Product Innovation Process

When it comes to product innovation, it was investigated through the process presented in

Figure 2. Hence, it is compartmentalized into the three phases derived from the literature

review, namely, idea generation phase, development phase and ready-to-launch phase.

and what inputs are needed in what phase. This subsection will focus on presenting these differences, hence, also describing the product innovation process of the tenants.

Consequently, the first sub question of our research question will be answered.

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What does the product innovation process look like for the tenants?

4.2.2.1. Innovation Methods

The large companies in our sample have devised a specific process that they follow when pursuing innovation. These processes are established to synchronize the efforts of the various people involved in the company in order to ascertain the efficiency of the innovation process. Furthermore, both SEGES’s and Arla’s time horizons go beyond one year when it comes to their development phase. The long time span obligates them to formulate clear and well-structured processes. While SEGES uses Design Thinking and other iterative methods for specific steps within the process such as qualifying ideas, their overall process follows a rather linear setup. This is also the case for Arla, who mentions agile working as an approach; nonetheless, their ambition to double the impact of their innovation while cutting development time by half is very much influenced by the Stage-Gate model.

“As everyone else in product development and in the innovation department at Arla Foods, we are vaccinated with the Stage-Gate model.” – Peter Sinding, Arla.

The smaller the company, the less structured the innovation process, and in some cases there does not even exist any clearly formulated process. Instead, their product innovation hinges on opportunities that open up along the way. Cath Mersh Communications mentioned that

“by muddling through, things kind of happen by coincidence” or DeliDrop stated that “you can stumble across different solutions and one thing often leads to the other.” Thus, the process is more iterative with inputs from different actors guiding the development in new directions. Especially startups include their external network to test and sample ideas.

“So, we don’t have a really structured process on how to do that. For me, it’s really a lot

about sampling.” – Rasmus Linnet, DeliDrop.

4.2.2.2. Top-down versus Bottom-up

Since only the large companies formulated clear processes with regards to their innovation, only SEGES and Arla have an organizational setup with respect to the management of their innovation activities. Both companies employ a top-down structure and strategy for their innovation process. As an example, Arla has different initiatives, called Smart Start or Dairy Hack, which they implemented to generate ideas for new products. SEGES as well has defined a clear structure with different stages in the innovation assigned to different employees.

“And then we have a process here where we have some of our employees, especially trained in using different innovation models. We call them innovation masters.” – Lisbeth Shooter, SEGES

When it comes to intellectual contributions to the innovation process, both companies include a bottom-up approach, mainly at the beginning of the process when it focuses on idea generation.

“The pipelines of ideas that we have, every project list of the ones that we are going to launch is mostly created locally.” – Peter Sinding, Arla.

“We ask farmers, we will ask veterinarians, we would ask advisors, companies, ourselves, colleagues.” – Lisbeth Shooter, SEGES.

4.2.2.3. Resource Acquisition

With regards to acquiring the relevant resources needed for the innovation process, different

approaches can be found amongst the tenants. Resources that are important in the process

include ideas, expertise, or knowledge within the development phase as well as physical

resources. Furthermore, human resources such as suppliers, specialized workforce as well

as customers are needed. For idea generation, larger companies try to include as many

people as possible, externally, and internally. Once it comes to developing the idea, they

tend to turn inward.

“All ideas can be started wherever there is a brain. So, whenever there is a brain, we can have an idea and we have a lot of initiatives.” – Peter Sinding, Arla.

“When we collect ideas, it can be from all sorts. But how to build a project from an idea, that is SEGES’s domain.” – Lisbeth Shooter, SEGES.

For the SMEs and startups, the initial idea usually stems from within the company or from experience.

“But most of it is like my own idea and I see something lacking in the market at present.” – Michelle Ngoc Le Kynde, Sweetkynd.

However, when developing products, the startups and SMEs include external partners and customers to a large extent. In addition, access to customers becomes especially important once companies reach the ready-to-launch phase in their process.

“At a very early stage, we got involved with a handful of companies that gave us a lot of input, and some of them even ended up being customers, and even contributed more to developing the solution.” – Katrine Søndergård, Tracezilla.

