Dr. Olivier Ballevre

1R&D Beijing 北京研发中心

Nestlé Innovation Partnerships: the new open innovation

Knowledge Transfer Conference – Hong-Kong – November 7-8th 2010


Let's talk Nestlé

NestléThe world’s leading nutrition, health

and wellness company


The Nestlé story – how it all began

1867 1866

1929

1938

1947

1960s

1970s

1980s

1990s

2000s

Henri Nestlé1866


4

Nestlé Facts and Figures

• CHF 108bn sales in 2009• EBIT CHF15.7bn• Over 280,000 employees• 449 factories• Operations in 83 countries

• 93% of sales are food and beverages• No other food company is so clearly focused


5

• 5-6% Organic Growth• Sustainable increase

in EBIT margin and ROIC

Innovation is the driving force of theNestlé business model

Can we create value for Nestléand the society?

Do we have the commercial

capabilities to do this?

What is needed by consumers?

What is scientifically and

technologically possible?

Innovation Sweet-Spot


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Fit at all ages

Balanced and happyHealthy and

well

Comfortable and refreshed

Alert and energetic

Confidentand relaxed

Skin Health & Beauty

Weight Management

Healthy Recovery

Digestive Comfort

Healthy Ageing

Protection

Growth & Development

Performance

Our Challenge:Connecting benefit platforms and consumer aspirations

Science Consumer understanding


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PROTECT©, instant coffee naturally rich in polyphenolsfrom green coffee

Adapted to the specific needs of cancerpatients undergoing chemo- or radiotherapy

First Growing-Up Milk with immune enhancing properties

A probioticssupplement for dietary management of dogs and cats with diarrhea

Reinforcing the body’s natural protection

Lead Science and Technologies across Consumer Benefit Platforms


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Science & Research 28 PTCs and R&D Centres … + 280 Application Groups

• Product renovation• Technology deployment • Local manufacturing support

• Basic research in Nutrition, Food Science and Safety

• New core technology platforms

• Product and Process development

• Packaging and Design• Engineering• Manufacturing support

Nestle R&D Global Network 2 Bio CHF of annual investment in 2009

MinneapolisSolon

St. Louis

St. JosephMarysville

VittelAmiensLisieux

BeauvaisTours

YorkSingen

Shanghai

Singapore

SderotCasa BuitoniKonolfingenOrbe

Lausanne

Beijing

Queretaro

Fremont

Tokyo

Welwyn Garden City

RutherglenAbidjan

Santiago

R&D Centres with partner projects


R&D Beijing: Connect and Innovate for and from China

A Nestle R&D Centre with:Nutrition & Health Research Product & Packaging Development

Opening October 2008“Speed-ovation” for and from China

A Nestle R&D Centre with:Nutrition & Health Research Product & Packaging Development

Opening October 2008“Speed-ovation” for and from China


“Speed-ovation” for and from China Proximity – Interaction - Communication


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Nestlé’s extended R&D Set-up:Innovation Partners

Joint R&D on products and services

Development of new ideas

Research on new ideas

Key SuppliersSince 2005

Venture CapitalSince 2003

Universities, Start-UpsSince 1990


Nestlé Innovation Partnerships 12

Typical Development Stages of Innovation Partnerships

Development StageEarly Mature

Focus

BenefitAreas

BusinessNeeds

Innovation Partnerships withUniversities and Start-Ups

Innovation Partnerships withSMEs and Inventors

Innovation Partnerships withKey SuppliersIn-kind Contributions

Venture Capital

Cash Contributions


Nestlé Innovation Partnerships13

CREATEVALUE

BUILD GOODWILL

ESTABLISHTRUST

Relationship Stages ofInnovation Partnerships

Indispensable dialogue steps


Innovation Partnerships as the RoleModel for the Present and the Future

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Joint R&D on products and services

Development of new ideas

Research on new ideas

Key SuppliersVenture CapitalUniversities, Start-Ups

Disciplined structuring of the ways we work with external partners, including solid collaboration agreements and an early understanding of IP usage and commercial benefits

Smart communication, internally and externally, of our activities in innovation partnerships and open innovation

Smart Selection of academic partners in order to influence

and help shape academic research that serves future

innovation needs

Optimize VC portfolio to make it a strong part driving

towards successful innovation

Establish and optimizerelations and partnerships

with a select group of suppliers as the preferred

Innovation Partners.Nestlé has selected 15

innovation partners



Innovation Partnerships the New Model:How to Capture External Innovation

Active ExternalInnovationProjects

Company contacts and expert networks

Industry organisations

Dedicated focus external ressources(e.g. Swissnex, …)

Suppliers & Partners Networks

internet search enginesWorldClass, Visionary University Partners

University based on strategic needVC investment

Active CommunicationStrategic

Needs and benefits



Innovation Partnerships In a Nutshell

Innovation Partnerships have become the new role model and an integral part of the company’s strategy and vision on its drive towards the No. 1 Nutrition, Health & Wellness company.

This can best be described as a "Give-and-Take" activity: sharing of well-defined elements of information with the

innovation partners

sharing of know-how and resources within a specific framework of confidentiality

clear expectations as to the resulting solutions, their timing, related costs and benefits as well as IP ownership



Innovation Partnerships: How to handle themin Difficult Economic Times?

Good Market SituationDifficult Market Situation

Innovation Partnerships

Investment

Low

High

Alliances

Contract Research


Nestlé Innovation Partnerships 18

How Sustainable is the Concept of Innovation Partnerships?

• The term « Open Innovation » has become a « buzz-word »

• Buzz-words and fashions are never sustainable, they come and go, they mutate

• Open Innovation will eventually become the normal way of working

• Innovation Partnerships (INP) are the new Open Innovation (OI) and are an integral part of the innovation landscape in general

• INP is one important element in the innovation equation, the othersbeing alliances and contract research



Innovation is the Driving Force of theNestlé Business Model

• Approx. 5 Bio $ growth annually

• Sustainable increase in EBIT and ROIC

• 3,700 People in NestléResearch

• 2 Bio $ investment into R&D (internal and external)

• Approx. 200 Mio $ additional business linked to partnerships after the second year

[email protected]

Can we create value for Nestlé and the society?

Do we have the commercial

capabilities to do this?

What is needed by

consumers?

What is scientifically

and technologicall

y possible?

Innovation Sweet-Spot


Once I contemplated a whole day, but what I gained was less than what I would achieve by a moment of learning.Once I stood on tiptoe in order to look farther, yet what came into my sight was inferior to what I would see by looking from a higher elevation.

(Xunzi. Admonition on Learning)

吾尝终日而思矣，不如须臾之所学也。吾尝跂而望矣，不如登高之博见也 - 荀子·劝学篇

Artist: Mr. LIU Wen Hui

Documents

Dr. Olivier Ballevre