Success depends on innovation

Success depends on innovation, says the head of one of the world’s leading retailers – and a major customer for New Zealand lamb.

Speaking at the FT Innovate 2012 conference in London in early November, Tesco Plc’s group chief executive Philip Clarke said: “Be it nations or companies, if you don’t innovate; if you cling to the old way of doing things in the forlorn hope that the pace of change will slow; if you dare not take risks for fear of failure – if you do these things, then decline is inevitable.”

Change and innovation are part of every successful businesses’ DNA, he said and related the story of Tesco’s founder Jack Cohen “an innovator to his fingertips.”

It was Cohen who helped bring the concept of a self-service supermarket to Britain after World War II “an innovation that changed the entire retail industry.”

His innovative streak was borne out of an attitude of mind. “He’d travel, he’d constantly ask questions, spark ideas, try things. Lesson one from Jack then: to innovate we must create the right mindset.”

Since then Tesco has been leading innovation in retail “everything from new formats like Express to centralised distribution, which have revolutionised the supply chain here in the UK,” said Clarke.

The digital revolution is heralding a new era of retailing. While the customer always was king, thanks to digital technology, today’s customers are more powerful than ever. “Not just with more information and choice of goods and services to buy, but a choice of ways to shop at whatever time they like,” he said, adding that social media creates fashions in seconds, making or destroying brands within a day.

In the wake of the change has come data. “The vast, almost infinite quantities of data now available means no retailer has any excuse not to abide by the first law of business: know your customer.”

The insights gleaned by Tesco by its Clubcard, launched in the 1990s, turbo-charged Tesco’s growth. Data is now helping Tesco to drive innovation: “Which is why we own Dunnhumby, our marketing services business.”

While data is important, experimentation is vital. “Try, try and try again. And in the face of failure look for what is good about the experiment. Encourage your people to try again, to build on the success, not blame them for the failure.”

People said, when Tesco.com was launched in 2000, it would not work. “Today it is the world’s largest and most profitable online grocery retailer and we are rolling out the service across all our markets. Already more than five years old in Korea and Ireland; we have launched it in Slovakia, Czech, Poland. Thailand follows very soon.”

That roll out has been made possible thanks to an innovative IT platform that has been developed by Tesco’s Hindustan Service Centre, the company’s global services arm based in Bangalore, said Clarke.

“Employing over 3,000 technologists, this is where we develop new web services and systems so they are on a common operating platform, allowing is to set them up easily in markets around the world.”

Clarke described Tesco as a ‘blueprint led organisation’. “Once innovations are proved successful, a blueprint is developed and managers trained to speed adoption around the world.”

In each of their markets, Tesco.com’s offer has to be tailored to meet the local culture and tastes. New innovations to aid speeding delivery to the customer include Mapster, an application which tracks Tesco vans in real time and is being piloted in some stores around London. Tesco has also created a virtual store in Seoul, Korea, where commuters can use their smartphones on the platforms of the city’s underground to scan the barcodes of the products they want – and then their shopping gets delivered to the address of their choice later on the same day.

“Our Korean colleagues lead on digital innovation for the Group – not because we asked them but because we fostered a culture of innovation; we encouraged innovation and recognised colleagues for trying.”

Clarke liked to think that Jack Cohen would be proud of what Tesco did with Facebook, asking customers what ice-cream flavours they wanted – the 21st century equivalent of his 1930s store tours in Hackney. “Asking customers what they want isn’t new, but doing it the digital way is.”

Looking to the future, Clarke said for retailers it’s no longer going to be sufficient to innovate simply to meet an existing customer trend. “We need to innovate to anticipate what customers want. Successful retailers will not be those who meekly follow the customer like some obedient puppy. They will be one step ahead, offering people new ways to make their lives that bit better.”

Those innovations have to fit a powerful trend created by the power of digital technology,. “People want and increasingly expect personal service, a personalised choice, a sense that a brand – be it a retailer or media organisation – has tailored what they offer to fit their own unique needs and wishes.”

The drive to personalisation will be propelled even further by the internet of things. “Everything from the light bulb in your house to the car you drive will be connected to the internet… Mass personalisation, plus the internet, will determine everything, from pricing and promotions to the internet.”

Innovations depend on much more than just clever people who are experts at technology; and they rely on much more than just using customer insight in an intelligent way, Clarke said.

