unilever case study

Access is thenew ownership: a case study ofUnilevers approachto open innovation

If access is the new ownership then the openinnovation modes invoked by Unilever are well placedto provide access to innovative technology for thefuture. Unilevers approach to innovation allows thedevelopment of strong, fruitful relationships withpartners and access to the agile innovationadvantages of small companies, whilst maintainingopenness to new ideas and a focus on core businessand priorities.

1. Executive Summary

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Access is the new ownership: a case study of Unilevers approach to open innovation

Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.

This case study is based on a series of semi-structured interviews conducted at one ofUnilevers major R&D Laboratories at Port Sunlight, on the 10th October, 2011. LancasterUniversity would like to thank the following people for their participation and invaluablecontributions: Jon Hague, Vice President Open Innovation; Dominic Tildeseley, Vice PresidentR&D, Structured Materials and Process Science; Cameron Jones, Vice President R&D Hair;Glyn Roberts, Genesis Project Field Leader for Disruptive Sustainability for Growth; and PaulJenkins, Group Director Structured Materials and Process Science Expertise.

Unilever is a large and successful multinational company, with a focus on sustainable growthand a long history of successful innovation. Unilever products are fast moving consumer goodsin four major global categories - Personal Care, Homecare, Refreshments (beverages and icecream) and Foods and the companys products can be found in homes all around the world.An estimated two billion consumers use Unilever products on any single day. Unilevers missionstatement reflects the companys aim of growth with sustainability.

We will develop new ways of doing business that will allow us to double the size ofour company while reducing our environmental impact. 1

A key strand of Unilevers compass strategy is bigger, better, faster innovations 1. To achievethese aims the company maintains a strong focus on innovation.

Unilever is also a truly international company, with more than half of sales made in emergingand developing markets and with products sold in more than 180 countries. India and China, inparticular, are huge potential growth points for the company. Unilever describes itself as havinglocal roots and global scale.

Our deep roots in local cultures and markets around the world give us our strongrelationship with customers and are the foundation for our future growth. We willbring our wealth of knowledge and international expertise to the service of localconsumers a truly multi-local multinational. 2

This influences both the direction the company takes in terms of products and its approach toinnovation. Unilever innovates broadly, with technical, process and consumer-led innovationsevidenced in the delivery of new products, the development of new markets and through newways of working.

2. Introduction Unilever and Innovation

2Decter, M; Mather, A; & Garner, C. Institute of Entrepreneurship and Enterprise Development, Lancaster University.


The drivers for open innovation within Unilever include emerging developments in science andtechnology, changing consumer demand and new markets.

An increasingly rapid rate of change in science and technology is one of the main drivers foropen innovation within Unilever:

the bottom line of the way the world is going is that the rate of change of scienceand technology outside our walls is greater than inside, its clear the rate ofknowledge generation is exponential as well so its pretty obvious that if we dontopen the doors then were going to get left behind (Interview, Jon Hague: VPOpen Innovation).

However, the core categories of Unilever are large, mature businesses each producing over10 billion in turnover. There are issues of risk associated with long established brands in thesemature businesses if innovation is pushed too far and too rapidly. To overcome these issuesUnilever has established both a New Businesses Unit (NBU) and the Unilever CorporateVentures (UCV) Group. The NBU (New Business Unit) explores the creation of enterprisesaround core categories and the UCV (Unilever Ventures Group) explores opportunities outsidethe current core categories. However the NBU draws upon the incubation and businessbuilding skills of the UCV to support its enterprises.

The UCV aims to identify technology assets inside and outside the company that can stimulatenew businesses. Open innovation can play a large part in facilitating the success of these newenterprises.

a. Drivers for Open Innovation

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Interestingly, technology spaces are not the only drivers of Open Innovation for Unilever.

the end game is business in partnership and technology is a part of it, not theabsolute sole reason for it. (Interview, Jon Hague: VP Open Innovation).

Partnerships with suppliers and universities can also encourage open innovation. Unilever hasworked with suppliers for many years and has had long relationships with academia. Howeverrecently weve said look, this is something we need to put much higher on the agenda so weregoing to put a leader in place, were going to get people thinking much more earnestly about itand its got to become part and parcel of the way we do innovation. (Interview, Jon Hague: VPOpen Innovation). This is part of exploiting fully the quality of innovation that can be createdwith supplier partners, such as the big chemical companies and the big packaging companies.Large firms are one set of partners with whom Unilever can find innovation and co-createinnovation but there are others.

The rise in importance of developing and emerging countries, both in terms of new markets forUnilever and as hot spots for innovation, also drive Unilevers quest for innovation. Certainconsumers in rural areas of India, for example, have very different user needs to those ofconsumers in the UK, the physical infrastructure (electricity supply, drains etc) and access totechnology in the home is also different. This has led to innovations in products, packaging andmarketing in these areas.

The changing nature of the workforce has the effect of bringing new ideas into the companybut, also, allowing leakage of ideas outside across other industries the fact is that nobody isgoing to be loyal to one company in the future anymore. (Interview, Jon Hague: VP OpenInnovation). This limits the capacity of firms to lock-in knowledge.

