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The 21st century is turning into the age of global development and collaboration. Many businesses today are working together to exchange knowledge and expertise, as well as to establish a foundation when moving into a new market. One recent approach to collaboration involves collaborative innovation between young, relatively small businesses and large, successful companies (WEF 3). This type of collaboration can be potentially beneficial for both sides, as well as for the local economy (WEF 3). Several models may be used for collaborative innovation, which promotes economic sustainability. One recent example of collaborative innovation with an eye to economic sustainability is Campbell’s 2016 investment into organic food start-ups.
Collaborative Innovation and Sustainability
According to Yoon and Hughes, large companies have many reasons for collaborating with start-ups and smaller businesses (par. 4). For instance, economic growth in certain industries relies on start-ups, such as the food industry, where the largest 25 companies only contribute 0.1% to growth (Yoon and Hughes par. 2). Therefore, developing start-ups can contribute to a faster-growing economy, where large businesses are more likely to succeed (Furlong par. 5). However, it is hard for start-ups to grow without external support. Most of the new companies close within a couple of years, which makes their contribution to economic growth short-term.
By investing in and collaborating with start-ups, big businesses can promote long-term economic improvement, thus achieving financial sustainability. Another reason for working with start-ups is their innovativeness and ability to find and share new opportunities: Yoon and Hughes state that “Startups excel at giving birth to successful proof of concepts; larger companies are much better at successfully scaling proof of concepts” (par. 4). For instance, Campbell’s characterises collaborating with smaller firms as “the latest step in the company’s attempt to better align its portfolio with consumers’ changing tastes, which have shifted away from processed food toward fresh goods” (Kowitt par. 6).
Models for Collaborative Innovation
However, not all collaborative innovations manage to achieve their plans for developing economic sustainability. Either small firms fail to grow in spite of the larger company’s financial contribution, or their growth does not lead to any significant change in the economic stability of the industry. In his article, “How Innovative Companies Collaborate,” Davis aims to explain why some collaborations are effective, whereas others fail.
One of the main reasons he gives is that too many companies are involved in the collaboration: “Forging an alliance between two companies has its own share of obstacles, including (but certainly not limited to) corporate culture clash, divergent strategic interests, and fear of intellectual-property poaching” (Davis par. 7); thus, the introduction of a third company is likely to create far more difficulties than benefits. Second, poor exchange of information and communication interruptions also pose a threat to collaboration (Davis par. 10).
Group cycling is one of the most efficient methods of communication within the partnership, as it promotes better circulation of information, thus improving the group’s innovative power while at the same time allowing enough space for members to pursue their own growth targets (Davis par. 10-11).
Yoon and Hughes also argue that one of the most important factors for successful collaboration is having a clear mission: “A missionary mindset provides protection to a proof of concept that is being scaled or sold in an established company or as a startup” (par. 10).
A close analysis of collaboration models for sustainability was performed by Rohrbeck, Konnertz, and Knab. The authors argue that in order to achieve the end goal of sustainability, the collaboration must have a thorough development plan for the future. One way to outline future development is to use a scenario technique (Rohrbeck et al. 17). This technique takes into account the changes to the business environment and the target audience that are not dependent on the industry, thus helping in predicting the overall development of the market (Rohrbeck et al. 17).
Another technique, roadmapping, can be used to predict the growth part of the businesses that are members of the collaboration, including the requisite competencies and necessary steps to achieve further growth (Rohrbeck et al. 17). Finally, the use of CBM can be used to turn the previous analysis into a concrete strategy for development (Rohrbeck et al. 17). Most importantly, however, CBM can explain how the members of the collaboration can benefit from market development and change facilitated by collaborative innovation (Rohrbeck et al. 17).
Overall, a successful collaborative innovation model is relatively small in terms of the number of members focused on a certain goal, and it involves good communication practices. Furthermore, collaboration for the purpose of economic sustainability has to employ trustworthy planning strategies that include an overview of the external structure of the market, the impact of the collaboration and the possible directions of growth.
Campbell’s Soup Company
Ever since the firm recognised the shift of consumer’s interest to organic foods, the Campbell Soup Company has been investing into start-ups working in this area of the food industry. Furlong explains that, prior to investing $125 million into start-ups, the company made several acquisitions: “For example, in 2015, Campbell acquired salsa, hummus and dip maker Garden Fresh Gourmet for $231 million and back in 2012, agreed to buy beverage business Bolthouse Farms for $1.55 billion” (par. 4). According to the author, this was primarily driven by the company’s failure to prosper in a slow food market (Furlong par. 5).
However, the 2016 investment marked a new style of collaboration for the company. The investment was made in a joint venture with Acre, which supports multiple new and innovative organic food and snack companies. The payment has already been partly distributed between several start-ups, such as Juicero, a new business that manufactures and sells an innovative system for making cold-press juice at home (Kowitt par. 4).
As a result of investment, small companies with innovative approaches to production and distribution of food products can grow, thus increasing the economic sustainability of the organic food industry in the United States and the financial sustainability of the Campbell Soup Company. The firm’s CEO Denise Morrison believes that the investment will result in the rise of shareholder value and help the company achieve its targets of growth in organic sales (Campbell Soup Company 4).
Conclusion
Overall, collaborative innovation is a promising practice for developing slow industries with shifting consumer interests. Large companies that are struggling to grow and small businesses that do not have enough resources can collaborate to encourage the stable growth of the industry, thus promoting their financial sustainability. However, building collaborative innovation requires both effort and expertise, as not all models of cooperation are equally valid. As long as the companies have a realistic goal and a thorough strategy for reaching it, collaborative innovation will be beneficial for both sides as well as for the industry.
Works Cited
Campbell Soup Company. 2016 Annual Report. 2016. Web.
Davis, Jason P. “How Innovative Companies Collaborate.” Forbes. 2014. Web.
Furlong, Hannah. “Campbell Soup Launches $125M Venture Capital Fund for Food Startups.” Sustainable Brands. 2016. Web.
Kowitt, Beth. “Exclusive: Former Obama Nutrition Policy Advisor Is a Partner in Campbell Soup-Backed VC Fund.” Fortune. 2016. Web.
Rohrbeck, Rene, et al. “Collaborative Business Modelling for Systemic and Sustainability Innovations.” International Journal of Technology Management, vol. 63, no. 1/2, 2013, pp. 4-23.
World Economic Forum (WEF). “Collaborative Innovation: Transforming Business, Driving Growth.” Regional Agenda, 2015. Web.
Yoon, Eddie, and Steve Hughes. “Big Companies Should Collaborate with Startups.” Harvard Business Review. 2016. Web.
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