All companies involve customers in their process. However, the involvement occurs at different stages. While larger companies use customers especially in the idea generation phase, startups and SMEs tend to involve customers to a greater extent in the development of existing ideas. Here, the customer is used as a source of knowledge that helps in improving solutions. Besides the knowledge gained from customers, knowledge is also in some cases derived from scientific research. Only a few companies in the sample include scientific research to a greater extent when developing their product besides using customers. NatuRem Bioscience product is based upon scientific research with the aim to radically innovate the food ingredients market.

“Then we have many students involved at KU (Københavns Universitet)… they do research in the strain itself, but also testing the biomass in food applications.” – Christian Kjølby, NatuRem Bioscience.

Arla focuses on scientific research as well to ensure that they stay on top of the game regarding what is currently possible in the dairy product industry and to be able to react fast to changes in consumer demand.

“So, we are spending quite some money in research year by year … to make sure that Arla is on the cutting edge.” – Peter Sinding, Arla.

For SEGES and Innova Consult, science builds the basis of the service that they are offering;

hence, they both are involved to a certain degree with scientific research.

“Everything we do is more or less research projects.” – Lisbeth Shooter, SEGES.

“I don’t know that much about sales because it is not what I was trained in. I am more on to the scientific part.” – Lisbeth Ankersen, Innova Consult.

Concerning resource acquisition, it is apparent that it is dependent on company size. The

large companies rely mainly on their internal resources, owning physical resources such as

machinery as well as having the brainpower in-house. Arla mentioned that they have a

critical mass when it comes to employees with which they can cover all relevant areas in

which they want to conduct research. Furthermore, they own state-of-the-art technology and

facilities. The same applies to SEGES, which employs around 650 employees who are

mostly technical experts in their respective fields. Smaller companies are not as resource

heavy, which forces them to access resources externally to a larger extent. This is true both

for startups and SMEs. Foodjob Nordic reported that when they recruit internationally, they

work together with partners who take over the process locally in the respective countries,

so recruits do not have to fly to Aarhus, for example. Also, when it comes to physical

resources such as production facilities, external partners are accessed as Sweetkynd

explains:

“I started looking for a company … and found a company in Germany, which is now producing it for me. So it was actually together with this company that I developed the recipe.” – Michelle Ngoc Le Kynde, Sweetkynd.

4.2.2.4. Goods versus Services

Categorizing the tenants by their product offer, if they either offer a good or a service, minor differences with regards to their innovation process could be established. Both goods and service companies include customers in their process as well as scientific research when it comes to idea generation or development. Generally, knowledge is accessed both internally and externally regardless of goods or service offer. Also, linear or iterative processes are represented in both categories. Nonetheless, the need for physical resources such as production sites or machinery is higher amongst tenants offering a good then tenants that offer a service.

4.2.2.5. Challenges in the Product Innovation Process

Table 5: Main Challenges in the Innovation Process by Company Size.

Resources Commercialization Management

Future Development

Startup X X

Big Company X X

SME No clear pattern could be established.

When it comes to challenges pertaining to the product innovation process, Table 5 shows what differences we have identified in the type of challenges that relate to firm size. The main challenge for the startup firms seems to be the acquisition of sufficient resources. Time is mentioned most often, followed by physical resources such as money and the right people.

Also, the commercialization of goods or services often poses a barrier because of a fierce

competition in the market or a poor product-market fit. By contrast, for the large companies,

resources and commercialization are not considered to be challenges. Rather, the

coordination and management of a large company as well as future development challenges regarding sustainability and novel idea creation, were mentioned.

“Then, of course, there is the sustainability challenge. … And here in Denmark, the government has decided to spend around a billion Danish kroner on research and until the 19th of March, we have to come up with ideas to reduce carbon emissions in the agricultural area.” – Peter Sinding, Arla.

“Our main challenge is still to actually get enough, how to say, innovation height, enough of these more out-of-the-box thinking projects.” – Lisbeth Shooter, SEGES.

However, amongst the SMEs, no clear pattern could be established. While one tenant

mentioned time as an issue, one referred to management issues based on the fact that the

company is run by only one person, and finally, another SME did not recall any specific

challenges.

In document Innovation in the Food Industry (Sider 54-60)