“From the perspective of any CEO, a company that truly excels at innovation is a company whose culture rewards innovation. It is a culture where people understand that, to change, to create something new, means taking risks. A culture where people know that innovations can certainly fail, that mistakes happen, but you learn from them; where aiming high, having a big, bold idea is not frowned upon, but encouraged. A culture in which the leaders think the biggest mistake is not trying, not experimenting, not taking a risk.”

 

Sustainable Business Network: awards open

Do you have a sustainable champion or project in your organisation?

If you do, or know someone who does, then you’ll be interested to learn that nominations are open for three national awards in this year’s NZI National Sustainable Business Network (SBN) Awards: Social Innovation Award, Sustainability Champion Award and Sustainable Design and Innovation Award.

The NZ National SBN Awards, now in their ninth year, are New Zealand’s pre-eminent sustainability awards, SBN chief executive Rachel Brown says, adding that anyone can nominate individuals or organisations in these three open categories.

“We really encourage people to put their thinking caps on and put forward names of people and organisations that deserve recognition for their efforts in sustainability,” she says.

“The awards recognise leaders in social innovation and individuals who are chamipioning sustainability and new sustainable market solutions. They support savvy organisations that are reshaping their business models for a more sustainable New Zealand. It’s easy to nominate someone via our website and entry is free!”

The awards will be presented at a ceremony at The Cloud, Queen’s Wharf, Auckland on 22 November 2012.

Entries close on Friday 26 October 2012.

For more information or to nominate a person, organisation or companies for these awards click here.

Smol confirmed as permanent MBIE head

David Smol has been appointed as the first chief executive of the new Ministry of Business, Innovation and Employment (MBIE), it has been announced by the State Services Commissioner Iain Rennie.

Smol (pictured right) has been acting chief executive of the super ministry since April this year and prior to that he was the chief executive of the former Ministry of Economic Development. His new contract runs until June 2017.

The Government established MBIE on 1 July 2012, bringing together all the existing functions of the former Ministry of Economic Development, Ministry of Science and Innovation, Department of Labour and Department of Building and Housing.

The Commissioner says that Smol has the skills and experience to “step up” to successfully lead the transformational change required in MBIE.

Smol will lead approximately 3,500 staff located in offices throughout New Zealand and overseas. MBIE has an annual expenditure of around $660 million and administers non-departmental appropriations of $4 billion.

Channelling innovation

The Government released the second of its six progress reports –  Building Innovation – under its Business Growth Agenda this week. The move has been welcomed by the Meat Industry Association (MIA).

Building innovation is central to building a more competitive and productive economy, said Prime Minister John Key at a business breakfast launch for the report earlier this week, adding that it gives a clear picture of the more than 50 policy initiatives the Government has underway to improve innovation, competition and the commercialisation of smart ideas and research into new products.

It calls for a doubling of the amount businesses spend on research and development, from 0.54 percent of GDP to more than one percent of GDP.

MIA chief executive Tim Ritchie has welcomed the report, saying that the meat industry is “all for anything that helps in that area.” Industry is very interested in innovation and already has a number of initiatives in place, he says.

Individual members are involved with a number of Primary Growth Partnership projects, while the industry has also invested in Ovine Automation Ltd, a consortium of nine MIA member companies and the government that is looking at bringing a step change in sheep processing through the use of automation.”

This all adds to innovations individual meat companies are working on in their own workplaces, like Silver Fern Farms’ robotics projects, Ritchie explains.

New Advanced Technology Institute

Meat exporters will also benefit in the future from the new Advanced Technology Institute (ATI) that was announced this week will be named after the late Sir Paul Callaghan. It is to receive $166 million over the next four years and is one of the initiatives to grow business research and development further.

The Institute will be a one-stop shop that will help high-tech firms become more competitive by better connecting them with innovation and business development expertise within the institute, around the country and internationally, Steven Joyce, science and innovation minister says.

‘It will focus on industries with significant growth potential such as food and beverage manufacturing, agri-technologies, digital technologies, health technologies and therapeutics manufacturing and high-value wood products.

“The ATI will take over some business development functions that are currently within the Ministry of Business, Innovation and Employment. This will include the administration of some business research and development grants,” Joyce says.

A seven member establishment board has been tasked with having the ATI up and running by the end of the year. Chaired by Sue Suckling, who led the set up of AsureQuality NZ and NZQA, other board members include Industrial Research Ltd (IRL) director and former New Zealand Game Industry Board and Cervena Ltd chairman Richard Janes and Dr Michele Allan, who has leadership experience across many facets of the Australian food industry. They join IRL chair Michael Ludbrook, entrepreneur Neville Jordan, Auckland Transport director Paul Lockey and Plant and Food Research chair Michael Ahie.

