)

2. Being smaller by nature you are in fact at a strategic advantage when it comes to innovation. Less $/people/time makes you smarter in your choices, you look for fast hacks forward, cut corners and try to make more from less without the bureaucracy of Stages and Gates and internal meeting after internal meeting and research after research spending valuable $/people/time but earning nothing, spending a lot and often learning very little about real customer and consumer problems in the marketplace.

innovation police

3. Small and medium size companies lack middle management aka ‘ the innovation police’ who are stringently guided and controlled by budgets, plans, processes, performance reviews and the need for ‘incremental’ over ‘transformational’ growth and innovation. The middle manager’s role is to shepherd the workforce on the annually set KPIs, Manage Budgets and stop people seeking out opportunities off the strategic plan no matter how promising those opportunities might look or feel to the front line.

Resource Dependence

Resource Dependency Model

 

4. Stakeholder dependency theory (Hillman, et al 2009) suggests any organisation is interdependent on its ecosystem and the biggest interdependencies on any organisation are its ‘customers’ and its ‘shareholders’. Think about who the dominant customers are of a small or medium size food enterprise in Australia vs. a large one? Think about what investors are seeking in small and medium size business? Fast growth? Exits? Vs. Large stable food businesses? Safe and consistent returns?

think-act-adapt-innovate-like-a-startup-3-638

Technology and capital are influencers in the background and technology enables the small and medium companies to better connect with their consumers, levels the playing field in terms of ability to interact professionally with customers (retailers) and trade partners.  Capital seeks growth opportunities and will look for the opportunity to enter and exit as quickly as possible where the opportunity for disruption exists.  Are we likely to see the small and medium growth food companies grow faster into the future – most definitely Yes! Will the large incumbents sit back and watch the ants eat their cake?  That remains to be seen and we are in for an exciting food future ahead.

Dermott Dowling is Managing Director @Creatovate, Innovation & International Business consultancy. Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.

References:

Blank, Steve & Dorf, Bob (2012) The Startup Owner’s Manual K&S Ranch Inc, California, US. First Edition.

Dowling, D (2015) Think! Act! Adapt & Innovate $ like a Startup! http://www.linkedin.com/pulse/think-act-adapt-innovate-like-startup-dermott-dowling?trk=prof-post LinkedIn, Aug 19, retrieved on 05-Nov-15.

Dowling, D (2015) Putting “I” first in Insight to Innovation http://www.linkedin.com/pulse/putting-i-first-insight-innovation-dermott-dowling?trk=prof-post LinkedIn, Feb 25, Retrieved on 5-Nov-15.

Dowling, D (2012) Globalisation of Food & Beverages http://www.slideshare.net/dowlmott/going-global-in-food-grocery-retailing-business Slideshare, Retrieved on 5-Nov-15

IRI Worldwide (2012) The Pacesetters Report http://www.iriworldwide.com/iri/media/iri-clients/4-17-13T_T%20April%202013%20NPP%20vFinal.pdf  viewed on 5-Nov-15.

Kowitt, Ben (2015) The War on Big Food http://fortune.com/2015/05/21/the-war-on-big-food/ Fortune Online 21 May, retrieved on 5 Nov. 15

Brown, R & Han, E (2015) Fast Food Evolution – Global Super brands are having to reinvent themselves to keep up The Sydney Morning Herald online 11 January   http://www.smh.com.au/nsw/fast-food-evolution–global-superbrands-are-having-to-reinvent-themselves-to-keep-up-20150106-12j7mc.html  retrieved on 05-Nov-15

Australian Food News (2015) Top Global Food and Drink Trends for 2015 http://ausfoodnews.com.au/2015/10/21/top-global-food-and-drink-trends-for-2016.html October 21, retrieved on 05-Nov-15.

Amy J. Hillman, Michael C. Withers and Brian J. Collins R (2009) Resource Dependency Theory: A Review Journal of Management 2009 35: 1404 originally published online 23 September 2009 https://www.unifr.ch/intman/assets/files/Teaching/Network_2014/Additional%20Readings/Hillman-Withers-Collins%202009%20-%20Resource%20Dependence%20Theory.pdf retrieved on 5-nov-15

Sue Mitchell (2015) Here’s Why Consumers are Choosing Aldi over Woolworths and Coles http://www.smh.com.au/business/heres-why-consumers-are-choosing-aldi-over-woolworths-and-coles-20150714-gicgix.html July 15 retrieved on 04-Jan-16.