Social media is another driver and Unilever is using sites such as Facebook for consumers tosubmit ideas. This goes beyond technology to consumer preferences and enables consumer-led innovation. Social networking enables fluid and real time customer push. Rather thanconsumer research steering development, social networks allow consumers easy and directcontact with firms, to voice their needs and preferences and to experience dialogue withindividual companies.

For example:

..consumers are asking for different flavours in their Magnum ice cream or things likethat so the idea, there, is simply to listen to consumers and what they want. So, if 10,000people around the planet are saying they want strawberry flakes in their Magnum wewould probably go out and do it! (Interview, Cameron Jones: VP R&D Hair).

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Open innovation is a term which has been used by Chesbrough3 to describe a new model inwhich innovation is sourced by firms from external, as well as internal, sources. In addition,external routes to exploitation of innovation may also be used. Chesbrough states:

The Open Innovation paradigm assumes that firms can and should use external aswell as internal ideas, and internal and external paths to market, as they look toadvance their technology. Open Innovation assumes that internal ideas can also betaken to market through external channels, outside a firms current businesses, togenerate additional value.

Chesbrough lists the open innovation principles which support the view that this approachoffers novel ways to create value along with new opportunities to claim portions of thatvalue.4

Open Innovation Principles Not all of the smart people work for us so we must find and tap into the knowledge and

expertise of bright individuals outside our company. External R&D can create significant value; internal R&D is needed to claim some portion of

that value. We dont have to originate the research in order to profit from it. Building a better business model is better than getting to market first. If we make the best use of internal and external ideas, we will win. We should profit from others use of our IP, and we should buy others IP whenever it

advances our own business model.5

3. Open Innovation a brief synopsis

a. Definition

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6Access is the new ownership: a case study of Unilevers approach to open innovation

b. BenefitsIn essence, the open innovation model describes new ways for companies to capture valueboth through using and adapting external innovation and through external routes for theexploitation of internal technical developments.

Open business models enable an organisation to be more effective in creating aswell as capturing value. They help create value by leveraging many more ideasbecause of their inclusion of a variety of external concepts. They also allow greatervalue capture by utilising a firms key asset, resource or position not only in thatorganisations own operations but also in other companies businesses. 6

In this case study, the open innovation approach at Unilever is explored and related to thecontext of the North West of England regional innovation system.


The concept of regional innovation anchors has relevance in the discussion both of theregional innovation system of the North West of England and, specifically, to Unilever within thatregion. Innovation Anchors have been described as:

Organisations that provide a pivotal research, technology or creative base for aparticular locality (nation, region or sub-region), sector or group of firms. Theseorganisations can be large multinational firms, universities, public researchestablishments or newly emerging creative, knowledge-based service firms but areimportant in underpinning their local innovation system or sector through theirresearch or knowledge activities, high level procurement patterns, demand andsupply of highly skilled knowledge workers and through more intangible leadershipin the fields of science, engineering, design and creative knowledge-basedactivities they undertake.7

Examining the potential of Unilever as a regional innovation anchor necessitates a view not onlyof the companys position in the UK, but also of its global positioning. This requires a shift inmindset:

if you look just within the UK ecosystem people dont think like that. There is ablind spot and I suppose the big unlocking thought is this is a gateway to the biggrowth markets of the world. (Interview, Jon Hague: VP Open Innovation).

Unilever can act as a supporter, as well as a consumer of regional innovation. The globalpositioning of companies such as Unilever may also act as a conduit, a global gateway tomarket for other firms. This conduit can act into the region for operating companies to accessresearch and infrastructure and out of the region for universities, partners and suppliers. Thisrole fits well with new views within the company itself.

4. UK InnovationEnvironment RegionalInnovation System North West of England

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a. Regional Innovation Anchors


as weve got a new leadership structure in place at the top of Unilever for R&Dwhere there is a chief R&D officer, she has actually said look these sites really areimportant and their place in the world is really important. And, so, weve put a newemphasis on sites and their role in the nation, I would say, but also the role in theregion theyre in (Interview, Jon Hague: VP Open Innovation).

Public private partnerships are seen by Unilever as a way forward in building scientificinfrastructure for the region, which would be too expensive to create for any single organisation.Innovation through these large scale projects is only possible if industry, academia andgovernment are prepared to work in partnership.

The model Ive just tried to create for high performance computing captures myvision of what the future really is, so that is a public private partnership, which I thinkis really important for the UK moving forward. So to take an area like highperformance computingwell you look at the risk and you look at the investmentand the investment for a single company is too high and for Rolls Royce its toohigh and for Astra Zeneca its too high and certainly for a large number of small tomedium enterprises (SMEs), its off the planet. (Interview, Dominic Tildesley : VPR&D, Structured Materials and Process Science).

This provides benefits for regional industry but also for universities; both through access toleading edge instrumentation and through exposure to real industry challenges.

