The importance of innovation has increased to a level that needs intensive investment, making the organisation note the need for a different way to initiate creativity. Innovation is a process that enhanced the creation of new products that are attractive to consumers through various company strategies (Ingram, 2018). The company selected for the discussion, Unilever, values innovation as an appropriate way to grow sustainably as the process helping the company to solve some significant challenges. The company promotes creativity that focuses on consumer demands and preferences and creates products that satisfy consumer’s needs.
Sources and Process of Innovation
Innovation for Unilever is a product of various divisions. The company engages prominent scientists, academic organisations, supplier and specialist enterprises that have an essential function to bring changes to the population’s health and wellbeing (Ingram, 2018). The innovation process for the firm involves three phases which include research, development, and product launch. These aspects create the framework vital for the successful implementation of new solutions and generation of positive effects on the work and results.
Research and Development
The research and development section in the UK works on sciences and technologies to apply to the product development procedure. The research intends to unite the most compelling intellectuals and concepts from various sources. Besides incorporating the leading scientific professionals from the company, it collaborates with universities and specialist organisations (Unilever, 2020). The firm has a history of being effective in discovering innovations through disruptive technologies that satisfy customer demands better than from the substitute products in the market and hence make a significant effect.
Unilever UK uses the innovations from science and technology to a different level through product design teams, converting exceptional concepts into products that meet consumer needs and demands. The stage also involves testing and developing new technology to ensure it meets the product characteristics by finalising a design to have a stable and great desired look (Unilever, 2020). The final phase of product development involves testing the products to ensure they meet safety standards and performance requirements.
Product Launch into Markets
Unilever UK R&D teams utilise local knowledge like consumer preference, regulatory guidelines, legal aspects, and rival products before launching their product into the market. The R& D collaborate closely with the marketing and supply chain division to ensure the manufacture of the new products is efficient and satisfy consumer needs.
Innovative Strategies for Unilever
Unilever UK believes in sustainable business as a driver to superior performance for the company concerning its vision in becoming a global leader in a sustainable industry. The company believes in a purpose-led, future-fit business model initiative that ensures superior performance, yielding consistency in financial results (Unilever, 2020). The leadership has strategic varieties and arrangements that help it meet the objective and vision of the organisation. Thus, the leadership strategy includes developing a portfolio into great development spaces in hygiene, skincare, functional beauty and plant-based foods. The leadership also endeavours to win with the brands as a thrust for benefits with empowerment from purpose and innovation.
Unilever’s new CEO Paul Polman introduced a new plan for the company, Unilever Sustainable Living Plan (USLP), which entails three sustainability objectives at the centre of the firm’s strategy. These goals include helping one billion people to improve their health, reducing the environmental footprint by half, and using its products to enhance people’s livelihood in different value chains (Unilever, 2020). The CEO is innovative as he was willing to break the typical business procedures at Unilever and link people with the new approach. As a visionary leader, Polman saw the need to consider a friendly business environment with a reduction in water utilisation (Unilever, 2020). The leadership was also ready to challenge the conservative perception in the business sector, bringing changes in the management by establishing the Unilever Leadership Executive (ULE) team (Siddique and Sultana, 2018). Along with his management team, the CEO can act regarding strategies that increase the employees’ motivation. The leadership established different plans to meet other goals, including long-term purpose, sustainability, and competence.
Innovative Marketing Strategy
Unilever incorporates its marketing strategy with the social project along with USLP effective plans. For instance, the company developed a brand message connected to mothers’ strong desire for their children’s development through a campaign “Dirt is Good”, which changed the mentality of fear for child’s play based on the detergent marketing ad approach (Siddique and Sultana, 2018). The corporation has also been innovative for educational campaigns to create awareness for the brands through a partnership with institutions such as the World Dental Federation, which has made the company participate in oral health care (Siddique and Sultana, 2018). Direct programs such as the Lifebuoy’s handwashing project in learning centres have been prevalent in marketing Unilever’s products (Siddique and Sultana, 2018). Dove Self Esteem Fund collaborates with organisations such as the UK’s Eating Disorder Association to finance educational Body Talk projects in schools to enhance the body’s self-esteem aspects.