Strong support in business community

Business NZ says that there is strong support in the business community for the Government’s systematic approach to building innovation. The ATI is a centrepiece of the innovation policy, says BNZ chief executive Phil O’Reilly.

“But there are many other initiatives including expanded TechNZ funding, better, government procurement policies, National Science challenges, more funding for the Performance-Based Research Fund, refinement of trademark and patents law, more investment in engineering at tertiary institutes, encouragement for multi-nationals to conduct research in NZ and others.

“It is up to business to innovate and grow and take up the Government’s invitation to keep the lines of communication open and provide feedback on how we are travelling towards a high-tech future.”

I’ll just print me a steak …

Traditional meat exporters will need to consider future protein competition coming from outside the box in the future, as new technology is attracting innovation funding around the world.

One such piece of research, by a US company called Modern Meadow, has this week gained between US$250,000-300,000 for a tissue engineering project. Modern Meadow is said to be developing a fundamentally new approach to meat and leather production, “which is based on the latest advances in tissue engineering and causes no harm to animals.”

The news was announced by the US-based Thiel Foundation, set up by one of the founders of PayPal Peter Thiel. It was one of three new grants, awarded through its Breakout Labs programme. This is a revolutionary revolving fund to promote innovation in science and technology. The two other grants went to medical and therapeutic innovations.

According to Breakout, Modern Meadow co-founders Gabor and Andras Forgas respectively invented and helped to commercialise bio-printing, a technology that builds tissues and organ structures based on the computer-controlled delivery of cells in three dimensions. The two previously co-founded Oganovo,a a San Diego-based regenerative medicine company which applies bio-printing to a range of medical applications including drug discovery, drug testing and ultimately transplant tissues. They plan to use the Breakout Labs funding to apply the latest advances in tissue engineering beyond medicine to produce novel consumer biomaterials, including an edible cultured meat prototype that can provide a humane and sustainable source of animal protein to consumers around the world.

“Breakout Labs is a much-needed source of funding and support for emerging technologies like ours,” says Andras Forgacs. “Investors across the board have become more risk-averse and yet early funding is critical to enable truly innovative ideas.”

Modern Meadow, based in Missouri, is combining regenerative medicine with 3D printing to imagine an economic and compassionate solution to a global problem, says Lindy Fisbhurne, Breakout Labs’ executive director. “We hope our support will help propel them through the early stage of their development so they can turn their inspired vision to reality.”

Launched in November 2011, Breakout Labs provides teams of researchers in early-stage companies with the means to pursue their most radical goals in science and technology. To date, the fund has awarded a total of nine grants, of up to $350,000 each. Breakout Labs accepts and funds proposals on a rolling basis.

Although very early days as yet, the concept supported by the fund could bring printing your own steak for the barbie nearer to reality, but just don’t expect it in the near future.

The Modern Meadow innovation is not alone in attempting to solve the world’s future protein needs. New Zealand’s Riddet Institute is also working on the joint PROTEOS project with its counterpart Wageningen University in The Netherlands, “formulating novel solutions that involve extending and using more effectively future animal-based protein sources, transforming the protein supply chain” – essentially growing meat in the laboratory. Project plans involving staff from both organisations will be finalised this year.

 

 

 

KPMG’s Agribusiness Agenda points the way forward

Link

The KPMG Agribusiness Agenda 2012, released this week, contains interesting observations which have been gathered from conversations with nearly 100 business leaders, says Allan Barber, who recently reviewed the report.

But like most strategy documents I have ever read, the conclusions never quite seem to live up to the anticipation. However, this is a solid document with good ideas. Read more …

 

Controversy over ‘pink slime’ in the US

Photo: B+LNZ

A controversy blew up in the US in March and April about the use of lean finely textured beef (LFTB) – also pejoratively coined as ‘pink slime’ – in manufactured ground beef.

Lean, finely-textured beef (LFTB) is lean beef that is separated in a manufacturing process from fatty beef trimmings, to reduce wastage. The process involves treating the LFTB with small amounts of ammonium hydroxide gas or citric acid to eliminate any harmful bacteria present.

The process has been approved as safe by the United States Department of Agriculture and it has been reported that over 70 percent of ground beef used in the US is believed to have incorporated LFTB as an ingredient.

