Open Innovation in CPG: The Future of HENRi@Nestlé
Examining Nestle's Open Innovation Program
Helping families manage portion control…Improving maternal nutrition during pregnancy and breastfeeding…Finding an alternative to PET in water bottles… Each of these could be the one-sentence pitch for a popular, VC-backed start-up, but instead they are the aspirations of the multinational food and beverage giant Nestlé through its HENRi@Nestlé open innovation platform. In its mission to become the global leader in nutrition, health, and wellness, Nestlé faced problems too broad and too important to be tackled internally.  Therefore, in conjunction with the Company’s 150th birthday in 2016, Nestlé’s Global Innovation Director Gerardo Mazzeo and Global Head of Digital and Social Pete Blackshaw launched HENRi.
Named for the Swiss confectioner who founded Nestlé, the HENRi program seeks external partners with bold new ideas. Through HENRi@Nestlé, the Company posts challenges with the aim of soliciting “ambitious and innovative” proposals from start-ups. These projects have both a social good component and a direct connection to one or more of the Company’s brands. For example, KITKAT Sustainability sought a partner to connect consumers with the Nestlé Cocoa Plan’s efforts to provide a better life for its farmers.  Good-Loop, an ethical video advertising platform, was chosen from over 150 applications. Once accepted, a bid is guaranteed $50,000 to pilot a proof-of-concept and assigned a senior sponsor at Nestlé to oversee the partnership.
HENRi@Nestlé has shaped its program to capitalize on several of the best practices of open innovation: intrinsic motivation, high-volume solution-generation through crowd contests, and project scope specificity.  While businesses typically have to offer their employee base some form of financial compensation, open innovation has allowed Nestlé to receive hundreds of proposals for free. Nestlé has only posted HENRi challenges that enhance the Company’s corporate social responsibility and has heavily publicized its partner selection. Therefore, the applicant pool could include start-ups seeking publicity, an opportunity to improve the world, or a chance to learn, in addition to those attracted by the $50,000 prize. Similarly, by structuring HENRi as a series of public contests, Nestlé maximizes the members of the virtual community, including those without traditional backgrounds, who might participate in an HENRi challenge. This should provide a diverse solution set and encourage experimentation from applicants. Nestlé has been superb at clearly defining the scope of its desired solutions. For its Nutritional Awareness challenge, Nestlé specified its desire for a project that took advantage of the rise of cellphone penetration in Equatorial Africa.
Over the past two years, the HENRi challenges with a marketing bend have performed quite well. In addition to Good-Loop, Nestlé has also formed partnerships with Linqia (Influencer Optimization), Crowdly (Word-of-Mouth Advocacy), and NextUser (Marketing Data Analysis). The early success matched Company expectations as open innovation in marketing represented a natural progression from Nestlé’s digital initiatives. Nestlé built upon this strength by forming a partnership with the ad:tech conferences in London and New Delhi where an HENRi challenge underpins the conference’s signature Next Big Thing pitch competition. Nestlé has clearly found a productive niche.
HENRi as Innovation?
HENRi@Nestlé has struggled to attract compelling start-ups to its more technical contests. In the months following the site’s launch, Gerardo Mazzeo lamented the lack of submissions for the Alternative Material to PET and Micronutrient Deficiency projects. To date, neither challenge has identified its collaborators or announced any progress. Earlier this year, Nestlé Waters released a bottle made from 100% recycled PET in an effort unaffiliated with HENRi.  If HENRi@Nestlé cannot generate successful partnerships across problem types, then the entire effort could amount to a well-publicized bake off for creative marketing solutions.
Nestlé has also limited the scope of problems for which it utilizes open innovation to those which have a demonstrable favorable global impact. This is a logical strategy for a new program receiving significant publicity. However, key initiatives at Nestlé will not always have positive externalities. If Nestlé views HENRi as an ongoing source of creative thinking, then it should pilot a challenge without any clear benefits outside Nestlé.
The Future of HENRi?
Nestlé is committed to thoroughly vetting its HENRi platform. The program’s 13th and 14th projects are live, and the Company highlighted HENRi@Nestlé as a major source of digital innovation in its 2017 Annual Report.  Yet, Nestlé has also seen certain HENRi challenges get overlooked by the creative community. Open innovation may not provide a solution to every problem Nestlé posts, but if science-based partnerships are categorically ignored then HENRi is little more than high-leverage marketing spend. HENRi@Nestlé is at a turning point: should Gerardo and his team take steps to court more technical start-ups or are the current ad-tech solutions enough for HENRi to be considered a success?
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 Mazzeo, Gerardo, and Pete Blackshaw. 2016. An Introduction to HENRi@NestleTV.
