Tate & Lyle is a large B2B company focused on speciality food ingredients. They have placed a large emphasis on innovation as a key source of future growth, with a pivotal role for open innovation (OI) and complementary roles for OI partnerships and venture capital initiatives. I had the chance recently to interview Dr John Stewart, Director of Open Innovation, to learn more about their integrated program.
Tell me more about Tate & Lyle
Tate & Lyle (www.tateandlyle.com) is a global food ingredients group providing ingredients and solutions to the world’s top food and beverages customers. We have annual sales of £3.3 billion ($5.2 billion) across our two global divisions - bulk ingredients and speciality food ingredients - with over 30 production facilities around the world. Our products are found in everything from breakfast cereals, soft drinks and dairy products to pizzas and ice cream, adding taste, texture, nutrition and functionality to products used or consumed by millions of people every day.
Where does innovation figure in your strategy?
Our vision is to be the leading global provider of speciality food ingredients and solutions and innovation is absolutely central to that. In 2010 we created a new group dedicated to developing and bringing new products to market called Innovation and Commercial Development (ICD). This group combines R&D, platform management, marketing and OI teams into one team dedicated to commercialising innovation across our three platforms - sweeteners, texturants and wellness ingredients. ICD is based at our new state-of-the-art global Commercial and Innovation Centre in Chicago. OI plays a key role in delivering ICD’s objectives – it is effectively an extension of our in-house R&D capabilities.
Why have you embraced OI?
In short, greater speed and wider reach. When we created ICD we recognised that to transform an organization’s innovation efforts take time. There is a limit to how immediate an impact you can have. We had examples of success from OI , but had no team or strategy in place for it. So a dedicated team was created to source products and technologies from outside our walls, thereby significantly increasing our speed to market. This approach also gives us access to a far wider pool of innovation than we can develop on our own.
What are the key components?
As you know there are many different approaches to OI, covering everything from technology licensing, participation in consortia, crowdsourcing and many others. One of our first steps was to really define what we wanted our programme to deliver. The approach you take to OI really should be driven by the results you need. For us this was about speed to market and launching new ingredient products, so we focus on the tools and approaches that bring that about. Most often we use co-development and licensing. It’s a style of OI based on well-established business development practices.
Tell us about the new portal
We launched the new portal earlier (www.tateandlyleopeninnovation.com) this year to extend our reach. It provides potential partners with a place to learn about Tate & Lyle and our OI program, what we are looking for and also what it’s like to work with us. If visitors to the site have an innovation that matches our scope and like what they’ve read, they can provide information and we will get back to them. The portal certainly doesn’t replace anything we’ve already been doing, but simply expands it. As well as traditional scouting (occasionally using external scouts, but mostly a lot of networking) we also work to raise our profile and make our OI program conspicuous. We are early days in that process and the portal is part of that.
What is the role of the dedicated team?
The OI team covers everything from sourcing new opportunities, managing the due diligence process, creating investment recommendations to negotiating the commercial agreement and closing the deal. After that point, the day to day management of partnerships is transferred to other teams, but we will remain ‘on call’ to help out with any issues.
What kinds of collaboration are you looking for?
We are looking for partners that have a great food ingredient innovation that matches our scope (sweeteners, texturants and wellness) and who are looking to take this to the next level by working with a global player. As well as route to market (we currently serve the vast majority of the world’s food and beverage customers), we bring product development, applications, regulatory and manufacturing expertise, so we always look to add value where we can. Ideally, we will look for opportunities that have established proof of concept and are protected by IP. We also look for venture investment opportunities via our Tate & Lyle Ventures fund (www.tateandlyleventures.com). Naturally, we are looking for that rare thing - the game changer.
How do you interact with Tate & Lyle Ventures?
We work very closely with Tate & Lyle Ventures. In January this year, we launched our second venture fund. This is a £30 million ($45 million) fund investing in food ingredients and enabling technologies. Both teams have slightly different roles: the OI team is focused on strategic partnerships to develop and launch new ingredients. The venture fund specifically works on equity investments in high growth companies. The venture fund is also managed independently, so companies that work with the fund are under no obligation to work with Tate & Lyle in other ways. Of course, ideally we would like them to if there is a fit, but it’s not a condition of investment.
What’s special about your programme?
The fact that we now have a dedicated team and a focus on OI has made a real difference. Often I hear directly from smaller companies about the frustrations they experienced when working with a larger company. We are very committed to making the process as user friendly as it can be. Also, having both a dedicated OI team and a venture fund working closely, but independently, gives us the expertise to work with outside innovators in a broad range of ways.
What does the future hold?
This is the first time we have had both our VC fund and OI team up and running simultaneously so we are very excited about what that will bring. Our new Commercial and Innovation Centre is already transforming how we interact with customers and innovate internally. So we have invested in some key enablers of innovation and are making great progress but still have much to do.