Thats got to be good for everybody, thats got to be good for academia because itgets them closer to real industrial problems and to their knowledge transfer mission.Its good for industry because it enables us to buy into stuff that individually wewont be able to afford to do. Its good for our growth. Its good for the suppliers,both the hardware and software suppliers because they are selling into a moreorderly environment and its good for the country (Interview, Dominic Tildesley:VP R&D, Structured Materials and Process Science).

The creation of an advanced scientific infrastructure can also have benefits for inwardinvestment as companies will be attracted to the region since there is an existing infrastructurewhich they can use on a pay as you go basis. The funding for such multi-partner infrastructureprojects has, historically, utilised both EU and regional funding, which may be an issue in thefuture with the dismantling of the regional development agencies.

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b. Public Private Partnership


The cluster of excellent universities within the N8 is attractive to Unilever as an area for furtherpotential developments.

So, the North West of England, its in our interest to see it develop as a cluster inthe ways that we innovate the idea that you can look to the N8 for that absolutelyworld class capabilities in concert with local industry, I think thats quite aninteresting opportunity for us. (Interview, Jon Hague: VP Open Innovation).

Given the importance of proximity to effective working, the possibility of collaborative projectsacross the North West, in particular is seen as desirable.

what if you could put something together across Liverpool, Lancaster andManchester that formed a world class community, all within two hours drive of you.(Interview, Jon Hague: VP Open Innovation).

The company sees itself as a potential conduit for intra-regional research interactions as well.The possibility of access to research excellence from Unilevers R&D labs outside of the UK isproposed. This may form part of an effort to achieve the desirable effects of proximity for othergroups in the company and to build relationships with a core network of research institutions ina coordinated way.

in terms of collaboration were interested in leveraging governmentinfrastructure by working with universities, so we cant afford to do neutronscattering or high performance computing or some leading edge measurements,but we can do this if we can collaborate with those measurements in industry. Alsowere looking to leverage government funding, do EU Framework Proposals,Regional Development funding, TSB. (Interview, Dominic Tildesley: VP R&D,Structured Materials and Process Science).

Such work takes place largely in the pre-competitive space or utilises firewalls betweencompetitive partners. It can have the effect of influencing the mission of the university beyondresearch and teaching, to a role in stimulating private public partnership around large scientificinfrastructure.

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c. N8 and the North West of England


We are trying to now engage with the N8 to try to understand what role we can playthere and the idea of playing with the N8 dream team is what we would like to bedoing. Were looking at the site here as a conduit for building program into themajor partners in the north west of England So, for example, if there is somebodyin our Dutch laboratory who wants to set up a relationship with ManchesterUniversity why wouldnt we use the steering group we set up here to make thathappen instead of it being a separate and different interaction. (Interview, JonHague: VP Open Innovation).

The development of the Daresbury Science and Innovation Campus as a site for significantresearch, development and innovation has been noted over the last ten years.

10 years ago we went to look at itAnd Daresbury it was a backwater, it wasvery slow and there wasnt much going on there and Colins come in and hesactually, to be honest with you, hes turned it around. I was there twice last weekseeing IBM and Intel and American visitors, and its a real hothouse. (Interview,Dominic Tildesley : VP R&D, Structured Materials and Process Science).

Weve talked to the science parks, been to Daresbury, had a look at what theyredoing and ok, theres lots of interesting stuff in Daresbury and the little start upcompanies (Interview, Jon Hague: VP Open Innovation)

In particular there are strong connections between Unilever and the Theory and ComputationalScience Group at Daresbury involving work on modeling polymers and surfactants, the basicingredients of many Unilever projects.

Daresbury Science and Innovation Campus is a good example of the critical mass and greaterimpact that can be gained through university cooperation. As evidenced by research andknowledge transfer initiatives involving Lancaster, Liverpool and Manchester universities in theareas of accelerator science, computing and business and management development. Therecent awarding of the Enterprise Zare status to Daresbury Science Innovation Campus furthersupports the sites position as a regional innovation anchor.

The challenge of balancing traditional science education with a better understanding of theneeds of business is an issue in developing the skills of graduates.

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d. Daresbury Science and Innovation Campus

e. Skills and Training


its quite an interesting challenge that education has and how you preparepeople to understand pure science and driving it forward, pushing the boundaries,which is what academia traditionally has been about. With balancing the needs ofbusiness, which is where, to be honest, we need people who really understand want to push the boundaries of science but have that little bit more financialunderstanding in business acumen.... I think the step change would bephenomenal. (Interview, Cameron Jones: VP R&D Hair).

Skills and training are also issues for Unilever staff to develop in the move to open innovationstrategies. Amongst these are critical skills which are described below:

when we started to push open innovation a bit more, as we got into thecapability proper we said, look, there are some critical skills that are notnecessarily innate to the scientists in the building and they are actually quiteimportant if you are going to make this transition into an organisation that can dothis without having a whole load of support mechanisms and departments in placebecause when alls said and done we want a lot more people to be capable ofoperating partnerships. (Interview, Jon Hague: VP Open Innovation).

there are a few critical skills. So, we put down scouting as a key one. We putdown the ability to do deal architecture as a key one and the ability to do alliancemanagement as a key skill and those are the three absolutely critical things.