Thorough Communication Strategy and New Partnership Plans
Unilever CEO Polman embraces the need for strategic communication with other organisations and stakeholders to increase awareness of the brand. The leadership uses channels such as interviews on media, meetings with analysts, UN conferences and World Economic Forums at Davos, which has left only a limited number of people unaware of Unilever UK (Unilever, 2020). “Partner to win” is an innovation that led to hundreds of deals with suppliers and several NGOs to address numerous difficulties (Siddique and Sultana, 2018). Agreements with Oxfam, Unicef, Save the Children, and Rainforest Alliance were productive in improving health and hygiene for over 2.5 billion people by providing safe drinking water, handwashing, and sanitation (Siddique and Sultana, 2018). In such a way, effective communication and cooperation help to attain better performance and new goals.
Achieving Superior Market Position and Quicker Product Development
Unilever is the global leader in the production of bath and shower products and deodorants and the UK. The company is advanced in advertising and marketing plans and active initiatives in in-store displays, enabling it to be successful in the cosmetics and toiletries division (Siddique and Sultana, 2018). The brand’s extensive presence and influence are due to innovative strategies in product development and appropriate establishment of brand extensions that meet the varying consumer inclinations (Siddique and Sultana, 2018). Unilever’s broad customer base has also been essential in scaling new products faster than its rivals.
Open Innovative Strategies for Unilever UK
Unilever UK’s ambition is to grow sustainably with the use of science, technology and product development accomplish existing goals and create high-quality products for consumers. The objective of innovation is to keep providing customers with products that improve their lives while also creating a healthy environmental and societal impact (Unilever, 2020). Innovations for Unilever UK are based on the vital understandings of consumers’ preferences, and hence the organisation desires to develop products that are relevant for consumers to choose them repeatedly.
Unilever has been using open innovation as a strategy for an extended period, and this approach involves collaborating with external organisations, including startup businesses, academics, and individual designers. The tactic is significant, especially in the continuously growing competitive world with globalisation. The source of the open, innovative approach was research and development (R&D) in 2010, after which the company acknowledged that great ideas relevant to Unilever would not only originate from within the organisation (Siddique and Sultana, 2018). Thus, the firm adopted open innovation to remove overdependence and heavy expenditure on R&D and established innovative initiatives across brands and incorporating the outside entities. With the open innovation, the company has expanded the scope to embrace assisting technology startups that could be essential partners to its products (Siddique and Sultana, 2018). The innovative products from the startup’s startups may include divisions like enterprise technology and digital marketing platforms. Therefore, Unilever launched the Foundry in 2014 to be responsible for partnering with innovative startups that can enhance the adoption of new technologies in a more efficient, effective and speedy manner (Siddique and Sultana, 2018). The Foundry provides three benefits, marketing mentorship, financial rewards for startups with ideas addressing Unilever posts and access to Unilever Ventures, the business’ investing division. Through this approach of incorporating startups, Unilever can identify the most recent technological innovation quicker.
Unilever UK has been acquiring brands as their short term innovative strategy in areas where open innovation has been ineffective. Unilever has made 18 acquisitions since the start of 2015, and the valuation of the business has revealed the cost-effectiveness of this strategy (Siddique and Sultana, 2018). For example, Unilever spent $1 billion to acquire an e-commerce shaving company, Dollar Shave Club, in 2016 for a valuation of 5 times revenue (Siddique and Sultana, 2018). Unilever also purchased Seventh Generation in 2016 for about $600 million and $700 million (Unilever, 2020). The cost of these acquisitions would have been lower if the Unilever Foundry had participated in developing these brands.
Unilever UK’s Internal Process of Innovation
Unilever has more than 150 000 employees working across over 400 brands, 190 countries, making it impossible to identify each individual’s skills and the best way to utilise them (Unilever, 2020). The most appropriate way to determine the staff’s innovative abilities is through employee skill sets to help the organisation match the workers to projects. The company, therefore, established a platform that is accessible via desktop, mobile device and smartphone for individuals to view the upcoming projects along with suggestions of potential matches of employees as internal hiring managers (Unilever, 2020). It helps to monitor current creativity levels and remain informed about the current climate.
