Today’s companies face a dynamic risk landscape, the navigation through which demands continual flexibility in order to meet emerging challenges, and to seize new opportunities at the optimum moment.
For some businesses, this spells disaster; those that adopt a short term, reactive approach find it tricky to keep up with new legislation, to adapt to new challenges and to leverage opportunities as and when they arise. But within more savvy and forward-looking organisations, it’s widely recognised that for business to prosper in the long-term there is no option but to innovate. It’s these companies, with the capacity and drive to innovate, who will gain a strategic advantage, staying one step ahead of the curve and contributing to the development of new legislative and regulatory frameworks.
Of course, innovation is nothing new; it’s been the bedrock of successful business since business began. But the new game changer is sustainability-driven innovation, and in the food and beverage sector, this is fast becoming a significant trend.
Innovation is much more than just new product development. Leading businesses have realised that incorporating sustainability thinking into innovation processes is not just to create niche, ‘green’ products. Responding to the major challenges of the world, like health and nutrition, can be translated into considerable mainstream opportunities. Unilever’s margarines containing plant sterols, which have been clinically proven to lower cholesterol, are a case in point, or the thousands of low calorie/low sugar products that have been developed by companies such as PepsiCo to help combat the rising tide of obesity. These innovations are providing the companies that have developed them with a multitude of business benefits, including market differentiation, competitive advantage, brand reputation and customer satisfaction, on top of a boost in sales.
Resources – or more specifically, the availability, price and quality of energy, water, materials and agricultural products – are a fundamental driving force to innovate. Within the food and beverage sector, all of these resources are a necessity throughout the entirety of the supply chain. Companies that choose to adapt their processes to curb resource use and increase their efficiency will ultimately improve their profit margins and build up greater resilience to future resource scarcity and price shocks.
To really reap the rewards, though, businesses should look beyond their four walls and deep into their value chain. Even greater cost savings can be realised by using innovative methods to encourage suppliers to adopt more efficient, sustainable practices and to reduce waste. And the benefits go beyond direct financial returns; reducing overall carbon footprint and social impacts, and improving brand reputation, these are but a few of the paybacks that are possible.
This theory also translates into agricultural practices. The 2013Tomorrow’s Value Rating demonstrates that a growing number of leading food and beverage businesses, including Unilever, Nestlé, PepsiCo and Coca-Cola are investing in innovation to promote long term improvements in farming methods at the source of their supply chains. By devising new farming techniques to improve crop yield and resilience, and offering new training programmes and more efficient fertilisers to smallholders, not only will these smallholders see increased profits and improved livelihoods, the company itself will in turn secure higher quality raw materials and achieve a greater certainty of supply.
Yet despite these clear examples of effective innovation and the resultant benefits achieved by business, some problems cannot be solved alone. Collaboration is a key differentiator between companies who innovate moderately well, and companies who make innovation a defining feature of their business. Leading companies are increasingly looking to partner with others within or outside of their sector, as well as with NGOs, individuals and governments. These types of partnerships facilitate a multiplier effect, allowing breakthrough innovation using the power of collaborative effort; a significant leap forward from the incremental innovation achieved using the more limited resources available within an individual organisation acting alone.
By partnering to innovate, companies can create mutually beneficial market positions, whilst sharing the risks and achieving scale. Despite contradicting the instincts of business, rather than fearing their competitors, the leading organisations within the food and beverage sector are gradually demonstrating an ability to engage with each other to tackle some of the greatest issues facing the industry and wider society. By discovering the solutions, all partners should, in theory, benefit.
Coca Cola demonstrated best practice in the 2013 TVR through its collaboration with Heinz, Ford, Nike and Proctor and Gamble to drive forward sustainable packaging through the development of a commercially scalable, 100% sustainable plant-based plastic. This initiative relies on both inter- and intra-industry partnerships and an openness to pooling resources and leveraging the strengths and capabilities unique to these different businesses to find a solution to a pressing and very much global environmental issue.
Collaboration is undoubtedly one of the most instrumental success factors in effective innovation, and there are clear examples of this demonstrated by some of the leading companies in the food and beverage sector. Of course, there have been excellent breakthroughs in terms of innovative new products tackling social and environmental issues, as well as pioneering ways to improve efficiencies across the supply chain. However, the cross pollination of ideas between industries, organisations and geographical borders is undeniably the way that the business leaders of today will position themselves to prosper in the future.
The full results of the 2013 Tomorrow’s Value Rating can be viewed at www.twotomorrows.com/tomorrows-value-rating
Source: FoodBev (http://goo.gl/ukI4O4)
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