This represents a new culture for Unilever staff and an advanced open innovation course hasbeen set up to support the development of these skills for staff. In particular it is the decisionladen aspects of deal-making that present a challenge. Mentoring, as well as forming staffinto communities and networks that are going through the process together, improves andsustains learning.

the whole advanced course is a free standing thing which is learning on the job,if thats what you call action learning, with a mentor; sharing with a group and thenbuilding your individual skills through distance learning. (Interview, Jon Hague: VPOpen Innovation).

Beyond these skills for staff undertaking programmes of development, there are more strategicaspects for senior staff around the issues of integrating capabilities to complement Unileversin-house capabilities.

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In common with many long established technology based companies Unilever, historically, hada very vertically integrated structure and a culture which focussed on in-house productdevelopment. This began to change with the new millennium, however, and new structures anda move towards a more open culture with regard to technology development have emerged.

Because, we were so vertically integrated We did the chemicals, forestry, export,transport, if we couldnt do it ourselves we werent interested. So, that started tochange from 2000 onwards (Interview, Glyn Roberts: Genesis Project FieldLeader for Disruptive Sustainability for Growth).

Research and Development is an important part of the Unilever organisation. It accounts forapproximately 2% of the total Unilever turnover. This equates to spending of roughly 1 billion ayear on research and development. The current research and development function is calledDiscover, Design and Deploy. Figure 1, below, is a model of Unilevers R&D funnel, Discoveris at the left hand, wider end, close to the universities and the sourcing of new ideas andconcepts. Discover delivers programs of technology, building the right capabilities for the futureand resourcing the right skills for future developments.

Design, further to the right of the funnel, is less about science and more about applications andnew business models. Then Deploy takes these from the centre of Unilever out to the 180operating countries and ensures that the products work locally. This entails both legal andsafety concerns as well as the sensorial point of view. For example, whats a good perfume inRuncorn, is not necessarily a good perfume in Sao Paulo . We have to make products rightfor the rest of the world. (Interview, Glyn Roberts: Genesis Project Field Leader for DisruptiveSustainability for Growth).

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5. Open Innovation at Unilevera. Research and Development

Design DeployDiscover

Figure 1. Below is a model of Unilever's R&D funnel.


Three modes of open innovation have been described at Unilever. The first is inside out inwhich ideas flow into Unilever from elsewhere. This may include from the broad range ofpartners and suppliers, SMEs, academics, lone inventors, entrepreneurs or anybody who hasgot a good idea. (Interview, Jon Hague: VP Open Innovation). Ideas coming from this route aremainly technology focused.

The second area is through the outside incubation policy delivered by the New Business Unit(supported by Unilever Corporate Ventures Group). Essentially, the New Business Unit findentrepreneurs who want to build businesses in areas of interest to Unilever. The technology isthen licensed to the entrepreneur who subsequently builds the business outside of Unilever.

The third mode is co-creation where Unilever looks for companies with complementarycapabilities and form enduring relationships. This can result in the production of a portfolio ofcomplementary innovation projects with a specific partner.

These open innovation modes have been explored in more detail below.

Ideas from outside Unilever can come from a variety of sources. In order to seek ideas that fitwell with Unilevers objectives, grand challenges are put forward to potential suppliers.

what we will typically do but well put a brief out for a new piece oftechnology. So, sometimes thats by standing up at a conference and putting upour grand challenges. I do a lot of that because they are the kinds of things that doexcite people, well say Unilever is open for business. Sometimes well go andactively solicit those companies because we think theyve got an interest in a certainarea; sometimes they proactively come to us. Sometimes well use brokerageagencies What then will typically happen is they will come and present andwell outline what we want and they will outline their technology (Interview, GlynRoberts: Genesis Project Field Leader for Disruptive Sustainability for Growth).

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b. Modes of Open Innovation at Unilever

i. Mode 1: The Flow of Ideas from Outside

There are around 6,200 staff in R&D and of those about 1,000 people work in the Discoverfunction. Unilever has six basic laboratories, one in the North West of England which isapproximately 800 people, and another quite significant lab at Colworth, just north of Bedford,in Bedfordshire. As an Anglo-Dutch company there is also a lab near Rotterdam atVlaardingen. In addition, there are labs in the US, India (Bangalore) and China, close toUnilevers growth markets.


The second mode of open innovation at Unilever involves the use of intellectual property (IP)which is not central to the core business, or which has other potential routes for exploitation.

Unilever Ventures is one of the Venturing Groups that belongs to Unilever Corporate Ventures. It isa vehicle used for spinning out IP that is unlikely to generate a return for the core business. Thesespin out companies nurture ideas and potential technologies that do not fit with Unilevers corecategories or brands and are therefore different from business incubated outside Unilever butwhich Unilever may bring back in. Most often the IP is of value in creating new technologycompanies that have markets outside the fast moving consumer goods (FMCG) industry. This is aroute to creating value from IP that would be wasted or worthless if auctioned as a raw patent.