However, a range of media commentators, including ABC News and British celebrity chef Jamie Oliver, have criticised the practice. Despite statements by the USDA and meat industry bodies asserting that LFTB is safe for consumption, a number of major retailers and restaurant chains –  including McDonald’s and Burger King – have recently decided not to use LFTB, as a result of considerable negative publicity about the product.

As a result of the controversy, the major producer of LFTB, Beef Products Inc, announced that it is closing down three of its four processing plants. The American Meat Institute estimates that without LFTB, the industry would need 1.5 million additional head of cattle to make up the difference in beef supply.

LFTB is not used in New Zealand, as the leaner, pasture-raised New Zealand beef does not produce the high fat trimmings that provide the raw ingredient for LFTB, the MIA says.

Published in Food NZ (June/July 2012).

Graeme Lowe: 2012 Business Hall of Fame laureate

A hearty congratulations goes to meat industry legend and processing pioneer, Graeme Lowe, who has been made a Fairfax Media New Zealand Business Hall of Fame laureate for 2012.

Graeme Lowe founded Lowe Corporation more than forty years ago and the company has grown to become one of New Zealand’s leading animal by-products processors and exporters. Based in the Hawke’s Bay, the company now operates three tanneries, two fellmongeries (skin preparation plants) and two rendering plants and employs over 500 people at the peak of the production season.

Lowe and this year’s six other new laureates – Bill Gallagher Senior, Sir Graeme Douglas, Sir Patrick Higgins, Thomas Macarthy (1833-1912) and Mary Jane Milne (1840-1921) – will be inducted into the Hall of Fame at a gala dinner on 28 June 2012.

The Hall was created by the Young Enterprise Trust in 1994, to recognise New Zealanders who have made an outstanding contribution to business and society.

Published in Food NZ (June/July 2012). Tickets and more information are here.

Andrew West new vice-chancellor for Lincoln

Dr Andrew West, former head of AgResearch and current adjunct professor or agribusiness at the University of Waikato, has been appointed as the new vice-chancellor of Lincoln University and took up his new position on 16 April.

Dr West’s career has spanned eduction, science and innovation, agriculture, process manufacturing and tourism. Educated in the UK, Dr West graduated with a BSc in Ecology from the University of Westminister and a PhD from the Council for National Academic Awards prior to emigrating to New Zealand.

He has been particularly influential in his roles as leader of the Institute of Geological & Nuclear Sciences (GNS) and latterly AgResearch Ltd. Throughout his career, Dr West has been involved in a large number of directorships, predominantly with the primary industry sector, but also with a strong emphasis on innovation and commercialisation.

Dr West’s achievements have been recognised by his peers and others as noted by the awarding of the Thomson Medal for outstanding contributions to the development of science and technology from the Royal Society of New Zealand (2008); an Honorary Fellowship of Waikato Institute of Technology (2009); and most recently a Companionship of the Royal Society of New Zealand (2010).

On his appointment, West says it is a privilege “to be asked to lead such a venerated institution, one with a genuinely global and well-earned reputation”. He is looking forward to working with the land-based of New Zealand and those of other countries.

 

All change from 1 July

David Smol, acting MBIE head.

It’s all change from 1 July, when a new Super Ministry will govern the country’s business matters.

The New Zealand government has announced that a new Ministry of Business, Innovation and Employment will kick in on 1 July 2012. This will draw together the existing functions of four current government departments: the Ministry of Science and Innovation: the Minister of Economic Development: Department of Labour; and Department of Building and Housing.

The new Ministry will assist the Government to drive forward its business growth agenda and make it easier for businesses to engage with the government, Economic Development minister Steven Joyce says.

An acting chief executive has already been appointed. David Smol, currently the chief executive of the Ministry of Economic Development, will take up the role to ensure smooth transition to the new agency. The appointment of a new chief executive by the State Services Commissioner is expected by the end of September.

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In another move, agriculture, biosecurity, food safety, forestry, and fishing have already been rolled into one department and the former Ministry of Agriculture and Forestry has been renamed the new Ministry of Primary Industries. The change took effect from 30 April and was described by Primary Industries Minister David Carter as “a logical move”.

It recognises the broad role of the Ministry in growing and protecting the primary sector, the power house of New Zealand’s economy. “Importantly, it provides the different parts of the organisation with a single, unifying identity,” he said.

Existing brands for MAF, BioSecurity New Zealand, the Ministry of Fisheries and New Zealand Food Safety Authority will be phased out. The Crown Forestry brand will be retained because it is a commercial forestry business that stands apart from the policy, regulatory and service delivery roles of the Ministry.