Think, Act, Adapt and Innovate like a Startup!

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Large companies’ size and culture make disruptive innovation extremely difficult (Blank, 2010). Despite this challenge many large food businesses today recognise the need to be disruptive innovators and test new business models in the digital world.

bat-in-face

 

Why change? Because the bat is coming…

Change is coming, it’s here now and there are many ways businesses can react to change.  They can duck and hide and hope the flying baseball bat misses them and takes out the competition.  They can look the other way and collect the full force of change to the face like the poor gentleman below at the Red Sox game or they can be brave anticipate the changes that are coming and reach out for the bat like the guy just out of shot.  Often its the startup that is just out of shot or sight of the incumbents.  Backed by passionate founders and astute investors they anticipate change, react to it positively and use innovative new business models and new technologies to literally land the baseball bat in the face of the incumbents and harvest the glory of fast growth in a new economy.

In this keynote address given at Food&Drink Business Live! Disruptive Innovation, Creatovate – Managing Director, Dermott Dowling takes the audience through some practical learning steps and lessons from local digitally focused food innovators leading the way in this exciting new land of opportunity.

Think!

Thinking is the first step in any business innovation. Alas, it’s hard in isolation. You sit and stare and scribble on the blank sheet of paper in front of you.  However, people as social beings need each other and our collective mind power to come up with breakthrough ideas to innovate. More often than not we scan the environment for what’s out there already and working? Alternatively, we look for problems – what’s bugging our current customers or potential new customers? We then map the value chain from inputs to outputs looking for – what can we take out? Where can we fit in? How we can create value for customers and ultimately our own business?

Think

 

Act!

Next step in the process of building an exciting startup or disruptive innovation is design & rapid prototyping our ideas into Minimal Viable Prototypes or MVPs. Rough and ready is fine here, what’s most important is we start testing & experimenting our hypotheses on existing and new customers ASAP.   Gone are the days we spend weeks and months in kitchens, pilot plants and focus groups with consumers.  The market demands we move at ‘tech speed’ now!  I can not wait as your customer or your boss for months while you toil and spend $$$ without any real customer or consumer feedback!  By that I mean people reaching into their pockets and paying for the food and beverage products, not just talking about how cool it is or whether they might like to buy it when it hits the shelf in 12-18 months time!  As we act, we simultaneously align as a team adapt to the changing customer feedback. We also measure & monitor early results for signs of customer acceptance and readiness to scale our new business model.

Business Model Canvas

Startups are not small versions of large companies. They need different tools for thinking and acting. Its important you create a common language in your company if you venture down the path of creating intrapreneurial startups inside your large organisation, so people are talking on the same page and not hearing Blah! Blah! Blah! when we mention new terms like Business Models. For this reason at Creatovate, we recommend a common approach to our clients hypotheses generation like the Business Model Canvas (Osterwalder, 2012).  This is an excellent thinking tool to get the team ‘on the same page’ in terms of understanding of terms, hypothesising ideas and creating a new Business Model for real market testing.

BMC Hypotheses

Adapt!

Once you have thought and aligned on your initial business model hypotheses “get out of the building” and ask potential users, purchasers, and partners for feedback on all elements of the new business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies. If we accept that startups are engaged in the search for a new business model, we recognize that radical shifts in a startup’s business model are the norm, rather than the exception. For this reason rather than fire the executive team when the normal approaches to go-to-market are not working, we pivot and change tack (Blank, 2013).  Pivots are a completely normal part of the startup process as you first discover customers who will pay an acceptable price for your product and validate your minimal viable prototypes fit their needs and are worthy of scaling.  Venture Capital and astute investors understand pivots as an essential part of building a startup.  The question is does established incumbent business leaders understand they need to treat startups in their own company very differently to the normal go to market new product development that may go through an existing business process like Stage-Gate to existing customers using existing norms.  If you are going to create a breakthrough innovation and business model in the digital economy its highly likely you will be doing things very differently.  As such leaders need to be aware of a different set of behaviours and skills to encourage the startup founders and intrapreneurs to boldly push on and not be afraid to pivot as they learn and lean left and right to find the right business model and validate their multiple hypotheses.