The characteristics of the source of innovation can bring with it some issues relating torelationships between differing types of organisations.

Dealing with other large companies is most straightforward as they have, like Unilever,established core expertise, and similar timescales and cultures. Moves toward strategicalliances with large companies have also simplified the process as multiple problems andprograms can be examined without the need for multiple agreements.

Breakthrough technologies come from predominantly two places, either coming out ofuniversities and new university spin outs, or SMEs (small and medium enterprises). Universitiesas innovation partners will be discussed separately.

SMEs are often not suppliers, but owners or creators of technology that Unilever will buy, eitherthrough purchasing the patents or licensing. However, for both sides, the risk profile of workingwith an SME is different to that of a large company.

If its an SME its R&D. So, if we say to themthe excited techie guy talking tothe excited techie guy at the SME and were thinking oh, its only three FTEs andthats absolutely fine, theyre just doing a piece of work for us without thinkingabout the fact this is 50% of the guys resource. Its probably at least five yearsaway from market launch. He puts those two people on, it comes back three yearslater with an answer and weve moved on and got marketing campaigns because ofthe way our funnel works and the poor guy is out of business. (Interview, GlynRoberts: Genesis Project Field Leader for Disruptive Sustainability for Growth).

There are potentially serious consequences for an SME to commit, what is for the SME, highlevels of technical resources and not reaching a marketable product or technology withinUnilevers timeframe. Also, often, technology based small firms lack the business andmanagement skills to develop their ideas into commercially viable products. In addition, SMEsmay be overwhelmed by the legal implications of working with a very large global multi-national.These factors continue to make working relationships with SMEs more problematic than thosewith other large companies.

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ii. Mode 2: Outside Incubation Policy


Quite a number of other companies have made quite a big deal out of licensing IP,extra IP, and I would say thats not really our game, weve hung onto our patentportfolios, really to cover the pipelines that we want to launch in our categories, plusexisting market products. (Interview, Jon Hague: VP Open Innovation)

There is an additional problem in that the main interest in Unilever IP is from competitors, whichencourages a cautious approach. However, in some cases IP has been deliberately takenoutside the company to be incubated. This policy sees the development of small businessesaround Unilever IP, but taking place outside the company: a way of Unilever capturing theinnovation and speed of a small, agile, company without the risk to established business.

the thing that we have done is find entrepreneurs who are conducive and wantto build businesses in the areas where were interested and licensed the technologyto those people and they go away and build the business outside of Unilever.(Interview, Jon Hague: VP Open Innovation).

The outside incubation policy captures the potential benefits of the small fast moving SME andavoids the sometimes slow internal machinery of a large multinational company. The option ofbuying these new entrepreneurial businesses at a later date is also possible with the outsideincubation approach.

An example of this outside incubation policy is the company Own Products8 which is askincare business, with a naturals positioning. The technology behind the company has beenlicensed by Unilever. The rationale for the outside incubation is that existing internal Unileverbrands did not fit well with the Own Products business ethos.

The opportunity presented by the outside incubation policy is a dramatic expansion of theinnovation pipeline, without the potential for risk to the existing Unilever brands. In terms of theinnovation funnel these enterprises help to expand the marketplace.

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iii. Mode 3: Co-creation

The third mode of open innovation involves much closer ties with Unilever. The first two modes,ideas from outside and outside incubation are at arms length from the company. Co-creation,also referred to as co-development or co-innovation, involves the development of a portfolio ofcomplementary innovation projects with a partner. Complementary capabilities are sought andenduring relationships with other companies developed.

Co-creation can happen with a range of different partners, from large companies to SMEs,universities and more recently NGOs.

if you look at it, most of the big companies that we deal with, you knowwhat kind of technologies theyre going to bring you so their core expertise set is asestablished as ours is so we can go and talk to big companies.. So, when wewant breakthrough technology its coming from predominantly two places, eithercoming out of universities and new university spin outs or it does tend to be SMEsthat weve worked with before and theres a third one which is NGOs whichIve never worked with before. So, its very different. (Interview, Glyn Roberts:Genesis Project Field Leader for Disruptive Sustainability for Growth)

Currently, co-creation relationships such as with the companies described above provideexternal biotech capability for Unilever. This is a deliberate choice for Unilever to keep a positionat the leading edge of molecular biology. In-house experts play a different role to in the pastwhen they would be involved in the in-house practice of molecular biology. Now their job is toorchestrate co-creation partnerships to develop innovations in molecular biology.

An example of co-creation with the supply base involves major strategic innovation relationshipswith enzyme manufacturers. Unilever does not conduct enzyme discovery in-house and relies,instead, on deep relationships with a range of biotech companies to create the innovationpipeline for enzyme technologies. This partnership in enzymes is a good example of cocreation, as it is fundamentally important to the competitiveness of the Unilever laundrybusiness, within the companys core categories, yet, the expertise is provided by co-creationpartners who are often looking for breakthroughs in the same areas. SME - Supplier - Unilevercollaborations can accelerate these innovations for all the partners.

