Food Industry R&D A New Approach

Research and development represents a vast spread of topics and can be an arena for controversy. In academia, such controversy may stem from conflicting interpretations of data and subsequent conclusions, the question of who was first to discover a particular finding and whether or not the said finding is of any value to the scientific community. R&D in corporate environments is mostly defined and driven by costs and clearly identified, consumer-focused targets. There is, however, common ground between these two approaches as both strive to maximize knowledge, though for different reasons and in differnt ways. The equipment and scientific rigor may be similar or identical, however their usage, approach and interpretation are different.

This book discusses the history and background of today's food industry R&D as seen by consumers, academia and the industry itself, with several chapters dedicated to new and disruptive approaches. A must-read for all professionals in the packaged goods industry as well as students who aspire to contribute to this new industry, forcefully driven by R&D.

Helmut Traitler has a PhD in Organic Chemistry from the University of Vienna, Austria. In 2010, after decades' of experience with Nestlé in various roles around the world, Helmut co-founded Life2Years, Inc, a start-up company producing healthy beverages for the over-fifties.

Birgit Coleman holds a Master of Arts in Business, MA from the University of Applied Sciences, Vienna. She is a strategic thinker and Connections Explorer in her current role at Swissnex San Francisco.

Karen Hofmann Karen holds a Bachelor of Science in Product Design from Art Center College of Design and a Bachelor of Arts in Psychology from California State University, Northridge. Karen is Chair of the Product Design Department at the Art Center College of Design in Pasadena, California.

