Large companies’ size and culture make disruptive innovation extremely difficult (Blank, 2010). Despite this challenge many large food businesses today recognise the need to be disruptive innovators and test new business models in the digital world. In this keynote at Food&Drink Business Live! Disruptive Innovation, Creatovate Managing Director, Dermott Dowling takes the audience through some practical learning steps and lessons from local innovators leading the way in this exciting new land of opportunity. Thinking is the first step in any business innovation. Alas, its hard in isolation. We need each other and our collective mind power to come up with breakthrough ideas to innovate. More often than not we scan the environment for what’s out there already and working? Alternatively, we look for problems – what’s bugging our customers or potential new customers? We can then map the value chain – what can we take out? Where can we fit in? Next step is design & rapid prototyping our ideas. Minimal viable prototypes. Rough and ready is fine lets start testing & experimenting our hypotheses on existing and new customers. As we act, we simultaneously align as a team adapt to the changing customer feedback. We also measure & monitor early results for signs of customer acceptance and readiness to scale our new business model. Startups are not small versions of large companies. They need different tools for thinking and acting. Its important you create a common language in your company and startup so people are talking on the same page and not hearing Blah! Blah! Blah! when we mention new terms like Business Models. For this reason we recommend a common approach to your hypotheses generation like the Business Model Canvas (Osterwalder, 2012). Once you have thought and aligned on your initial business model hypotheses get out of the building and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies. If we accept that startups are engaged in the search for a new business model, we recognize that radical shifts in a startups business model are the norm, rather than the exception. For this reason rather than fire the executive team when the normal approaches to market are not working, we pivot and change tack (Blank, 2013). Private equity and venture capital are investing in disruptive startups in the food industry. Large businesses need startups and vice versa. Is there some magic in the middle and what can incumbents do to learn to be lean and act and adapt and innovate like a startup! Established businesses are in danger of not being able to adapt quickly enough, while nimble start-ups fail due to their inability to scale. Tomorrow’s business winners will be the ones who know how to combine the two (David Butler, VP Innovation & Entrepreneurship, Coca-Cola)

1. Think, Act, Adapt &
Innovate like a Startup!
Food & Drink Business Live!
Thursday 13 August 2015

2. “…large companies’ size and culture
make disruptive innovation extremely
difficult”
Steve Blank and Bob Dorf (2012) The Startup Owner’s Manual

4. Introducing Dermott @
Dermott Dowling is Managing Director
@Creatovate Innovation & International Business
Consultancy.
Dermott has over 18 years experience building
brands and businesses in Asia Pacific, Australasia
and UK, with time spent at leading consumer goods
companies including Fonterra, Foster’s and
Lion Dairy & Drinks.
Belief the only sustainable business growth is
organic, driven by innovation and international
business.
Creatovate works with a diverse range of clients
from startups & independent family owned
businesses to fast growth multinationals.
Innovation & International Business Consultant

5. THINK
• Scan the environment –
what’s out there already
working?
• Look for problems – what’s
bugging customers?
• Map the value chain – what
can we take out? Where can
we fit in?
• Design & rapid prototype
• Test & experiment
• Align & adapt
• Measure & monitor
Not easily done in isolation

6. Tools to help you think
1. Business Model Canvas – sketch out your hypotheses
Source: Osterwalder(2013)

7. Business model canvas
Nespresso
Source: Osterwalder(2013)

8. Business model canvas
Hypotheses
Source: Blank, 2010 & Osterwalder(2013)

9. ACT – Tools to help you do something
2. Customer Development Models – ‘get out of the building’
Source: Blank, 2010

10. ADAPT
Business model iteration

11. INNOVATE
• Venture Capital
– Over $570m in food
companies in the past 5
years in US alone
• Private Equity & Venture Capital
2014 (AU)
– Consumer goods and retail
$154m 6% total investment
14 companies 9% number of
companies invested.
Who is doing it? How? What can we learn?
Source: WSJD 2014, AVCAL Yearbook, 2014