The platform allows workers to make suggestions and their skills and desires, including what they intend to learn. The organisation encourages the employees to add their unknown skills to the platform to identify other areas they can suitably match. Unilever global HR partner Yanpi Oliveros-Pascual asserted the importance of recognising the relevance of maximising shared experiences from people coming together to foster innovation (Prange and Schlegelmilch, 2018). The system also provides project opportunities for the staff to acknowledge the interest of participation or not. The rollout of the technology in 2019 has produced various encouraging outcomes. The launch involved several functions and divisions, including HR and tax, food and refreshment sections (Unilever, 2020). Currently, the platform has 11000 active users with new skills profile while around 900 people are on projects (Unilever, 2020). This open strategy has been influential in discovering new skills that were unknown in the company while also enabling the employees to add several hours committed to project work beside their existing roles.
The company is also characterised by mechanistic structures with high levels of standardisation and formalisation of all processes. The given approach helps to increase the operational effectiveness and reliability of all processes, which is vital for the company as it emphasises the quality of its products (Amit and Zott, 2020). At the same time, this method can limit the reliability and creativity of workers, and for this reason, there is a need for the promotion of additional creative activities among workers (Amit and Zott, 2020). The company uses the competency enhancing strategy, presupposing that all employees are provided with the chance to improve their skills and become more creative in decision-making (Amit and Zott, 2020). Applying the framework for innovation strategy, it is possible to state that the ideas offered by trained workers are considered by the top managed and implemented to attain better productivity (Amit and Zott, 2020). It results in better outcomes and the further evolution of innovative practices in the company.
The human resource section for Unilever has various plans to enhance the competencies of its workers. The organisational culture stimulates and facilitates the individual development of the employees. Unilever UK has an Individual Development Plan (IDP) that involves creating an individual worker’s growth and actions towards their own goals, which focuses on long-term development within the company through attending compulsory pieces of training and optional ones from which an employee can choose (Unilever, 2020). Unilever Future Leadership Program (UFLP) embraces local Onboarding, two-year development, and then mentoring (MacDonald and Huang, 2019). This roadmap involves networking, developing skills through formal teaching and a mentorship program.
Organisational Structure of Innovation for Unilever UK
Unilever implements the divisional organisational structure, which implies that the global product design enables the specific product or product groups to become a separate operating division. This pattern is appropriate for firms owning various product lines or products in different markets (Amit and Zott, 2020). Unilever UK is a leading Unilever firm and is responsible for its production and management of its profits. The multidivisional structure, in turn, consists of cooperative form, strategic business unit form (SBU) and competitive practice. Unilever has adopted the joint plan, which focuses on structural integration devices to establish stable connections with other sub-firms.
Unilever UK also promotes innovative strategy at an organisational level through the Board’s composition that considers an equilibrium of skills and experience. Unilever’s creative design to enter multi-stakeholder partnerships involves the Board’s diversity in gender, age, and expertise (Unilever, 2020). Unilever indicates that recruitment of new directors and all employees requires an individual to possess features that promote different ideas, views, and standpoints (Unilever, 2020). The brand works towards achieving overall diverse fieldwork in the top leadership and in the workforce that includes gender-balance and involved employees who reflect the company’s consumer base that is essential for a lasting growth approach.
The Role and Impact of Disruptive Innovation
Innovations are an imperative element of business strategy and sustainable development as it facilitates improvements in product, procedures, business models and organisational arrangements. Innovations have also been essential for enhancing the sustainability and competitiveness of Unilever UK. Disruptive innovation, for instance, has a significant function in establishing new market value for the company. Disruptive technologies such as IoT provide the ability for value creation individually and collaborate with the existing standards and rules (Nasiri, Tura and Ojanen, 2017). The Internet of things (IoT) has altered the acceptability of information, people, technologies and services. The introduction of the IoT can create new market values and innovate brands by providing new opportunities (Nasiri, Tura and Ojanen, 2017). The disruptive innovation of IoT can also affect the development of firms’ environmental performance since the advancement in technology helps increase environmental safety and detection of danger.
