Skin Care Giant Launches New Open Innovation Approach

By: Frank Mattes

The skin care market is an interesting business to be in. Every single person on our planet is a potential customer and yet it takes a good deal of focus and expertise in every corporate function to become globally the number one. This is what Beiersdorf, the Hamburg (Germany) based champion in the skin care business has achieved with its Nivea brand. Innovation is a key ingredient in the success formula. InnovationManagement caught up with Martin Rudolph from Beiersdorf and discussed about innovation and in particular about the Open Innovation approaches Beiersdorf is taking.

In the success formula of a skin care company, innovation is a key ingredient. Innovations need to provide answers to five megatrends affecting the global skin care market: The global population is becoming older, increasing wealth in emerging markets, the ideal of agelessness, technological advances and massive awareness of health & wellness.

Beiersdorf as a world leading skin care company is taking up these challenges with a clear focus on a few strong brands with top market positions, a unique expertise in R&D and a well-crafted Marketing approach. It starts from a solid base, with a corporate history of more than 125 years and with brands that are trusted all over such as NIVEA, La Prairie, and Eucerin.

Beiersdorf sees itself as an international R&D leader in the area of skin care. Some 152 million Euros were invested and 940 people employed in R&D last year. Beiersdorf’s R&D received, as the only European FMCG company, an award from the renowned Fraunhofer Institute IPT in 2008 for its technology management.

In January 2011, Beiersdorf announced the public launch of its unique Open Innovation portal ‘Pearlfinder’. InnovationManagement interviewed Martin Rudolph, Corporate Vice President, Head of R&D Corporate Development, on the background and the goals of Beiersdorf’s Pearlfinder initiative.

How do you view the openness of Beiersdorf’s innovation management?

Beiersdorf has always been open to innovative ideas also from outside. We have a long history of successfully collaboration with external partners on new product ideas. One of the oldest and best known examples is Isaak Lifschütz’ discovery of the emulsifier Eucerit more than 100 years ago. Mr. Beiersdorf saw the potential and connected with Lifschütz, thus laying the foundation for the development of the NIVEA creme and modern skin care.

Recent examples are the burdock root ingredient in the anti-aging products of the new NIVEA Pure & Natural range and the anti-staining technology in the new NIVEA Deodorant Black & White. Both were developed together with external partners.

In Beiersdorf’s Research alone the number of collaborations with external partners has tripled over the last three years. With our new Open Innovation initiative ‘Pearlfinder’ launched in January this year, we offer access to the needs of our company through a new level of openness. We invite well-known external partners but also unknown companies, institutes, universities and individual researchers and inventors to exchange their innovative ideas with us.

By doing so we get more access to innovative ideas from outside the company and our partners the chance of a long-term collaboration and to market their ideas – a concept all participants benefit from.

What is special about the Pearlfinder model?

Pearlfinder is a unique Trusted Network that allows external partners in all regions of the world to work with us. On a confidential communication platform Beiersdorf’s R&D and Packaging Development encourage creative companies and individuals to share their innovative ideas and solutions with us. This exchange of ideas can lead to privileged partnerships and long-term collaborations.

The novel idea of Pearlfinder is the confidentiality of the information exchanged: This applies to the security of our technical briefings as well as the handling of the external proposals. We guarantee that no competitor and only a small group of people within Beiersdorf will be able to access the proposals. Once the required mutual Non-Dislosure Agreement is signed, we guarantee that no patent activity will be initiated within Beiersdorf.

Why should an external innovator prefer doing Open Innovation with Beiersdorf instead of doing it with its competitors?

Beiersdorf values have always been trust and fairness which is reflected by our way to collaborate. Based on this idea our partners enjoy the privileged access to an open information exchange. It is always the intention of Beiersdorf to build on a trustful and good relationship with its partners.

As an example, all posted ideas on Pearlfinder are still the intellectual property of the external partners. That is the main difference between Pearlfinder and many of our competitors’ networks. Another advantage is that all external partners always receive feedback to their proposed ideas within eight weeks. Furthermore, Beiersdorf offers the opportunity to market innovations under the umbrella of a strong company with internationally leading brands like NIVEA.

How are Intellectual Property issues addressed in the Pearlfinder approach?

It is mandatory to sign a mutual Non-Dislosure Agreement (NDA) to get access to the briefings on the platform. In accordance with this NDA all information related to the topics of our briefings are confidential. Beiersdorf ensures that no patent activity will be started with external ideas unless mutual agreement between us and the external partner has been found. The platform offers a confidential environment to exchange ideas, where everybody, no matter if international suppliers or individual inventors can be sure that Beiersdorf will not abuse their ideas.

What are successes that you can share with us?

Pearlfinder started in January of this year, so it is too early to share finalized projects yet. However, we already received very positive feedback from external partners. The community of Pearlfinder members is growing continuously – faster than we expected. We received promising ideas and solutions which resulted in collaboration activities with external partners, and also we have more exchanges with new potential partners from all over the world. This encourages us to believe that the unique Trusted Network Pearlfinder is a very promising extension of our Open Innovation initiatives which we will continue.

What did you learn about Open Innovation along the way?

Some test runs of the Pearlfinder platform in 2010 have shown us that external partners only like to disclose their innovative proposals in a protected space. Confidentiality is a key issue when it comes to Open Innovation. The cultural change in dealing with others’ ideas is also an essential step forward: If we want to keep our competitive advantage, we have to open up for these ideas from outside the company even more.

Moreover, we need clearly defined processes and concepts before external networks can be involved. Flexibility for the implementation of new business models for exceptional ideas and collaborations have to be developed. The development of open innovation takes time, experience, and patience. You have to find out what your internal challenges are – from a cultural as well as from a structural perspective.

What were the factors that made Beiersdorf go this route?

Knowledge is available globally. The product market cycles are getting shorter and smaller, innovative companies and networks become more important. Through greater involvement of external partners and consumers we can respond more quickly and effectively to market needs and further strengthen our own innovation ability through access to knowledge, technologies and skills outside of Beiersdorf.

How is Pearlfinder embedded organizationally?

Open Innovation is the responsibility of all departments in R&D and in Packaging Development. Pearlfinder is one important pillar of Beiersdorf’s open innovation approach. It is steered by a team of scientists which handle all contacts between R&D, Packaging Development, and the Pearlfinder Community. A dedicated Pearlfinder team ensures also the quality of the technical briefing, the platform, and the communication activities that we are conducting.

How has working with this Open Innovation approach influenced ‘Old School’ innovation management?

The key lesson we learned is that it really doesn’t matter where the idea comes from. It is more important to find the right ideas and take them to market quickly. This implies that especially the front end of the innovation funnel is nowadays a more “porous system” than a streamlined process.

Usually culture change is the toughest part in any Open Innovation implementation. How did Beiersdorf take up this challenge?

With a clear commitment of Beiersdorf’s top management concerning the importance of Open Innovation for further growth opportunities. We have involved the Beiersdorf R&D employees early from the start of new Open Innovation approaches and have set-up a training and communication program.

What is Beiersdorf’s long-term vision for Pearlfinder?

We see Pearlfinder as an important step on our way to open Beiersdorf even more towards external partners. Pearlfinder will help us to connect with companies, universities, institutes and inventors, especially the ones we wouldn’t normally have been aware of before. The access to novel ideas provides us a huge potential to develop innovative products for our consumers also in the future.

By Frank Mattes