Business Model Iteration

Innovate $

Private equity and venture capital are investing in disruptive startups in the food industry right around the world.  The top 25 U.S. food and beverage companies have lost an equivalent of $18 billion in market share since 2009. Some analysts are describing ‘big businesses in food’ nowadays as being like melting icebergs, every year they become a little less relevant to customers and consumers (Kowitt, 2015).

VC Funding for Food & Beverage Startups

Major packaged-food companies lost $4 billion in market share last year alone, much of it to smaller, more health-conscious companies.  Venture capital firms are taking notice. Over the past five years, they have invested nearly $570 million in food companies. Famous Australian VC/PE funded food businesses include Rafferty’s Garden (Anacacia Capital’s sale of baby food maker Rafferty’s Garden to PZ Cussons for over A$80m).  Notable trade sales recently of established food businesses that have been reinvented include Pacific Equity Partners’ sale of Peters Ice Cream to UK-based ice cream maker R&R (AVCAL Handbook, 2014).

Large multinational food companies are not taking the changes in their markets lying down.  Nestle founded Inventages in 2002 and has invested EUR$150m in 38 companies across a breadth of categories from consumer health sciences to CRM to supply chain to innovative packaging solutions.  Tate & Lyle established Tate & Lyle Ventures in 2006 initially with a £25M VC fund & currently has another active £30 million fund investing £1-2 million per tranche in each investment.  Coca-Cola Founders program was established in 2011 and already has 19 co-founders, across 10 countries, with 9 startups partnering with Coca Cola to provide much needed scalability to the startups and their co-founders.

Design to Grow

Large businesses need startups and vice versa. Is there some magic in the middle and what can incumbents do to learn to be lean and act and adapt and innovate like a startup! Established businesses are in danger of not being able to adapt quickly enough, while nimble start-ups fail due to their inability to scale. Tomorrow’s business winners will be the ones who know how to combine the two (David Butler, VP Innovation & Entrepreneurship, Coca-Cola).

Learn & Lean

Australia is seeing signs of life now in the land of digital disruption with several new startups from both existing food companies and new entrants.  Some digital disruption innovation leaders interviewed for this key note include Dish’d    Kogan Pantry and Marley Spoon  MDs & Founders.  Each business plays to its own unique space in this exciting new field of play, but there are several key common learning shared by their leaders for any business thinking about entering the exciting and highly disruptive digital innovation landscape in food.

dishdkogan pantryMarley Spoon AU

Challenges

Challenges of starting a new food business in the online world today in Australia include:

Sub-culture of a startup within a large business can be hard to swallow for staff and senior leaders alike in established traditional food businesses.  Patience is essential alongside persistence with payback horizons very long and initial sales may fall well short of what can be expected from taking NPD to market through traditional go to market retail channels.  Consumers want whole of shop/meal solutions rather than parts of the pantry stocked from several different eTailers, and they are looking for suppliers to make their lives easier, not harder when it comes to shopping online and/or cooking meals at home.  Inventory / demand / supply chain management is even more challenging in the online with demand for hot specials either going viral and off the charts or product being unappealing and not moving at all.  Never underestimate the response from incumbents who will fight back extremely hard with loss leading specials and pressure exerted on their existing suppliers to restrict supply of goods and inputs to the new entrants.  Go in eyes wide open – the online world requires the same effort if not more than a business in the bricks and mortar world of food and beverage manufacture, supply, distribution and marketing.

Why do it?

We get asked this question a lot from our clients!   Our first response, is to remember that whatever innovation or change you make it must create economic value to you and your business.  Change for changes sake is not innovation, it might be creative but its not innovation until it delivers economic return to your business.  This may not happen for significant time when testing new business models or startup strategy but we also ask our clients what are the possible consequences of doing nothing?  Going backwards? Getting hit in the face by a baseball bat?  You may be chasing additional demand and/or contributing back to your online community if you are already an established online entity.  You might be looking to engage and interact with existing and new consumers if you currently exist in the traditional bricks and mortal retail led food industry.  You may be seeking to grow into adjacent verticals. Whatever your strategic reasons, for action they need to be strong enough to survive the bumps in the road ahead as there will be many!

Advantages!