About the Authors xvii

Foreword xix

Preface xxi

Acknowledgment xxiii

Part 1 WHAT WE HAVE TODAY AND HOW WE GOT HERE 1

1 A typical food R&D organization: Personal observations 3

1.1 Introduction 3

1.1.1 Business people always know better 4

1.2 A look back in wonderment 5

1.2.1 Innovation is everyone’s business 5

1.2.2 Let’s go and have a drink 6

1.2.3 Never give up and continue to hope 6

1.3 A look back to the beginnings of a typical food industry R&D 7

1.3.1 It all starts with a great idea 8

1.3.2 People were frightened 8

1.3.3 Are we depleting our resources? 9

1.3.4 Focus, focus, focus 10

1.3.5 A historic perspective 11

1.3.6 Let’s cut costs 11

1.3.7 Food industry has simple and tangible goals 12

1.4 From single and large to multiple and complex 13

1.4.1 Nutrition has growing pains 13

1.4.2 The new risk management approach: Many projects 14

1.4.3 Too many projects? No problem, reorganize 15

1.5 Why does the food industry need R&D after all? 16

1.5.1 Million dollar answers to the million dollar question 16

1.5.2 Here we go: Justifications 17

1.5.3 Because we can is a great reason! 17

1.5.4 New product development is everything, or is it not? 18

1.5.5 Consumer is king 19

1.5.6 It’s all about long�]term thinking, stupid 20

1.6 Summary and major learning 21

References 22

2 A typical food R&D organization: The world consists of projects 23

2.1 All R&D work is project based 23

2.1.1 Project has many meanings 23

2.1.2 Third�]generation R&D 24

2.1.3 Strategic business units became popular 25

2.1.4 Organization is everything 26

2.1.5 Freeze the project design 26

2.1.6 How free can you be? 27

2.1.7 Small is beautiful 27

2.1.8 Pipelines 28

2.1.9 Try it out first 29

2.2 Project management 30

2.2.1 Manage or lead? Manage and lead 30

2.2.2 Select the right project and deliver 31

2.2.3 Teamwork is not everything, it’s the only thing! 32

2.3 All projects are sponsored 32

2.3.1 SBUs: The new, old kid on the block, happy anniversary! 33

2.3.2 Accountability and responsibility: A “repartition” of roles 34

2.3.3 SBU demands, R&D delivers 35

2.3.4 A brief comes from above 36

2.4 The predictable organization 36

2.4.1 First ritual: Research the consumer 36

2.4.2 From “business scenario” to “business plan” 37

2.4.3 More rituals 38

2.4.4 Projects never seem to die 39

2.4.5 It’s all about results 39

2.5 Valuation of projects 41

2.5.1 Your project could have delivered more! 41

2.5.2 That’s what others invest 41

2.5.3 Sell your project better: Start by explaining it so that everyone can understand it 41

2.5.4 Communication is king! 43

2.5.5 Speed is everything 43

2.6 Summary and major learning 44

References 46

3 A critical view of today’s R&D organization in the food industry: Structures and people 47

3.1 A typical setup of a food R&D organization 47

3.1.1 New idea? Let’s wait 48

3.1.2 Food is a conservative beast 48

3.1.3 Small is beautiful, or is it not? 49

3.1.4 Ingredient is king 49

3.1.5 Quality and safety are not everything, they’re the only thing! 50

3.1.6 Technologies are always product related 51

3.1.7 What’s my project worth? 51

3.1.8 Cui bono? 52

3.2 The people in the food R&D 52

3.2.1 Do I stay, or shall I move on? 53

3.2.2 Twenty percent! Are you out of your mind? 53

3.2.3 More hoppers 55

3.2.4 More stayers 55

3.2.5 Change can be frightening 56

3.3 The role of discovery and innovation in food R&D 57

3.3.1 It’s all about discovery 57

3.3.2 It’s all about innovation, or is it renovation? 58

3.3.3 Size matters 59

3.3.4 Here’s a way out 59

3.3.5 What would the consumer say? 60

3.4 Additional personal observations and R&D�]related stories 61

3.4.1 The business project 62

3.4.2 The secret project 63

3.4.3 The pet project 64

3.4.4 The never�]ending project 64

3.4.5 The trial�]and�]error project 65

3.4.6 The please�]someone project 65

3.4.7 The defensive project 66

3.4.8 The knowledge�]building project 66

3.4.9 Change is needed! 67

3.5 Summary and major learning 67

References 69

4 Understanding intellectual property and how it is handled in a typical food R&D environment 70

4.1 Quest for intellectual property: An important driver 70

4.1.1 Patents 70

4.1.2 Recipes 71

4.1.3 Trademarks 72

4.1.4 Trade secrets and secrecy agreements 72

4.1.5 Experts: Actions and results 73

4.1.6 Alliances and partnerships 74

4.1.7 Protect everything! 74

4.1.8 One last attempt 76

4.2 The value of intellectual property for a food company 76

4.2.1 Poor principles in practice 77

4.2.2 Change is on its way 77

4.2.3 Patents forever 78

