Barry Lustig
Apr 15, 2015

Collaborate and iterate, otherwise stagnate

Barry Lustig, partner of Cormorant Group, argues that most companies are still not set up to enable real experimentation, with the result that new technologies often aren't given the chance to get off the ground.

Barry Lustig: Unilever's Foundry sets an example for companies to follow if they really want to innovate
Barry Lustig: Unilever's Foundry sets an example for companies to follow if they really want to innovate

When I asked Jeremy Basset, Director of The Unilever Foundry, about why Unilever established a dedicated space for startups to work directly and collaboratively with its brands, his candor was refreshing. “We need to have the humility to recognize that we don’t know it all," he said. "We need to work more closely with people who have capabilities beyond the strength of our own network.”

Through The Foundry, Unilever is taking a swipe at two unhelpful dogmas that have long hobbled innovation in the communication industry. First is the belief that new technologies and business models will help transform the industry even though it persists in a perpetual culture of insularity. Second is the mindset of “plan and perfect” which is rooted in a collective fear of failure. This has the chilling effect of crippling promising new ideas at birth.

The Foundry represents an ongoing transformation within Unilever about how it approaches innovation more widely. Its work is straightforward and holistic. The Foundry identifies promising startups and other talents through various competitions worldwide. Selected participants receive pilot funding and mentoring. They are expected to pilot and refine technologies quickly, working in partnership with Unilever brands. As one would expect, benchmarks for success and failure are defined at the outset and Unilever’s risk is carefully managed.

Even if major players in other industries, such as pharma, partner with fast-moving startups routinely, Unilever’s direct collaboration with emerging tech companies and innovative thinkers is far from the industry norm. Unilever’s experiment is a message to its staff and partners to adapt, and acknowledge the liability in maintaining status quo.

Matt Boffey of London Strategy Unit, a strategy consultancy, notes that there is a fundamental flaw in how the communications industry innovates: “Most companies want to launch a ‘perfectly good idea.’ They spend the majority of their time and budget developing their good idea and then releasing it.” A good idea is obviously good which means it’s likely that someone else has figured it out already.

“Innovative companies may release a seemly ‘bad idea’, but one that can be easily improved or abandoned,” explains Boffey. For example, Angry Birds and WhatsApp appeared to be pretty bad ideas when they started. There were 51 beta versions of Angry Birds, and WhatsApp was designed as a tool to help people update their social status until users discovered it worked as an Internet messenging service without using mobile telephone airtime.  Angry Birds and WhatsApp “launched and learned” quickly, so were able to turn this feedback into something useful, and in the case of WhatsApp, an entirely different product than was first imagined. Instilling that launch and learn mentality is now Unilever’s challenge to itself and, by inference, to its agency partners. 

“Interesting things happens in small bites,” notes Viswanath Parameswaran, CEO of Logical Steps, a Singapore-based tech platform development firm that works with companies like Standard Chartered Bank and Ericsson. “Most companies don’t have the patience or discipline to start small by focusing on a very specific client need, then building it out. They begin with a “grand vision” for a new product or service. The problem with this approach is that these grand visions are not allowed to fail.”

The reality is that few managers have the ability to show quick fails on their balance sheets without putting their jobs in jeopardy. Without alignment of incentives to encourage and support risky ideas, the ability to create new technologies and bring them to market internally will continue to be limited.

It’s not realistic to ask line staff or agency partners to invest in unproven technologies or create and pilot 25 prototypes in rapid succession keeping costs in mind, even with financial incentives. Unless agencies provide a clear space and guidelines to do new things and fail, efforts to develop and adapt new technologies aren’t likely to succeed.

While only established a year ago, some of The Foundry’s investments are already starting to reap benefits for Unilever’s brands. For example, Knorr Brands is partnering with a company called Digital Genius that developed a natural language app to help people discover recipes primarily by using ingredients found in their homes.

Odds are that a vast majority of larger-scale communications companies cannot innovate like Logical Steps or many of the startups knocking on their doors looking to partner with them. These smaller companies have greater freedom in terms of how they hire and retain talent as well as how they allocate their resources. “Launch and learn” is at the foundation of their corporate ethos. At the same time, Unilever is able to innovate by establishing a defined space in The Foundry to collaborate with emerging companies while containing risk.

Though the ideas behind The Foundry are replicable by others, Unilever will benefit from being first and learning faster than its competitors about collaboration and piloting new technologies.

As an industry, we need to be smarter about how we collaborate with startups and creative entrepreneurs. The Unilever Foundry, a defined space with a specific purpose, is a model worth watching and perhaps emulating.

 

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