Some of the key advantages from entering the online world of food and beverage eTailing are the longer term potential scale advantage that can come quickly if you are successful.  Likewise the plethora of instantaneous data analytics like Google Analytics that can help you pivot and test and adapt much more quickly than through traditional customer/retailer feedback networks.   Recognise that Australian eCommerce market maturity could be as much as 5 to 10 years behind the US and our Australian eCommerce supply chain maturity has some considerable road to run especially in the area of chilled B2C food or meals solutions delivery to consumers doorsteps.  These are significant challenges and can not be underestimated but the early entrants will learn faster and be further down the field as new enabling technologies like drone deliveries or driverless vehicles become very real solutions to today’s very high cost of service to the Australian consumers doorstep.

Omni-Channel

Omni-channel could be a red herring – beware!  The economics are vastly different between off-line and online retail in Australia, however for incumbent off-line retailers who have online eTail offers the commercial incentives are quite simply not there to lower their online prices for their eTail offers such that it would cannibalise their healthy real world margins in bricks n mortar retail.  Let us not forget the significant sunk costs the incumbents have in ‘land banked’ property investments, the enormous number of staff on their books in their shops who would cost $$$ to layoff if their online services took off!

Food Supply to Disruptors

Food manufacturers, wholesalers and suppliers are aware of the current industry trends and have a strong willingness to supply new food focused digital startups.  That being said beware the earlier caution about incumbent retailers pressure to stop supply to new entrants.

Price Leadership

Price leadership is of paramount importance online and that could be in part due to the fact that Australian consumers have been trained to expect deals online.  Brands matter online and deep cut discounts bring traffic!

eCommerce US 2013.jpeg

 

Groceries look like the last to take-off in the land of digital commerce.  Online suits small, expensive, commodity driven categories hence why it has disrupted so intensely in travel, music and electrical goods.  Wastage is an important driver in eCommerce in food. Consumers care about their household (average 20%) and supermarket waste (average 35%). This can be a compelling emotive and commercial value proposition for digital disruptors.  Consumers also expect their food in the same condition they find it in store when they get home and see it at their doorstep.

Clearly, we have a long way to go in terms of digital disruption and disruptive innovation in the food industry in Australia and what is around the corner is the million dollar question for startups and incumbents alike.  When an intelligent member of the audience from Nestle Australia asked “what’s the next big thing in terms of disruptive innovation in the food industry in Australia?” to the panel of experts on the stage she got 6 very different answers ranging from predictions of drone and driverless vehicle meals and drinks delivery to consumers demanding a direct interaction with their favourite food producers not only in the social media landscape but in terms of direct purchase and order-to-delivery-to-doorstep.

One thing is certain, the businesses that can have the foresight to anticipate change and react positively to it will be the ones who avoid the baseball bat to the face and will seize the opportunity our new tomorrow brings to us all.  The multi-million dollar business question is which of the incumbents or venture backed startups has both a) the foresight and b) the resilience and bravery to not only see the bat coming but to calmly stand up, reach out and catch it!  When everyone breathes the collective sigh of relief and the startup sits back down in the stands, they will have banked the profits on the table and will be the new incumbent. Go Gators!

MITCH-DAVIE-BAT-Catch

References & Bibliography:

http://businessmodelalchemist.com/tools

AVCAL (2014) Australian Private Equity & Venture Capital Association Ltd

Blank, Steve (2010) Crisis Management by Firing Executives – There’s A Better Way Nov, 18. http://steveblank.com/category/customer-development-manifesto/page/2/

Blank, Steve (2013) Why the Lean Start-Up Changes Everything, May, Harvard Business Review

Danielle Gould (2014) Food & Ag Investment Sources Explode in 2013  http://www.foodtechconnect.com/2014/01/02/food-ag-investment-sources-explode-2013/ viewed on 11/8/2015

Kowitt, B (2015) Special Report: The War on Big Food Fortune May 21.

Montgomery, M. (2015) How The Tools Of Venture Capital Are Revolutionizing Food July 14 Forbes

Osterwalder, A. Pigneur, Y. Bernarda, G. Smith, A. (2014) Value Proposition Design Wiley.

Osterwalder, A (2013) A Better Way to Think about Your Business Model

Phillips, E. (2015) Food ‘Accelerators’ and the $10 Bag of Pasta The Wall Street Journal Jan 6.

Kolodny, L (2014) Will Investors Still Back Food Startups As Competition Heats Up?

Wall Street Journal July 25.

http://coca-colafounders.com/

http://www.coca-colacompany.com/innovation/

http://www.iamdigital.com.au/2015/02/coles-woolies-vs-kogan-pantry.html


Can you hear me?