4.2.4 Numbers and more numbers 79

4.2.5 And more numbers 79

4.2.6 Here are more and even bigger numbers 80

4.2.7 Is my patent actually profitable? 81

4.2.8 It’s all about brands! And about service level! 82

4.2.9 Good communication is key, great communication creates value 83

4.3 Intellectual property as the basis for industrial intelligence and counterintelligence 83

4.3.1 List everything 84

4.3.2 Technologies and people 84

4.3.3 Who are the experts? 84

4.3.4 Don’t ask questions, just fill in the form! 85

4.3.5 I want monthly highlights, although I don’t read them 86

4.3.6 Open up! 86

4.4 Commercializing IP assets 87

4.4.1 A good license deal is better than no license deal or so you would think 88

4.4.2 Licensing out most often is a deviation of the traditional business model of a food company 88

4.5 Summary and major learning 89

References 90

Part 2 POSSIBLE FUTURE OF THE FOOD INDUSTRY 91

5 The need for a new approach to R&D in the food industry 93

5.1 R&D in the food industry is inefficient: An analysis 93

5.1.1 Innovation at zero extra costs 93

5.1.2 Real changes are required 94

5.1.3 Small is beautiful; large becomes inefficient 95

5.1.4 The good, the creative, and the productive 95

5.1.5 What’s wrong with R&D? 96

5.1.6 I don’t know which half to cut! 96

5.1.7 Let’s eliminate every second word 97

5.1.8 Let’s do another budget cut 98

5.1.9 Innovation is key! 98

5.1.10 The secret: Combine sensible budget cuts with instilling a creative constraints atmosphere 99

5.2 R&D under the influence and guidance of consultants 100

5.2.1 Consultants sell you back your idea; What’s wrong with this? 100

5.2.2 It’s you or your boss who asked for help 101

5.2.3 Consultants well used can be of real help 101

5.2.4 Being coached is everything 102

5.2.5 How to bring it to the consultant 103

5.3 R&D under the tutelage and guidance of marketing and operations 104

5.3.1 Marketing has greater leverage 104

5.3.2 Marketing gives orders; marketing does not make compromises 105

5.3.3 Operations act like a strict father 106

5.3.4 A bit of humor 107

5.3.5 Here’s one example 108

5.3.6 Let’s be respectful with each other 108

5.4 Evolutionary change in a typical food R&D organization 109

5.4.1 R&D is not alone in mediocrity 109

5.4.2 Let’s change, gradually! 110

5.4.3 Watch out for support and best timing 110

5.4.4 Cyclical versus anti�]cyclical 111

5.4.5 From 10 make 1 or make 10: Which do you prefer? 111

5.4.6 Let us team up! 112

5.4.7 Change comes easy 112

5.5 Summary and major learning 112

References 114

6 Consumer perspectives for change to R&D in the food industry 115

6.1 The fast moving consumer goods industry (FMCGI) 115

6.1.1 Fast, furious, and cheap! 116

6.1.2 What consumers really want? The million dollar question, the billion dollar answer! 117

6.1.3 Food should be all natural it should be all this… 118

6.1.4 Food companies don’t like risks; they “wait them away” 118

6.1.5 Lean and efficient: Don’t you get it? 120

6.1.6 Mutual understanding is not everything; it’s the only thing 120

6.1.7 Here are some ways out 121

6.2 The consumer in the center 121

6.2.1 No risk, no fun, or else? 122

6.2.2 What’s architecture got to do with this? 123

6.2.3 In search of the ultimate answer 123

6.2.4 Emancipate from the consumers! 124

6.2.5 I think we may have the wrong people, oops! 125

6.2.6 Observation and smart conclusion: Two successful siblings 125

6.2.7 Observation is king 126

6.2.8 What do I do with what I have seen? 127

6.2.9 Tell the consumers, don’t let them tell you! At least try 127

6.2.10 The ultimate downturn: Administrative processes 128

6.3 The consumer�]driven food R&D 129

6.3.1 The “a�]ha” moment 130

6.3.2 Take the risk and become independent 131

6.3.3 And better back it up with successful results! 131

6.3.4 I want to play with my own toys and make my own rules 132

6.4 Consumer groups: The public opinion 132

6.4.1 Early warning is the name of the game 133

6.4.2 Oops, we got it wrong 134

6.4.3 Working together for the common goal: Consumer benefits 134

6.5 Summary and major learning 135

References 137

7 University perspectives for change to R&D in the food industry 138

7.1 How did we get to this? 138

7.1.1 Why have “food science” and “food engineering” developed in parallel to mainstream science disciplines? 139

7.1.2 Why does industry sponsor research 140

7.1.3 IP “there’s gold in them there hills”: The intellectual gold rush 141

7.2 The “state of the art” 143

7.2.1 What does the food industry know about academia? 143