 Audoyer, Florence. 2017. “THE KITKAT SUSTAINABILITY PROJECT”. Henri@Nestle. https://henri.nestle.com/live-projects/kitkat-sustainability-project.
 Boudreau, Kevin, and Karim Lakhani. 2013. “Using The Crowd As An Innovation Partner”. Harvard Business Review, April 2013.
 Nestlé® pure life® purified water launches new bottle made from 100 percent recycled plastic* in north america. (2018, Feb 15). PR Newswire Retrieved from http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/2002240722?accountid=11311.
 Nestle Global. 2018. “Annual Report 2017”. https://www.nestle.com/asset-library/documents/library/documents/annual_reports/2017-annual-review-en.pdf.
Student comments on Open Innovation in CPG: The Future of HENRi@Nestlé
Nice article about a cool initiative!
I imagine the relative success of courting marketing startups over technical startups has a lot to do with the incentives of partnering with Nestle over focusing on the startups’ own businesses. Whereas Nestle gives a marketing company something to market, a technology company may be more inclined to develop their own technology product and sell the product–or eventually the business–for a much greater payout than the $50,000 Nestle is offering.
If this is a big driver, Nestle may need to increase the offer for technical products in order to generate more participation.
Love the article — such an interesting read! In answering your concluding questions, I actually believe that Henri as a platform may actually become a more sustainable and viable option for Nestle to utilize as it has morphed into more of a dedicated ad-tech platform. I like how Nestle is using this buzz to gain entry into various ad-tech conferences and pitch competitions, and truly believe that this type of a brand building marketing initiative will enable Nestle to remain relevant in various external industries.
In my opinion, I believe that Henri will have a tough time convincing /recruiting more technical start-ups to become involved in some of the science-based partnerships UNLESS they raise the value of the winning prize. One would think that today’s tech start-up market is raising so much venture money that $50k would not be enough money to actually incentivize start-ups to pitch via the Henri platform versus finding other VC opportunities.
Nestle seemed to have launched this initiative with a much bigger scope than the one actually in place, and as soon as I started reading the first paragraph, I could see some of the challenges it may be facing to escalate it and achieve higher penetration in the “more technical” crowdsourcing. I feel that the compensation in place does not seem very attractive to more science-oriented startups that may be/have been working in the pursuit of high returns given the risk they incur (which is completely different than that of a marketing company). In the specific case of the PET alternative, I would tend to think that a company or individual developing such new technology would seek for something else than $ 50,000 and a “public recognition”.
I would love to hear more about the author’s recommendations on how to tackle this situation, but I feel that one possible solution could come from re-designing the incentives strategy depending on the type of project. Introducing for example some kind of royalties for those projects that bring innovative R&D technologies to the table can be a good way to start thinking about longer term partnerships with the “external” innovators.
I think this is a classic case of the iron triangle of cost-control-scope. While the lever of control is untouched, cost and control are at a tradeoff. For the $50,000 cost, the team should lower the scope of what it means to be successful. I think altering the incentives, so that the tiers are aligned with the actual value of the inputs that the startups give could increase their yield in this project.
My second theory here is the open innovation channels and audiences here are mismatched. Partnerships entities like Linqia (Influencer Optimization), Crowdly (Word-of-Mouth Advocacy), and NextUser (Marketing Data Analysis) all are used to working with high amounts of data to create success. However, data density/availability is not evenly distributed across the globe. Thus, the partners themselves could be using asymmetric data and pushing the challenges to the wrong audiences that might not be interested in micronutrient deficiencies or PET projects. I would hesitate to write off this project’s success on account of not finding enough technical startups- and instead study the profiles of who is applying to the challenges to understand who is missing from the equation.
Thank you for this post – I thoroughly enjoyed reading it! I also enjoyed reading the comments that have been posted. There is a lot of value in the suggestions to tailor the reward to attract technical or science-based start ups.
The concern expressed in the article regarding Nestle’s exclusion of projects that might not have demonstrable positive global impacts resonated with me. This limitation of scope means that Nestle is not gaining the full advantage of open innovation. This could also be one reason that members of the scientific community are not as engaged, seeing HENRI as more of a marketing campaign than a true challenge. Should Nestle develop another platform for more broad open innovation questions without obvious global impact? Is there a way to position this without attracting negative publicity?
One proposal for gaining traction among the technical, science-based start-up community, building on the recommendations from my colleagues, is to offer to partner with the start-ups going forward, rather than simply sharing prize money. This kind of approach has been done successfully in other businesses, such as at Valve, where hackers who created impressive “mods” were subsequently employed by the company. Since start-ups typically are attached to the product that they develop, offering to employ the developers or partner with them to use their inventions most likely has a higher chance of success than simply offering them prize money.