Disruptive innovation is a significant determinant of a company’s sustainability through disrupting the existing markets. Innovations influence business growth and create the potential for social and environmental disruption. The creations are essential to counter sustainable development pressure and compete with existing businesses (Amit and Zott, 2020). Despite the critical components in disruptive innovation, the phenomenon might have several threatening impacts on big brands like Unilever UK, meaning that it should be considered while creating a growth strategy.
Smaller, quicker businesses might cause dangerous disruptions to big brands such as Unilever UK. However, disruption offers various opportunities to the firm, because of its creative nature (Cen, Dasgupta and Sen, 2016). Disruptions initiate changes in the way companies operate, although the firms have a culture of procedural and structured operation and hence need time. Disruptive innovations also affect the operations of a brand and not the core business (Cen, Dasgupta and Sen, 2016). Digital innovation in communication has already influenced how customers perceive advertisement (Cen, Dasgupta and Sen, 2016). This component includes the need for a road map that contains several channels with limited time to showcase.
Development and Performance
Unilever measures its success by assessing both non-financial and financial significant performance pointers such as health and wellbeing, environmental impact and influence on livelihoods. Economic indicators include divisions and the overall group. Unilever targets to help more than 1 billion people by promoting their health and hygiene to help limit the prevalence of life risk infections such as diarrhoea (Unilever, 2020). By 2020, the company had reached over 625 million people while reaching 715 million people through the digital TV platform representing an increase in previous years’ performance (Unilever, 2020). With a target to get 60% of its customers in meeting the highest standard nutritional levels based on internationally acceptable dietary regulations, the firm has attained a 61% mark, which was an increase from 56% during 2019 (Unilever, 2020). The business has therefore been successful in improving the health and wellbeing of its consumers.
Unilever also assesses its performance based on operations’ environmental impact and its reduction in a particular period. Although the company intends to reduce greenhouse gas emissions by halving across its products’ lifecycle, it has managed to reduce by 10% by the year 2020, an improvement in performance from the year 2019 (8%) (Unilever, 2020). Despite the large volume of production in 2020, the target to reduce CO2 emission below the 2008 emission rate of 145.92% was a success as the company recorded a 36.94% emission rate (Unilever Annual Report, 2020). On the other hand, the business operation has achieved its water target levels of 1.52, representing a lower value to 2.97 set for 2020 (Unilever, 2020). The firm has also maintained a waste disposal target of below 7.91 at a value of 0.34, although this increased from 0.30 in 2019 due to the increase in production volumes (Unilever, 2020). The numbers demonstrate substantial growth and the ability to function in complex conditions.
Moreover, enhancing livelihoods with components like fairness at the workplace and women’s opportunities is another non-financial performance indicator for Unilever. The company has improved its Responsible Sourcing Policy, which its target was 100% and attained 83% in the year 2020, which was an increase from 70% in 2019 (Unilever, 2020). Workplace injuries and accidents increased due to the large volume of production in the year 2020, although the performance was still within the target of 1.05, reducing by 50% (Unilever, 2020). The organisation targeted empowering over 5 million women by 2020 (Unilever, 2020). Under these conditions, a significant long-term goal was established.
The financial performance for Unilever Group has been experiencing dynamic performance over the years. The group realised a turnover of 50.7 billion Euros and an operating profit of 8.3 Euros in 2020 (Unilever, 2020). The net profit was 6.1 billion Euros with a cash flow of 7.7 billion Euros (Unilever, 2020). The turnover in 2020 decreased from the previous year 2019 by 2.4% due to the weakening of currencies in foreign markets (Unilever, 2020). Several divisions’ performance has faced several effects of the COVID-19 pandemic, which has also altered consumer behaviour.
On the other hand, the role of emerging markets became more significant. Statistics show that sales in this segment increased by 1.2 (Unilever, 2020). However, several markets such as India and China faced challenges due to lockdown before returning to mid-year regular operation. Underlying sales in the developed market grew by 2.9%, especially in North America from home foods, while the sales in Europe dropped (Unilever, 2020). Therefore, the dynamic development over time and performance of Unilever UK’s business operations requires more innovative strategies to ensure the company continues to maintain its competitive advantage in the market.