Image

Listening to the lessons of a thriving and successful $3b start-up – Cochlear

Cochlear is a $3.3b market capital ASX top 100 listed enterprise, with sales of $750m per annum, employing 2,700 employees globally, publically lauded for its highly innovative ‘bionic inner ear’ that has been implanted in over 300,000 ears globally.  When the opportunity arose to hear Dr Jim Patrick, Chief Scientific Officer who has been with the business since start-up and Lyndal York, Chief Financial Controller speak at a business breakfast I was not going to miss the opportunity to ‘listen and learn’!

Nowadays with a head of steam behind them, an R&D spend that is 13% of total revenue, 300 R&D staff, 120 collaborative projects and 140 collaborative partners on board it is easy for Government politicians, business press and the community to see Cochlear continued growth and success as inevitable.  Not to mention the amazing world first ‘bionic ear’ they invented.  However, what is less visible today is the critical points at Start-up that Dr Jim shared which were vital to Cochlear birth and early development of this Australian global start-up success story.

1978 The first cochlear recipient Rod Saunders

Jim cites early on two key founders at instrumental in the birth of Cochlear, Dr Graeme Clark, the early inventor who was profoundly impacted by his own father’s deafness and Paul Trainer a medical devices entrepreneur who established the Nucleus Group in the 1960s.  The story is well chronicled on the Cochlear website: http://www.cochlear.com/wps/wcm/connect/au/about/company-information/history/history Dr Graeme Clark was instrumental in getting the initial idea to a vital “proof of concept” with a multidisciplinary team @University of Melbourne which included key staff from varied faculties including Engineering, Physiology, Psychology, Speech Pathology, and Computer Science, to name a few.  We see this time and time again in ‘breakthrough innovation’ that a multi-disciplinary team from a wide variety of backgrounds and experience bring out the best in terms of ‘breakthrough’ new thinking and technologies.

1981 Paul Trainor to start commercial development of multi - channel cochlear implant

Paul Trainor, the medical entrepreneur and founder of the Nucleus Group was instrumental in setting up Cochlear in the early 1980s post the first initial proof of concept Cochlear implant in 1978 and following phase 1: 1979 when the next two subjects received prototypes, a global market survey was undertaken and a development cost plan was completed.  Paul sounds to me like a modern entrepreneur who used attractive financial staff incentives, created competition for resources within the Nucleus group and between start-up teams and used attractive financial rewards for risk taking and bravery in the early stages of Cochlear implant development.

Government Commercialisation: 3 phases of funding totalling $10m over 6 years 1979-85

Government assistance and funding in the early phases of development from funding the University of Melbourne team to come up with the original prototype in 1978 through to $400K of funding in 1979 for 2 more subjects to be implanted, a global market survey and a development cost plan, through to phase 2 $1.6m for development of prototypes and implanting a further 6 subjects and finally phase 3 $3m to send a small team to the US to undertake a FDA trial and further commercialisation work was critical to the business becoming what it is today.  Overall Dr Jim estimated the Australian Government initial seed capital funding to total $10m which if you look at the market capital of Cochlear today ($3.3b) their staff numbers (2,700) and annual R&D spend ($100m) this $10m was very well invested in the early 1980s!

1992 First paediatric cochlear implant recipient Pia Jeffrey Sydney

Children began receiving implants in the 1990s and today if a child under 1 year old is implanted with a Cochlear device they will develop speech and hearing at the same rate as normal hearing children.  Cochlear $750m in sales are split 40% in the Americas, 40% in Europe and 20% in Asia Pacific and the company is headquartered in Sydney inside MacQuarie University, in a state of the art research and development, clean room manufacture, warehouse and distribution centre opened in 2010.  With 60% market share, $500m in R&D investment over the past 5 years and over 120 collaborative studies and projects underway the company certainly has a pipeline of innovation to come and is active in the global acquisitions space.  It is easy to see why Cochlear has received over 50+ industry awards and accolades. What are not so easy to see today are those vital early key success factors in the late 1970s and early 1980s to get Cochlear up and running as a fledgling Aussie start-up.

Distilling all the learning from Jim some of the key success factors vital to Cochlear beginning and continued growth are detailed below.