This has been a successful model of open innovation for Unilever because of the essential anddeliberate nature of the match between Unilevers capabilities and the capabilities of partners.This allows for a series of projects to be developed between Unilever and the partners making itan effective system of development.


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A traditional model of company IP would see development in-house in the companys corecategories. As the open innovation modes described above illustrate, there has been a revisionof this traditional view at Unilever.

In the co-creation mode this extends to allowing partners to take technologies to themarketplace if Unilever has not commercialised the technology within a certain period, whichmakes the company an attractive partner in such ventures. This ensures that Unilever is

very serious about commercialisation. Its a big decision not to go to marketbecause we are playing use it or lose it and that is something weve instilled in thepast couple of years quite deeply. (Interview, Jon Hague: VP Open Innovation).

It is a very different mindset to the past where if you go down the corridor andtalk to the patent guys they want to own everything.

were trying to get much more enlightened about the freedom to allow a partner togenerate value even if its not with us because then you are a much more attractivepartner. (Interview, Jon Hague: VP Open Innovation).

There is recognition here, of the value of relationships with partners, but also of the limitations ofIP and patents.

I think we get hung up too much, everybody gets too much hung up on IP andpatents. To be honest, I could have fantastic patents and never put a product out. they see a massive big box and if they just step back and say you know what,Im going to open it up and share it you would get a better problem defined, abetter solution and then we would all end up making more money. (Interview,Cameron Jones: VP R&D Hair).

Particularly in the consumer goods markets in which Unilever operates, it is vital not only thatcustomer problems are recognised and solved but, also, that customers are able to recognisethat the new products offered are addressing these needs. This means that technology and,therefore, IP issues are just one small part of the product package.

c. Access is the new ownership - theChanging Role of Intellectual Property (IP)


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So, you have a consumer they give you info. You turn that into a technicalproblem; you then get a technical solution; now, is that the problem solved? No, itsnot because what youve got to do is put that back into consumer language so theconsumer recognises the problem and this is the product to sell for the problem.(Interview, Cameron Jones: VP R&D Hair).

If access is the new ownership then the open innovation approach invoked by Unilever isplaced to provide access to innovative technology for the future. In addition, these policies allowthe development of strong, fruitful relationships with partners, access to the agile innovationadvantages of small companies, whilst maintaining openness to new ideas and a focus on corebusiness and priorities.

The motivation for working with universities is twofold: access to new sources of knowledge andrecruitment of capable graduates. This reflects the emphasis on open innovation through theflow of new ideas into Unilever.

Im responsible for trying to push new science into Unilever. And, increasingly, wedo that by collaboration with the outside world, so you cant do anything like asmuch work inside, or tap as much knowledge or get hold of as many interestingpeople as you can outside. (Interview, Dominic Tildesley: VP R&D, StructuredMaterials and Process Science).

The company is working towards having a group of senior leaders in each of the laboratoriesthat owns a relationship with a top university in that proximity.

lets talk about academia in many ways where the deepest individualrelationships between scientists and the external world have always been there buttheyve always tended to be individual relationships / networkswhat weve beenlooking to do more recently is take that up a step. there are a number of placeswhere weve looked to get relationship agreements in place, a portfolio, werelooking at the institute as not just a place where there are a cluster of funded post-docs or PhD students but weve actually got a deliberately constructedportfolio. (Interview, Jon Hague: VP Open Innovation).

d. Universities as Sources of Innovation


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A range of possible connections within a university relationship is desirable.

we look around for good places to work with locally, and when one thinks ofLancaster, I know youve got a good physics department and I know that youhave closed your chemistry department, but that youre having a think aboutwhether you want to re-open it at the moment, and I also know that if I wanted to dowork on water and environmental science, Lancaster is a place I would come to -have been to talk to people. And if I wanted to work on consumer understanding,the politics of science, Lancaster is also a place that I would come to work.(Interview, Dominic Tildesley: VP R&D, Structured Materials and Process Science).

Proximity has proven to be important, historically, in developing good external relationships.

in Unilever a few years ago the zeitgeist was the ability to partner wasinversely proportioned to one over r to the six, where r is distance. I think wherewe need to move to is that one over r to the six doesnt need to be me being able totouch the other person, but I need to be able to interact with them in a way thatfeels like were touching as opposed to the old days where I need to go there or Illsend an email. So its actually about how you enable that as if its one siteworking. (Interview, Paul Jenkins: Structured Materials & Process ScienceExpertise, Group Director).

An example of the problems produced by distance is illustrated by collaboration with oneEnglish University.

we helped(one university based in another region)to refurbish a departmentattached to the chemistry department and we provided them with funding to runacademics through the department, ... we havent made it part of that contractfor our guys to work side by side with their guys actually down there. I think inhindsight everybody would say its not been that successful because well do a bigtrip every three months to find out what theyve been doing and then three monthsis like why did you do that? Why are you going off over this way? I dont think itworked because I dont think we ever had a secure partnership. We looked at isas we want to package out this entire area and wed like you to come back withsome best practice and then well work out how we put that into a programme.(Interview, Paul Jenkins: Structured Materials & Process Science Expertise, GroupDirector).


