Innovation Process at Frieslandcampina

INNOVATION AT FRIESLANDCAMPINA

Q1: The first and foremost reason for FrieslandCampina (FC) to have a stage gate model is to ensure that its innovative efforts are critically assessed in a constant fashion so that time, costs, benefits, risk and uncertainty are managed to an optimal extent. With multiple billion-dollar competitors in a mature market, it is important to have a model that controls innovation to maximize project outcomes. Secondly, the model’s clear governance process, with defined gates and evaluation-criteria, provides for efficient and timely decision-making throughout the appropriate organizational levels. The value of such processes is paramount, considering the average size of projects in the industry. Thirdly, since the industry is characterized by strict health regulations, it helps selection and resource allocation processes, by early identification of projects that are worth carrying on and those that should be killed. Q2: Radical innovation occurs in a non-linear and iterative fashion (Thomke, 2001). We think the linear nature of the stage-gate model is inappropriate to manage radical innovation during its initial stages. However, it can be useful in the later stages of radical projects. Firstly, it helps identifying the projects that are worth carrying on and those that should be killed before incurring major costs. In this industry particularly, radical innovations incur high development costs as they require a lot of testing to comply with the safety requirements and protocols of governments worldwide. Secondly, the stage gate approach provides a clear governance process, with defined gates and criteria for efficient and timely decision making. This is suitable for the size of the dairy industry in which FC competes: truly breakthrough projects are big, expensive and need to be launched on a large scale. Lastly, this stagegate approach provides a structure that can be tailored and adapted to projects with different levels of risk. This...