Key Success Factors:

  • Driven co-founders – Dr Graeme Clark (personal desire) and Paul Trainer (medical entrepreneur)
  • Multi-disciplinary start-up  team from a wide variety of faculties and backgrounds
  • 3 critical phases of commercialisation funding over 6 years from the Australian Government
  • Tiger team of talented and well rewarded scientists and business entrepreneurs to prototype, test, develop and FDA trial their early devices
  • R&D Investment , now 13% of Total Revenue | R&D Tax concession helps | $500m in R&D over past 5 years
  • Collaborative studies and projects – over 120 today and over 140 collaborative partners
  • Portfolio of hearing solutions and technologies
  • Location in Sydney: inside MacQuarie University, close to Hospitals, and other partners
  • Leadership – Smart, Stable and driven to succeed.

Dermott Dowling is founding Director @Creatovate, Innovation & International Business consultancy.  Creatovate help businesses create, innovate and growth through sustainable innovation processes and spreading their wings outside their home base.


How to start a beautiful organisation

Lessons and confessions of a serial innovator @EvanThornley #ACBC12

The 4 sides to a Beautiful Organisation

Evan Thornley, former CEO of Better Place Australia is a successful entrepreneur who has also served in public office.  Prior to that, Evan co-founded and served as chairman and CEO of Look Smart Ltd. (NASD: LOOK), an Internet search advertising company that remains one of the few Australian technology companies to be taken public on the NASDAQ  and to have delivered a 100x return to venture capital investors.   Evan was also a Founding Director of GetUp!, Online activist network with over 400,000 members.

Evan shared some of his wisdom with the readers of Anthill post his address to the Australian Chambers Business Congress titled ‘confessions of a serial innovator’.  In opening his address Evan noted how the first 6 years of a child’s life are fundamental to his/her success as an adult, not unlike a Start-up!  Here is some of the key out-takes from Evan’s address that hopefully help you start a beautiful organisation or continue to build a beautiful organisation.

Great Idea

Great Idea

Long Side #1: Great Idea

Every business starts with a ‘great idea however, Evan shared too many entrepreneurs rush to execution without thoroughly thinking through that idea, testing it, sharing it with others for builds and feedback and miss the two fundamental determinants of a good idea.  Does your idea meet a core set of unmet needs for a group of customers, or solve some problems they never knew they had?  Does your idea measure up on fundamental economics?  It is not enough to have great technology and hope that customers and profitability comes post commercialisation of the idea.  Technology is important but it is only a means to an end and the fundamentals of your idea must stand up to the two tests of a great idea.  Evan shared the example of Better Place founder Shai Agassi who spent two years thinking through, working on his idea and sharing it in a white paper for builds from his government, businesses, investors and the community.  Sir Michael Young who founded the Open University and many other social businesses noted that the true test of a ‘great idea’ is whether it can sustain a team and organisation around itself within the first few years.

Team

Team

Long Side #2: Team

Great ideas that are good from a business and social sense will attract a team.  Evan noted he is approached frequently by passionate creative entrepreneurs’ who he described as ‘lone rangers’.  Great creativity and passion for their idea but without a team around them they will not go onto great success.   Evan’s feedback to these ‘lone ranger’s’ is ‘go away and come back when you have a team of 3 or 4 people around you’.  In filling your team the tips are look for people with strengths and skills that complement the founder.  How good are they?  How passionate are they about bringing your now ‘shared’ idea to reality?  When asked how do you recruit people from paid secure employment into your start-up Evan was quick to point out entrepreneurs have a responsibility not to take people out of paid employment and put them in a high risk start up without explaining the risks associated with a start-up.  People need to self-select if they want to leave the safety net of secure employment for the risk and rewards of a start-up.  Evan also pointed out the only thing worse than not having a great team member join your team is having them join and then freak out when the going gets tough and have them worrying about meeting the mortgage or paying the kids school fees.

Culture & Values

Culture & Values

Short Side #3: Culture & Values

The first of two short sides to a beautiful organisation Culture & Values are the important ‘glue’ or ‘anchor’ that will hold the start-up together and guide it through troubled waters.  The beauty of a start-up is that the founder(s) get to set the culture and values for the organisation.  How those founders treat their people will be fundamental to how that start up performs and is perceived by its customers and stakeholders.  For more on the importance of culture and values in start-ups and organisations see Lesson #3 and Bonus Tip #2 in Are you a winner or a loser?

