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Harry Barraza, Head of Open Innovation, Arla Foods

Harry Barraza, Head of Open Innovation

Arla is innovating toward a goal that is nothing less than “creating the future of dairy” – and is increasingly harnessing small business and academic collaborations to guide the journey.

Its head of open innovation, Dr. Harry Barraza, summarized the practice of innovation at Arla in this unforgettable way: “At Arla, the culture is very exciting – the metaphor we use a lot is that the rate...
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1

How is your team changing the game within your industry sector?

Historically, an export mindset, the focus on quality and the embrace of innovation have been competitive advantages for Arla.  In general, a strong export focus in Sweden and Denmark was a big difference from co-operative movements in other countries. In Denmark, for example, one driver was exports to the UK of butter and bacon, which originated two of the biggest companies in Denmark today: Danish Crown and Arla

I see the DNA of the company as not just being a co-op, but innovative in terms of product quality. That continues today – to be able to maintain our dominant position in markets like the UK, and bolster our ability to enter new markets in China and the Middle East and U.S. as well. Particularly in China and the Middle East, the credentials of being high quality about products really helps our exports  – stemming from the famously stringent laws we have (in Scandinavia and Europe).

In addition to having strong dairy products, we are also manufacturers for other companies, so we also need to be competitive in technologies and efficiencies for production.

What I do is often researching about research – how can we find new ways to interact with other types of research partners, such as academic partners and smaller companies, to unlock ecosystems of innovation. A big game changer for us has been the ability to translate the Scandinavian traditions of dairy products and foods to deepen appeal within diverse global markets. One of these products is Skyr, which is based on an old Nordic tradition: translating Skyr according to the taste of other parts of world, like the UK and Holland – that’s been a game changer. Another has been the change in formulation in some of our high protein products, which have allowed very successful recent launches in China.

We are also moving toward more strategic partnerships with universities. Last year, we partnered with Copenhagen University and Aarhus University to launch the Arla Dairy Health and Nutrition Excellence Center. I believe dairy can unlock major global problems in terms of nutrition, and we have only begun to tap the potential applications of natural milk proteins. We actively seek out disruptive ideas from both internal and external sources; connecting with small companies and entrepreneurs. Our approach is based around ‘technology push; consumer pull” – so that potential new products must see a deep collaboration between from both scientists and marketers before launch.

Last year, we put together the Arla Food Innovation Challenge, in partnership with the Creative Business Cup. This challenged entrepreneurial ideas in competition, and brought winners to Copenhagen – and we were able to see fantastic ideas from preexisting businesses as well as from early-stage entrepreneurs. Stimulating entrepreneurs in this way gives us a new way of thinking about our products – providing new insights from external sources. I am very passionate about working with small and medium enterprises, which is what we will be pushing going forward.

2

What are some of the biggest impediments to innovation in your organization or industry sector?

Innovating in the dairy products space may seem less sexy than creating the next digital app, so it is a challenge to attract top entrepreneurial talent to the industry. And yet we are doing so at Arla. Our goal – to create the future of dairy – offers the kind of ambition that interests young innovators. And our potential for positive impact on societies around the globe is immense, in terms of health and nutrition in particular. We are trying to raise the level of expectation of what we need from small companies in the food industry, and showing that we can create opportunities for innovation. We also challenge entrepreneurs directly through competitions like the Innovation Challenge.

Another potential impediment to innovation in the industry is the traction of ideas between seniority levels. In some companies, just the fact that, say, a junior scientist comes up with an idea may mean that idea does not go forward. But while that is a barrier present in other companies, I see it as a big positive contrast for us. At Arla, everybody has a say, and the weighting is the same for good ideas, no matter where it comes from.

I also think that having gurus on innovation does not suit our industry – it is more about what works. The ability for anyone to put forward a proposal leads to a broader source of internal ideas. On the flip side, there is a greater challenge to reach a consensus – you may think that breaking consensus would be a barrier to innovation in a conservative environment, but the way we try to address that is to harness external sources.

I learned so much during my time at Unilever, which was one of the initial drivers worldwide of open innovation, together with Procter & Gamble. Unilever was creating new models of innovation before they appeared in textbooks. But the pace was such that there was time to experiment and develop iterations of prototypes. At Arla, open innovation is also a major feature, but the culture is a little different, partly because the speed at which things need to happen is greater. We try different things and must make almost instantaneous decisions on what works and what does not work, which, at times, may be a challenge.

3

How has innovation become engrained in your organization's culture, and how is it being optimized?

Arla, of course, has a long history of innovation, but I think our roots in the Nordic countries really promotes this culture, and that culture itself also presents Arla with a big advantage in foreign markets.

To be successful in the future, dairy companies will need to have strong credentials on sustainability. Consumers and customers in foreign markets know that the emphasis on sustainability in the Nordics is way ahead of other parts of the world. Already, Arla is the biggest organic milk producer in Europe, and those efforts in sustainability are being recognized abroad.

Within the company, there is already a deeply collaborative culture, and part of my role is to try to bring Arla to working closer with SMEs and entrepreneurs, and finding new ways of approaching products and business models outside our own. We invite our large customers to come and innovate with us at the lab. We want to duplicate this more and more, and also to be involved in the incubation of start-ups.

4

What technologies, business models, and trends will drive the biggest changes in your industry over the next two years?

I think the main driver for our business in the future will be people’s concern in living longer and healthier lives – health will be the big driver throughout the food industry. There are increasingly effective technologies being developed to measure your health and fitness, which will impact the type of products we introduce in the market.

There will soon be constant monitoring of all of your vital signs – technology which may tell you: “this week, your calcium levels are lower and you may need x grams of cheese.” There is going to be a big connection between products with strong health credentials and the maintenance and self-reporting of heath. Arla is in the right place in terms of understanding consumption and health-monitoring technologies.

3-D printing offers some interesting opportunities, linked to new digital challenges. One possibility which is interesting for me, for instance, is whether new technologies can bring back old traditions – such as the popular tradition in the UK, in particular, of having your dairy product and bottle of milk delivered by the milkman to your front step. These are things that might come back in the digital world, and we have some people researching in that space – but aerial drones delivery are not part of that research just yet!

5

Can you share a specific innovation strategy you’ve recently encountered which you find compelling?

Well, we saw a series of outstanding innovations at the Arla Food Innovation Challenge. The Challenge winner – Miss Can, from Portugal – was a great example of the importance of creative consumer-focused innovation in an industry that may not seem sexy for entrepreneurs; in this case, canned fish.

I am also really inspired by the innovations Arla is creating in terms of producing products which are not only ‘nutrient dense’, as our scientists call it, but are also about enjoying your life. It is not just about counting calories – so butter for instance, can be enjoyed as part of the rich life experience, with the right formulation and balance.

But top of my list might be Arla’s successful translation of Nordic products into markets and cultures from the U.S. to China.

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