7.2.2 Academics: Three different ones 143

7.2.3 Nutrition, medical science, claims, and regulatory bodies 146

7.2.4 Getting money from governments via grants and awards 149

7.2.5 Academics as consultants 151

7.3 Where are we heading? 151

7.3.1 Reunification? 151

7.3.2 Research as a marketing tool 151

7.3.3 Crowd�]sourcing solutions: Open innovation pros and cons 152

7.3.4 Scientific publication in the future 153

7.3.5 A multidisciplinary future 154

7.3.6 How to collaborate better? 154

7.4 Summary and major learning 154

Reference 156

8 Industry perspectives for change to R&D in the food industry 157

8.1 A typical food industry set�]up 157

8.1.1 Branded products or private label? 158

8.1.2 The food industry: A champion of complexity 158

8.1.3 Some stories: Small food businesses and simplicity in their setup 159

8.1.4 How it all started 160

8.1.5 A bit of history: Strategic business units 161

8.1.6 It’s getting really confusing now 162

8.1.7 One important change of R&D setup as a consequence of a changing business structure 162

8.1.8 What’s first: The chicken or the egg? 163

8.2 The food industry: An easy money�]maker or a daily battle? 164

8.2.1 Marketing is really old, really, really old 164

8.2.2 Can the food industry turn to a new direction and new business model? Is a revolution possible? 165

8.2.3 Let’s do this together 166

8.2.4 Easy money or daily struggle? 167

8.3 Is the food industry really innovation driven? 168

8.3.1 Innovation in the food industry is rather an antique affair 169

8.3.2 IBM or Kodak: Which would you rather follow? 169

8.3.3 Change or perish! 170

8.3.4 Small is beautiful and creative 170

8.3.5 Change your business model 171

8.4 The perceived value of the R&D organization: It’s in the eye of the beholder 172

8.4.1 Why R&D is useless… 172

8.4.2 And why R&D is great! 173

8.4.3 It’s because of the tax man 174

8.4.4 The sense of urgency is really missing 174

8.4.5 “Good�]weather” versus “bad�]weather” managers 175

8.4.6 Constraint is good, smartly dealing with it is better 176

8.5 Summary and major learning 177

References 179

Part 3 DISRUPTIVE OUTLOOK FOR THE FOOD INDUSTRY’S R&D 181

9 Outlook to other industries’ R&D organizations 183

9.1 Introduction 183

9.2 Brief historical review 184

9.3 Let the journey begin: What we can learn from their players and industries 184

9.3.1 Google 184

9.3.2 Google X 185

9.3.3 Back to Google X and the future 186

9.3.4 Google Research 187

9.3.5 Google for Entrepreneurs (GfE) 188

9.3.6 Google Ventures 188

9.3.7 Westfield Labs: Designing the mall of the future 189

9.3.8 Attack on the the brick�]and�]mortar model by e�]tailers Zappos and Amazon 190

9.3.9 The rise of social shopping 191

9.3.10 Traditional industries meet tech 193

9.3.11 The art of dating 193

9.3.12 Learning from the least sexy industry role model 194

9.4 Halftime 195

9.4.1 The lean startup methodology 196

9.4.2 The lean network approach: The nomad approach 196

9.4.3 R&D�]I�]Y 196

9.4.4 The IKEA effect 197

9.4.5 Open source 197

9.4.6 The street is your R&D lab 198

9.4.7 Projects to promote interdependence 199

9.5 Summary and major learning 199

References 199

10 Utopia or visions for the future: A new reality? 201

10.1 What if I had a magic wand? My first set of magic tricks 201

10.1.1 Abracadabra… 202

10.1.2 Integration across the borders in the food industry 202

10.1.3 Open innovation still remains much of a lip service approach 203

10.1.4 Brand strength is volatile 204

10.1.5 Store brands become more popular, or so it seems 205

10.1.6 Let’s join forces 205

10.1.7 We have to accept that there are problems out there 206

10.1.8 We need to take the consumers’ fears seriously 206

10.1.9 It’s so confusing out there, please help me! 207

10.1.10 The new business model 2.0 208

10.1.11 The R&D�]centric company model 2.0 (equally applicable to model 2.1) 210

10.2 What if I had a magic wand? My second set of magic tricks 211

10.2.1 Change is inevitable in all areas! 212

10.2.2 The new product will be know�]how 213

10.2.3 That’s what’s important for business model 2.1 214

10.2.4 Here are the details 215

10.2.5 Some calculations, just examples 216

10.2.6 The company can earn more with model 2.1! 217

10.2.7 More changes: A new type of employee 218

10.3 The new scientists and engineers: A new type of people 218

10.3.1 The new educational focus: Communicate 219

10.3.2 Choose your words and help me to understand 220

10.3.3 That’s what it takes 220

10.4 The new R&D organization 221

