Sustaining Innovation at Unilever -Embracing Open Innovation in R&D

Miles Eddowes : HPC R&D Director for Open Innovation22nd June 2006

Outline

UnileverMissionProducts

Portfolio management processOpen Innovation

Unilever – Scope and ScaleOne in every two households in the world has a

Unilever brand in their home

247,000 employees worldwide

Brands on sale in over 150 countries

In 2005 turnover was £27Bn

Unilever - Our Mission

“Unilever’s mission is

to add vitality to life.

We meet everyday needs for nutrition, hygiene and personal

care with brands

that help people

feel good, look good and get more out of life.”

Product portfolioHome & Personal CareFoods

Savoury & Dressings Skin

World Number 1

World Number 2

Local strength

Spreads

Laundry - #1 in D&E

Deodorants

Weight Management

Tea Household Care

Daily Hair Care - #1 in D&E

Ice Cream Oral Care

Our €1bn brands

Commitment to R&D

Creating world class brand mixes and innovation that are born from

great science and technology!

Home & Personal Care R&D

LAUNDRY SKIN DEOORAL HAIRHHC

Sources of R&D - The Philosophy

Practical solutions for the consumer’s problems:• Personal care• Hygiene

As leading edge as it needs to beAs simple as possible

R&D The Fundamental Balance

An organisational structure to achieve:

Focus on the Customer, the Shopper

and the Consumer

Scale and Depth of the Science

Focused 4D model:Define, Discover, Design & Deploy

Define Discover Design Deploy

Managed in Stage Gates

What What shouldshouldwe do?we do?

Can weCan wedo it?do it?

How willHow willwe do we do

it?it?

LetLet’’ssdo it?do it?

Has it Has it been abeen a

success?success?

Can we Can we recommendrecommendto others?to others?

Home & Personal Care R&DInternal Skills

CORE SKILLS• Product• Process• Packaging• Safety/Health/Environment• Evaluation UNDERPINNING SCIENCE

• Physical Science

• Bioscience

• Process Science

• Consumer Science

Home & Personal Care R&D - Locations

Research GTC Port Sunlight (UK)

BangaloreTrumbull (USA)

Shanghai

Embracing Open Innovation

Want Find Get Manage

What is Open Innovation to Unilever?

Closed InnovationVertically integrated organisation that developed its technology in-house for its sole use

InternalTechnologyBase

UnileverProduct base

Open Innovation Other’sProducts

New Unilever Business Venture

Unilever Product base

Technology In sourcing

Out-Licensing

Technology Spin outsInternal TechnologyBase

ExternalTechnology Base

Commercialise internal and external ideas inside and outside of existing product/ channel base

One trend that’s driving Open Innovation

0102030405060708090

100

1981 1989 1999

25,000+10,000-24,9995,000-9,9991,000-4,999<1,000

Number of employees per organization

YearFrom Henry Chesbrough, “Open Innovation” Haas Business School, Berkeley

% of US R&D spend by size of the enterpriseThe rise of the Start-up and SME

Original source from National Science Foundation, Science Resource Studies, Survey of Industrial Research Development, 1991 and 1999

Our challenge

If we always do What we have always done,

We will always get What we have always got

More spaceto innovatewithin

Technologyoptions

ConsumerInsight

Businessmodels

doable

profitable

desirable

Technologyoptions

ConsumerInsight

Businessmodels

doable

profitable

Where to apply OI

1. Better, faster delivery of current benefit platformsBy leveraging OI to meet technical challenges in project plan

BrandStrategy

Projectplan Consider OI

2. Creating new benefit/product platformsBy integrating OI into the strategic innovation process

Integrate OI

BrandStrategy

Projectplan

Consumer Technology Matrix forbalancing the ambitions of a project portfolio

New Core Product New Benefit Improvement Variant

Radical

Next Generation

Incremental

Base

Consumer Value Perception

Enab

ling

Tec

hnolog

y

Shift internal skills

Technology Significance

Clear Leader : MARKET TREND

SETTER

Strong: IMPROVES

COMPETITIVENESS

Favourable: MAINTAINS

COMPETITIVENESS

Tenable: MARKET

FOLLOWER

Weak: LOOSING GROUND

ACTIONS

Technology CompetenceScience and Technology Significance and Competence:

Emerging: LOOKS PROMISING BUT NOT

YET PROVEN

Pacing: START TO APPEAR IN THE MARKET - HIGH

POTENTIAL

Key: CRUCIAL TO COMPETE

Base : CRUCIAL TO SURVIVE

Technology acquisition target lists

Tech need 1Tech need 2Tech need 3Tech need 4Tech need 5Tech need 6Tech need 7Tech need 8Tech need 9Tech need 10Tech need 11Tech need 12Tech need 13Tech need 14Tech need 15Tech need 16

OI project types

Ourmarket

Complementor

Unilever R&D

Authority& support

MutualGuidance

Liaison

Publications

Complementor’sTechnology

Unilever Brand

Complementor’scapability

Unilever’scapability

Re-badging Joint Capability Builds

Complementor’scapability

Unilever’sTechnology

Complementor’sTechnology

Unilever’scapability

Ourmarket

Othermarket

Favourable Cost structures

Ventures

Authority

Adopt and Adapt

Unilever’sTechnology

Complementor’sTechnology

Joint Development

Unilever’sTechnology

Complementor’sTechnology

Joint Research

Q&A