Creative Problem Solving (CPS) Methodology
Consumer goods companies have been successful in innovation through the constant introduction of profitable, reliable and high-quality goods variety of goods, including disposable diapers and frozen foods, that eventually changed consumers living conditions. However, several companies have faced the challenge of lower returns on investment due to the fewer launch of products from which few are highly innovative. The situation has further deteriorated since the business models and investment decisions have become less productive.
Definition of the Problem
Unilever has been using open innovation as a strategy for an extended period, and this has approach involves collaborating with external organisations, including startup businesses, academics, and individual designers. The tactic is significant, especially in the continuously growing competitive world with globalisation. The source of the open, innovative approach was research and development (R&D) in 2010, after which the company acknowledged that great ideas relevant to Unilever would not only originate from within the organisation (Unilever, 2020). Thus, the firm adopted open innovation to remove overdependence and heavy expenditure on R&D and established innovative initiatives across brands and incorporating the outside entities. Unilever also managed to deal with the challenge of emerging digitally native brands through forming partnerships with the startup companies through Unilever Foundry.
Despite Unilever partnering with the startup companies, the challenge is the ability for Unilever to identify a promising brand earlier. The brand has traditionally acquired firms that have indications of growing distribution (Cen, Dasgupta and Sen, 2016). Unilever needs to develop the capability to detect the encouraging brands before its competitors make a merger or purchase the companies to remain at a competitive advantage with innovations and products in the market.
Analysing the current situation, the discovery of the potent solution presupposes research of the market and available options for further expansion. Considering the fact that Unilever depends on the in-time acquisition of new and advantageous brands, it is vital to establish evaluation criteria meeting the demands of the company, and its ability to merge with the startup (Unilever, 2020). Moreover, the appropriate analysis tools should be used to determine the competitiveness of a new partner and its ability to support innovativeness and competitive advantage. Furthermore, because of the open innovation strategy, for the company it is vital to ensure that the approaches accepted by the brand will be applicable to a new firm. Under these conditions, the solutions should presuppose the better choice of partners and their in-time detection.
Solution and Determination
Today’s market is highly competitive requires efficient strategies to maintain a competitive position for a long time for sustainability. Unilever needs to identify the promising brands and acquire them at their earlier lifecycles at more sensible estimates (MacDonald, Clarke and Huang, 2019). Unilever Ventures and The Foundry demand leverage to perform the task by providing benefits, mentorships, brand name, marketing advice, and logistics supports to the startups while gaining financially. Large companies such as Alibaba, Rakuten and Google have established internal ventures capital divisions to contest in this space, making it challenging to differentiate a company individually and win transactions.
The corporation should implement several strategies to transform its open innovative approach to counter the emergence of digitally native brands (DNB). The company need to expand its mission of the Foundry to contain incubation programs for emerging consumer businesses as a short term plan besides its mandate that involves initiating the partnership of Unilever with external organisations. As a medium-term approach, the firm has to lure startups to an incubator program through motivational components like benefits that are appropriate to any entrepreneur. Discounts on facilities like workspace, marketing and branding mentorship would be vital for emerging companies. Another significant step would be to permit brands operating within the Foundry to infiltrate into the digitally native brands under Unilever’s acquisition, such as Dollar Shave Club, to promote early identification of startups.
Altogether, innovation is a critically important process providing companies with the chance to generate a competitive advantage and continue its rise. Using the Unilever case, it is possible to conclude that the corporation provides its employees with the opportunity for using innovative practices. The open innovation model contributes to better work with potential partners. At the same time, the employment of such techniques leads to the resolution of some problematic issues, such as environmental concerns and sustainability. Innovativeness also presupposes using creative problem-solving approaches to discover, determine, and resolve a certain issue. Regarding Unilever, the detection of new startups can be enhanced by luring startups to an incubator program through motivational components like benefits appropriate to any entrepreneur. Using innovative practices and approaches, it is possible to guarantee that the brand will evolve in the future and preserve its competitive advantage due to the correct management of available resources, sufficient degree of creativity, and integration of problem-resolution methods.
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