Governance

Governance

Short Side #4: Governance

The second of the two long sides of a beautiful organisation Governance is often overlooked by founders early in their ventures to their detriment down the line.  Second only to running out of financial runway in terms of problems for start-ups and entrepreneurs’ are problems caused by a lack of Governance.  Fights between founders, between founders and investors, and issues of Governance only get worse the more successful a business becomes as everyone seeks to claim ownership of the entity.  A clear shareholders agreement, a Board of Advisors and if possible a Board of Directors are some of the Governance tools an entrepreneur should not gloss over or leave to later on down the track when starting a beautiful organisation.

For a short video share on the 4 sides to a beautiful organisation go to…

For an in-depth insight from serial innovator and entrepreneur Evan Thornley you can watch his Tedx Talk linked to here…

Dermott Dowling is founding Director @Creatovate Innovation & International Business Consultancy.  Dermott is a strategic, innovative, business professional with a passion for building great brands, businesses and teams with experience and achievements across companies, countries and cultures.


Why come back to work in the New Year?

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Why come back to work after the holidays?

At this time of the year we often look back and reflect on the year that was and then sit back over the holidays and think about plans for the coming New Year.  Here is some learning from a morning spent with the Wizard of WoW! Why? & WooW…Paul Dunn earlier in the year that might be worth pondering over your happy holidays.

Connect before you communicate

Business needs less communication and more connection

e.g. http://www.Zappos.com founder Tony Hsieh says, “1st connect with ourselves, 2nd with our team, 3rd with our customers”

WOW! Add speed

e.g. the iPhone box impresses you before you open the box and find the phone.

“We are in the age of acceleration of everything” Google MD, Asia

BBC World ‘digital goldfish’ everyone has 9 seconds to impress online and our online behaviour has transferred offline into the same expectation.

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Digital Goldfish

WHY? Add purpose!

People will do amazing things if they understand the why and believe in what you believe in (Simon Sinek)

Focus on the Limbic brain and work your way out from WHY? to HOW? to WHAT? rather than the other way around

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Simon Sinek: Start with Why?

WooW…Change Lives!

e.g. Bill Gates 2007 Harvard Graduation speech “I hope you will judge yourselves not on your professional accomplishments alone, but also on how well you have addressed the world’s deepest inequities, on how well you treated people a world away who have nothing in common with you but their humanity.”

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Bill Gates Harvard Address: Have a purpose

e.g. Make giving a part of your business values https://www.b1g1.com/

Bonus learning: Q: What is your most important decision you make when you start your business? A: the NAME!

e.g. Robert Stephens & “the Geek Squad” from 1 man and a bicycle in 1994 to 24,000 people and $1.5b revenue in 2011 “Advertising is the fee you pay for being Unremarkable”.

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The Geek Squad: Be remarkable!

Do you have a Wow! Why? & Woow…for your business?

Take some time to think about it over the festive season and build them into your business plans for 2013.  Happy New Year!

 


Are you a winner or a loser?

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Here are some lessons learned from time spent listening to and talking to @RosabethKanter @ #ACBC12.  For those readers who have not heard of Rosabeth Kanter, she a renowned Harvard Business Professor who has inspired cutting-edge innovation, strategy, leadership and culture. She has worked a broad spectrum of for-profit and non-profit industries, including celebrated corporations like IBM, Proctor & Gamble and Verizon. I spent some time interviewing Rosabeth at #ACBC12 on behalf of Anthill Magazine and here is a summary of here are 5 key lessons learned from Kanter.

Her advice is equally applicable for new businesses as it is to established businesses.

Lesson # 1) Good moods, stickiness & parties!

When people in business are winning they are in a good mood and its contagious infecting others with more energy, there is less absenteeism, and people turn up even when they do not have to and take initiative rather than waiting for instruction.  Winners get invited to the best parties and thus, the opportunity to network with more successful organisations. Losers are left out.  Networks are vital and why many small companies flourish and grow.

Winner tip: Act bigger than you are if you are small and network with successful companies. Start-ups that dominate their industries usually had better partners early in their start up life.

Lesson #2) Warning! Winning can be boring! It’s hard work.

Just like an Olympian you need to practice every day and not become complacent.The people who make up teams in winning organisations may change but, the culture that perpetrates the organisation keeps the team winning.