10.4.1 Change is a risky business 222

10.4.2 Here’s the list 222

10.5 Summary and major learning 224

References 226

11 Testing the hypotheses 227

11.1 Too good to be true or simply wrong? 227

11.1.1 Let’s look at business model 2.0 first 228

11.1.2 Let me take stock 228

11.1.3 Model 2.0: It’s either all or nothing 229

11.1.4 We don’t want to change anything; all is just perfect or is it not? 230

11.1.5 It’s about time for R&D to jump into the driver’s seat 231

11.1.6 What about business model 2.1? Too disruptive and outlandish? 232

11.1.7 So, what’s bad about model 2.1? 233

11.1.8 We better start the gradual transition today 233

11.1.9 It’s all about people 234

11.1.10 Selling the intangible: The new mantra 235

11.2 The new people: What does it mean? 235

11.2.1 Really new people with a new level of education are needed 236

11.2.2 And there has to be more 237

11.2.3 Hiring by committee 238

11.3 Some case studies: Personal views 238

11.3.1 Charlie and the chocolate factory 239

11.3.2 It’s all about talking to clients 239

11.3.3 Observe and learn; don’t impose and remodel 240

11.3.4 Citius, altius, fortius 240

11.3.5 Some reasons for the separation 241

11.4 Business model 3.0 for R&D 242

11.4.1 Change was in the air 243

11.4.2 A short commercial 243

11.4.3 Change or perish 244

11.5 Summary and major learning 245

Reference 247

12 Summary, conclusions, learning, and outlook 248

12.1 The typical R&D organization in the food industry 248

12.1.1 You are too old for marketing 249

12.1.2 How it all started 249

12.1.3 Why R&D? 250

12.1.4 Everything’s a project 251

12.1.5 And here came the strategic business units 251

12.1.6 Clever project management 252

12.1.7 The role of the SBUs and how it influenced R&D 252

12.1.8 The rituals: Consumer research, business plans, and the project definition 253

12.1.9 A critical view of today’s R&D organizations in the food industry 253

12.1.10 People in the food R&D 254

12.1.11 Discovery and innovation: More projects 255

12.2 Understanding intellectual property 255

12.2.1 We want to own everything: Should we really? 256

12.2.2 Service: An added value for any food company 256

12.2.3 What are other companies doing? What is my company working on? 257

12.2.4 I want to know who stands behind the competencies 257

12.2.5 What’s my IP worth? 258

12.3 New approaches and perspectives for change 258

12.3.1 Something’s wrong in the state of R&D 258

12.3.2 Consultants: A necessary evil? 259

12.3.3 Lessons from marketing and operations 259

12.3.4 Evolutionary change in a typical R&D organization 260

12.3.5 How would consumers see changes in the food industry’s R&D? 260

12.3.6 Consumer research isn’t everything; sometimes it’s actually the only thing 261

12.3.7 Consumer groups and the public opinion 262

12.3.8 University perspectives for change 263

12.3.9 IP: The intellectual gold rush 264

12.3.10 What does the food industry know about the world of academia? 264

12.3.11 Nutrition, medical science, claims, and regulatory 265

12.3.12 Where to get the money from: The role of grants and awards 265

12.3.13 Academics as consultants 265

12.3.14 What’s the future direction? 265

12.3.15 Scientific publication in the future: Multidisciplinary future and collaboration 266

12.3.16 Industry perspectives regarding change in food R&D 266

12.3.17 Food and beverage companies are really old 267

12.3.18 Anticipate change or be forced to change 268

12.4 Outlook to R&D organizations in other industries 268

12.4.1 And the winner in the innovation competition is 269

12.4.2 The street is your lab 269

12.5 The vision for the future: Testing the vision 269

12.5.1 The new reality for the food industry’s R&D and for the entire food industry 269

12.5.2 The new suggested business models 270

12.5.3 Brand strength is becoming increasingly volatile 270

12.5.4 We are not there yet 271

12.5.5 This change is going to be really tough 272

12.5.6 Testing the hypotheses: First model 2.0 272

12.5.7 What about suggested business model 2.1? Too disruptive and detached from reality? 273

12.5.8 Finally, here yet another business model 3.0 for the R&D in a food company 273

Reference 274

Index 275

The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any access cards, study guides, lab manuals, CDs, etc.

The Used, Rental and eBook copies of this book are not guaranteed to include any supplemental materials. Typically, only the book itself is included. This is true even if the title states it includes any access cards, study guides, lab manuals, CDs, etc.