Nestlé is set to launch an open innovation platform next month that will effectively allow start-ups to “bid” for business challenges its brands are looking to solve as it looks to foster a peer-to-peer environment over “the authoritative company talking to the little start-up”.
Due to open in July in San Francisco, the innovation centre follows the launch of the food and beverage company’s Silicon Valley Outpost two years ago and has been created to help it figure how it can create “powerful digital service layers” that help Nestlé think about its brands beyond product, according to Pete Blackshaw, global head of digital and social media at Nestlé.
Speaking to The Drum, Blackshaw said that while fellow corporations P&G and Unilever have their variations on start-up arms, Nestlé's new endeavour will present a unique way of working with young tech companies.
“What started as a little test the waters exercise has turned into a bigger ambition and it is very closely tied to businesses involvement,” he said. “The biggest thing is that we are about to open an innovation platform in early July, and the way that will work is we will take businesses challenges from within Nestlé. That might be how to figure out the next generation Nescafe or figure out the Internet of Things for Nespresso, and it will allow entrepreneurial technology start-ups to almost bid for the opportunity and then we have to respond in a certain amount of time.
“We think this is a very unique model to Nestlé and that is how do you build a platform that really feels peer-to-peer, not top down, not the authorities company talking to the little start up, we are actual equal co-creators.”
The business has been trying to pivot more of its brands around services since Blackshaw’s arrival in 2011. He spearheaded the Digital Accelerator Team (DAT) to ensure its marketers instinctively think about how people consume digital media, which has led to the creation of services attached to some of its well-known brands.
So far Nestlé has tested out digital “service applications” on some of its brands including Milo, a malt powder drink popular in Europe, and created activity trackers and virtual reality applications that offer health advice, something Blackshaw added Nestlé is hoping to replicate across brands like KitKat and Pure Life water. “What I am trying to figure out is how do we create more service layers on top of our brands, and experiential layers; everybody needs to think way beyond product.”
One way Nestlé envisions using augmented intelligence is by using its brand’s packaging as it did for Milo, whereby consumers could scan the packaging from a smartphone to trigger an avatar, which offered advice and performed sports tricks.
“If you think about it, if you sell 1.2 billion products a day and a decent percentage of your packaging has some additional value through VR that is a big opportunity. It’s almost thinking about your packaging as a form of media,” said Blackshaw.
Nestlé's latest investment spotlights the shifting dynamic between some of the world’s biggest advertisers and the entrepreneurs. The likes of Coca-Cola, Mastercard and Visa are taking more nuanced and long-term view of these upcoming businesses, mindful that it might be better to back those businesses out to displace them instead of trying to outmuscle them outright.