Likewise, the complete opposite can occur for losers. There’s a U.S. college football team that lost every game of for nine years! The members of the football team changed, but the culture and attitude didn’t, so the team kept losing.

Winners monitor and measure their performance. They live by the saying ‘what gets measured gets done’

Winner tip: Use key success indicators with precision meticulously, to get things done.

Lesson #3) Winners are leaders who take responsibility.

Winners are leaders who take responsibility. Winning companies are run by people who are not afraid to say the three hardest words to say in business: ‘I was wrong.’

Losers love cover ups and do not say these words.

Winning businesses have a strong set of values and core purpose. P&G, founded in 1837, codified its values 20 years ago when it acquired Richardson Vicks.

P&G created its PVP (Purpose, Values, and Principles) to guide and unify the company with a common cause. It helped to create the company’s growth strategy of ‘improving more consumers’ lives in small but, meaningful ways, each day’. The PVP inspires P&G people to make a positive contribution every day.

These lessons are highly applicable to start ups, many of which are now writing and codifying values and purpose. Kanter pointed out a growing recognition that people cannot share in something they do not create. A PVP is a core part of a business, any business, that can be created by the whole team, not just the Founder.

Winner tip: Know what you stand for. Make sure your team does, too.

Lesson #4) Winners think small as well as big

Winners focus on small wins and one step at a time.  They get right back to work the day after a success.  If all you have is a big vision for your business then you will get demotivated  This is because the gap between the now and the vision, is too big.  Toyota changed from five year plans to five week plans. If you have a five year plan you will only start working on it in the 11th month of the 4th year!

Winners use open brainstorming, their initiative and feel everyone can make a difference to the business.  Losers go it alone, set unreasonable goals and, think no one else has valuable input.

Kanter’s advice is to focus on ‘small wins’, especially in tough times. Winning companies will provide teams with tasks and goals they can achieve.

Winner tip: Break it down; project by project. Focus on achievable components to build on success.

Lesson #5) the real difference is how winners handle losing

Winners like to get together with other winners, and share their experience. They are more likely to share mistakes and take on board feedback and, tips to improve.  Losing becomes an opportunity to learn for a winner.

Losers, by contrast, need to improve but, are less likely to heed conversations about losing. Nor do they take on board feedback to improve.

All winners have bad patches, or products or services that do not go well. They make changes, learn and stay focused and resilient.

Businesses that are resilient can always come back. McKinsey & Company gave free consulting to U.S. businesses post the GFC in the knowledge those companies would bounce back and appreciate their help in tough times. Then, when the opportunity arose for the company to engage a consultancy, McKinsey would be at the top of the list.

Winner tip: Remember Kanter’s law: Everything can look like a failure in the middle. Refocus, redirect and you can become a winner.

So, those are the five key lessons to help you and your company, be a winner and not a loser.

But wait! There’s more!

Bonus Tip #1: Innovation – be courageous but not stupid!

Kanter recalled how businesses often call her asking how they can be more innovative and immediately follow up with: ‘what are other businesses doing?’

It takes an innovator with courage to bring out something radically different and, not just something incremental. I mean, really, how many different varieties of toothpaste do we need? Do something different!

Incremental strategies reach a peak. In order to get more success, you need to have more failures. You need to try more ideas, more often, before you find the one that works.

Bonus Tip #2: Values matter! Your business is bigger than you!

Kanter points to a greater need today for openness in organisations today.  Founder-led companies can fall into bad habits because the founders can think they know everything. However, an autocracy cannot flourish.

Founders need to be surrounded by great teams. They also need to accept that they may not stay on as the CEO forever.

Bonus Tip #3: Partnering skills matter most!

Business alliances come and go and, they are really difficult to do well. Take Verizon and Google, for example. These two huge companies partnered to create the Android phone but, that alliance no longer stands.

The best alliances have a very specific outcome and an end. It needs to be recognised that the interests of the companies in the alliance can, and will, change.

What every start-up needs is the skills and knowledge to identify and make alliances with the best, and most suitable, partners.

If you are interested to read more on the differences between winners and losers, go to Kanter’s blog.

This article was published on http://anthillonline.com/are-you-a-winner-or-a-loser/ on 14 Sep 2012.

Dermott Dowling is an Innovation & International Business Consultant with a passion for building great brands, businesses and teams. He is the founding Director @Creatovate.


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