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One challenge driven by the open innovation culture is how to access some technologyecosystems. Currently labs dont necessarily sit in the footprint of those great ecosystems sowe dont have anybody on the west coast of the US for example. Yet, that is I would say, anabsolutely hotbed of creation in the creation of the new chemical industry thats about tohappen. (Interview, Jon Hague: VP Open Innovation). This issue also applies to innovativepackaging of device work in Japan. Unilever Ventures allows some access to technologyclusters in other parts of the world, but it is a challenge as there is not a group of Unileverscientists in close proximity to some of the, potentially, most innovative partners and strategicallyimportant technology clusters.

The laboratories in India (Bangalore) and China (Shanghai) do provide access to an IT clusterand manufacturing and developing scientific clusters respectively. Currently, this proximity issueis important as the nature of Unilever products is physical, rather than virtual (as in otherindustries such as internet and mobile communications). The geographical footprint is quiteimportant and most Unilever companies have a legacy footprint, as a result of their history,rather than a future facing footprint, presenting an interesting challenge. That is, understandinghow to be present despite the lack of a physical presence such as a laboratory.

The structure of the company and new and burgeoning markets in developing and emergingcountries challenges the practice of locating R&D facilities in western, developed areas of theworld. However, historical connections and a strong university research system, eager forindustry funding, provide the rationale for this strategy.

And so it regularly asks itself the question about why would it continue to do its R&Din the West? When it could move and continue its R&D in the East one of thereasons I always give is because of the superb university base that we have here inEurope (and) the very strong connections we have, I mean we do have strongconnections here to Liverpool, to Manchester, Lancaster, Salford, Daresbury - reallyimportant to us and of growing importance. (Interview, Dominic Tildesley: VP R&D,Structured Materials and Process Science).

University collaborations in some developing countries, for example India, can be problematic asthe universities are less in need of university funding.

we tend to do a lot of quite good local collaborations and a lot of good UKcollaborations, we have a few in the US, but collaborations in the Far East is stilldifficult for us and the reason is actually that if you go to India they would say wellwe dont need any students, weve got them, we dont need any post-docs, wevegot plenty, we dont need any equipment because they are so well-funded by theirgovernments, theres no pressure on them to work closely with industry. So its quitea different situation to the situation here in the West. So thats one of the reasons thatwe continue to work very locally. (Interview, Dominic Tildesley : VP R&D, StructuredMaterials and Process Science).


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we choose good places now whats a good place? So, two things aboutbeing good, you have to be clever, so it has to have a high research rating, butyouve also got to be hungry, youve got to want to work with Unilever, otherwise it isa waste of space youve really got to make sure that youre working with placeswho need it, who want to work with you and who then produce the goods.(Interview, Dominic Tildesley : VP R&D, Structured Materials and Process Science).

In regions where Unilever labs are based there are some established research collaborationswith universities. Proximity of the Unilever R&D centre at Port Sunlight to Liverpool Universityfacilities has seen many benefits. The easy access to the facility (20 minutes away) has theadded convenience of visits to the university being easy to fit into a working day.

And its an opportunity because there are lots of players in the bio-chem arenahere and the Mersey Partnership, thinking about the knowledge economy its oneof the major themes. So, yes, proximity matters when it resonates like that and so ifyou can engage with the local community that is world class in bio-medical, shouldwe be doing that, then that makes a lot of sense. (Interview, Jon Hague: VP OpenInnovation).

This involves partnerships in which Unilever staff and university staff are working side by side onprojects. Through this collaborative experience, helpful and sustainable practices concerningthe legal and practical approaches to IP management have been built.

The IP arrangements have been crucial, I think, to that. Essentially, because whatthe university provides is that facility kept to the leading edge and the skills to beable to turn that facility to tackle Unilevers challenges, so the university itself is notcreating IP in our product space, what happens is they will work with our guys whothen do the experiments and come up with the new technology innovation, so wetake that back and that becomes our IP for our suppliers to work with and launchour products. (Interview, Paul Jenkins: Structured Materials & Process ScienceExpertise, Group Director).

when we first moved in it was a new world for us, we were used to going into alab where here where no one else could come in, whereas there, a big 3 millionpounds worth of kit is in an open lab, so what weve done weve developed with theuniversity - and perhaps the university do this anyway - a way of managing theIntellectual Property in that environment of an open space lab. its actually the keyintellect that you bring to the experiment rather than the experiment itself thatsimportant, the way you interpret the data, then its less scary because you interpretthat data in your own space. (Interview, Paul Jenkins: Structured Materials &Process Science Expertise, Group Director).


The legal agreements were a key issue as there could be staff from the university, Unilever andother outside organisations working in the same labs. The importance of trust is crucial torelationships with universities. Issues around IP can be handled through legal agreements, butcommon sense arrangements and an understanding of environment are also clearly importantand Unilever has been successful in the management of these.