12. INNOVATE
• Nestle
– Inventages EUR$150m in 38 companies
• Tate & Lyle
– £25M VC fund & an active £30 million
investing £1-2 million per tranche
• Coca-Cola Founders
– 19 co-founders, 10 countries, 9 startups
partnering with co-founders/startups to
provide scalability
Venturing – Who is doing it?
Source: AVCAL Yearbook, 2014

13. INNOVATE
• Dishd.com.au
– Frozen meals to you
• Kogan Pantry
– Groceries to you
• Marley Spoon
– Fresh Meal Solutions to you
Digital Disruption in Australia

14. INNOVATE
• Challenge(s)
– Sub-culture of a startup within a large business
– Patience
– Consumers want whole of shop/meal solutions
– Inventory / demand / supply chain management
– Response from incumbents
• Specials and Supply restriction
• Patience
– Go in eyes wide open
Learn from the disruptive innovators

15. Innovate
• Why do it?
– Demand and/or contribute back to your community
– Grow into adjacent verticals
• Advantages
– Scale
– Data analytics
• Australian eCommerce market maturity
– 5 to 10 years behind the US
• Australian eCommerce supply chain maturity
– Challenging for chilled B2C
• Omni channel could be a red herring – economics vastly different
between off-line and online
Learning from the disruptive innovators

16. Innovate
• Suppliers
– Demand and willingness to supply is there
• Price leadership
– Consumers have been trained to expect deals online
– Brands matter online and deep cut discounts bring traffic!
• Groceries
– Last to take-off
– Online suits small, expensive, commodity driven categories
• Wastage
– Consumers care about h/hold and supermarket waste
– Expect their food in the same condition they find in store at their
door
Learning from the disruptive innovators

17. Established businesses are in danger of
not being able to adapt quickly enough,
while nimble start-ups fail due to their
inability to scale. Tomorrow’s business
winners will be the ones who know how to
combine the two.
– David Butler, Coca-Cola’s Vice-President of
innovation and entrepreneurship.
Forbes, Feb 2015 http://www.forbes.com/sites/andrewcave/2015/02/10/how-coca-cola-turned-its-ship-around-and-how-your-business-can-too/
Where is the magic in the middle?

18. References & Bibliography
http://businessmodelalchemist.com/tools
AVCAL (2014) Australian Private Equity & Venture Capital Association Ltd
Blank, Steve (2010) Crisis Management by Firing Executives – There’s A Better Way Nov,
18. http://steveblank.com/category/customer-development-manifesto/page/2/
Blank, Steve (2013) Why the Lean Start-Up Changes Everything, May, Harvard Business
Review
Danielle Gould (2014) Food & Ag Investment Sources Explode in 2013
http://www.foodtechconnect.com/2014/01/02/food-ag-investment-sources-explode-2013/ viewed on
11/8/2015
Kowitt, B (2015) Special Report: The War on Big Food Fortune May 21.
Montgomery, M. (2015) How The Tools Of Venture Capital Are Revolutionizing Food July
14 Forbes
Osterwalder, A. Pigneur, Y. Bernarda, G. Smith, A. (2014) Value Proposition Design
Wiley.
Osterwalder, A (2013) A Better Way to Think about Your Business Model
Phillips, E. (2015) Food ‘Accelerators’ and the $10 Bag of Pasta The Wall Street Journal Jan
6.
Resources

19. References & Bibliography
Kolodny, L (2014) Will Investors Still Back Food Startups As Competition Heats Up?
Wall Street Journal July 25.
http://coca-colafounders.com/
http://www.coca-colacompany.com/innovation/
http://www.iamdigital.com.au/2015/02/coles-woolies-vs-kogan-pantry.html
Resources

20. Dermott Dowling
Director
T: +61 400 040 195
dermott@creatovate.com.au
www.creatovate.com.au