And thats an open lab, anyone can access that, Unilever has got funds, we gotgrant funding to help it, the university owns all the hard assets; they clearly putmoney into it too. And, its a centre that anybody can pay to access to use,including our competitors and, once again, were very happy with that, not thatmany of them do that we know of anyway, but we dont ask. (Interview, Jon Hague:VP Open Innovation)

The collaboration at the University of Liverpool has been important and is a good example ofthe type of university relationships sought by Unilever. The Centre for Material Discovery, whichopened in 2006, is the result of a collaborative funding from the North West DevelopmentAgency and the EU (Merseyside European Objective One) and the University. Since that timeUnilever has worked with the University on household products and this collaboration hasrecently been confirmed as continuing until 2017. 10

what Liverpool do provide uniquely here is evoking that facility to be the best inthe world in its area and to be able to help us to be good enough to utilise it to itscapability. What we bring is the knowledge of our consumers and our brands andour challenges to turn that stuff into things we can then turn into technologies thatbenefit consumers, which I wouldnt expect a university to do. (Interview, PaulJenkins: Structured Materials & Process Science Expertise, Group Director).

Unilever is seeking to extend and broaden the relationship with the University of Liverpool andthis could provide a model for other similar collaborations world-wide.

we are laddering up now to a deeper relationship with the Liverpool University atlarge. So, were putting in place a similar group that meets regularly that looks acrossthe whole program that looks to foster relationships, that looks to push programswhere its relevant and I think in this particular case there is a lot to be said forproximity; the fact that we are just across the river from a major university. Who caresabout their ranking in the world, the question is where have they got capability, whereare we able to invest together to get something world class going and thats theconversation that goes on now with Liverpool and its at the vice chancellor level, notat the individual site. And how many of those around the world can we do? Well,probably 10 15 of those. (Interview, Jon Hague: VP Open Innovation)

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Access is the new ownership. This quote by Jon Hague, VP Open Innovation, resonatesthroughout many aspects of Unilevers approach to Open Innovation. The acceptance andconsequent action around the belief that greater knowledge, R&D and new technologies existoutside of the firm in universities, small firms, consumers and through partnerships is central toUnilevers success. Access to knowledge rather than control and ownership - drives Unileversapproach to innovation whether through partnering, spin outs, public private partnerships, withNGOs or through co-creation. In this way risks are mitigated, costs are shared and Unileveraims to stay ahead of the wave by bringing new products to new markets faster and moreefficiently than its competitors.

The multifaceted approaches to innovation involving outside-in, inside-out, co-creation and thechanging role of intellectual property result in the ability of Unilever to develop cutting edgeideas and manage risk whilst building and maintaining relationships that are structured, as faras possible, to deliver a beneficial outcome for all.

The importance and usefulness of proximity is highlighted. The collaboration with LiverpoolUniversity is highlighted as being particularly fruitful and enabled by proximity. Physical proximityleads to a deeper relationship that means that difficult issues are more easily managed. Thedevelopment of deep and creative relationships mean that difficult issues such as IP andsharing a laboratory and the development of deep and creative relationships are seen to bemore easily managed when partners are physically close. This leaves us with the question ofhow Unilever continues to extend and manage its knowledge network to areas where the firmhas no footprint. How can the benefits of proximity be replicated?

The case study also outlines the importance of inward investment on regional R&D. The abilityof Unilever to develop ties with other innovation anchors, such as the N8 universities and withDaresbury Science and Innovation Campus has been enabled by inward investment, such asthat recently experienced by Liverpool University and at Daresbury.

Unilever has a strong position as an innovation anchor within the North West of England andwithin the UK economy. Unilever, through its approach to innovation acts as a conduit for theflow of new technologies and ideas into and out of the North West. The firm brings significant,and potentially, beneficial influence on the capacities of all within it its network, includingacademic and industry partners to take their innovations to the global stage.

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6. Conclusions


1Introduction to Unilever, March 2011, http://www.unilever.com/images/ir_Introduction_to_Unilever_tcm13-234373.pdf Accessed Jan. 2012

2Unilever Fact Sheet, http://www.unilever.com/investorrelations/understanding_unilever/factsheet/,Accessed Jan 2012

3Chesbrough, H. W. (2004) Managing Open Innovation, Research Technology Management, 47.1,Jan/Feb 2004, p. 24

4Chesbrough, H. W. (2003) The Era of Open Innovation, MIT Sloan Management Review, Spring 2003,Vol. 44, No.3, p. 41

5Chesbrough, H. W. (2003) The Era of Open Innovation, MIT Sloan Management Review, Spring 2003,Vol. 44, No.3, p. 38

6Chesbrough, H. W. (2007) Why Companies Should Have Open Business Models, MIT SloanManagement Review, Winter, 2007, p. 22

7Mather A. and Howells J. Innovation Anchors - A concept paper for Mini Europe.

8 http://www.ownproducts.com/ based in the USA, Accessed Jan 2012

9 http://www.unilever.co.uk/Images/Transcript%20of%20Unilever%20HIstory_tcm28-237513.pdf, AccessedJan 2012

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