— The global consumer goods company brings scale, budget and marketing while the startups in the Unilever Foundry offer fresh approaches to connecting with customers.
“What I should I eat for dinner tonight?“ Knorr, a food and beverage brand owned by the consumer goods company Unilever, wanted to help target customers in South Africa answer that question but wasn’t sure how to reach people who didn’t have smart-phones or computers. DigitalGenius, a UK startup, helped the global consumer goods company come up with a recipe for success.It partnered with Unilever in a program called Unilever Foundry that helps startups link up with its 400-plus brands. DigitalGenius’s artificial intelligence (AI) and natural language processing technology allows it to automate tens of thousands of real-time conversations. An AI chat service it developed allowed people to use their basic phones to text the Knorr ingredients they had on hand at home to get advice on what to cook.
The service helped Knorr build personal profiles of customers in a database that was then used to push targeted campaigns of their new products. Knorr said it found that engagement was higher than with other digital channels and gave the company the opportunity to reach people it had not connected with before.
Working with Unilever Foundry gave the UK startup a new use case and opportunity for its technology in a new market. It is continuing to work with Unilever across multiple markets and brands, even after pivoting from its original model of AI-based chat services to using AI to automate and streamline customer relations, says Dmitry Aksenov, DigitalGenius’s CEO. Both Aksenov and Jonathan Hammond, the global head of Unilever Foundry, are scheduled to take part in a February 28 panel at the 4YFN innovation conference in Barcelona about corporate/start-up collaboration. The panel will be moderated by The Innovator’s editor-in-chief, Jennifer Schenker,
and will also include executives from Visa and Deutsche Telekom. Corporates are acquiring, investing in, or partnering with startups around the globe in record numbers. More than 1,000 big companies worldwide have opened corporate venture arms, spreading their bets by taking stakes in multiple startups. Some corporations are creating their own stand-alone “startups” and recruiting entrepreneurs to run them. Another strategy is opening stand-alone incubators and accelerators or joining ones backed by multiple players. Other models include hackathons and global startup competitions, or opening labs in universities and then taking stakes in the companies that get spun out.
Setting up programs is one thing. Making them work well is another. There is no off-the-shelf operating system for innovation, and big corporates the world over are experimenting to find the most successful formulas for working with startups.
Pitch, Pilot, Partner
Unilever Foundry has launched around 150 pilots with startups in a number of verticals since it was launched in May 2014. “These pilots have helped us to learn how to better communicate with clients and understand disruptive business models as well,” says Hammond. Unilever operates under a “pitch, pilot, partner” model. “We scout for innovative tech and startups, then we pilot to get to a MVP [minimum viable product] and try to get to market as quickly as possible,” says Hammond. “This removes a layer of bureaucracy traditional corporates have and really allows us to experience how the startup ecosystem works. It is a win-win relationship for both. Unilever brings scale, budget and marketing while the startups bring innovation and new go-to-market approaches. These partnerships lead to a great outcome for both parties.” Startups accepted into the program receive $50,000 and the possibility of working with Unilever but remain separate entities. The global consumer goods company has a venture arm — Unilever Ventures — but taking equity or buying startups is not the goal for Unilever Foundry. “We are focused on finding long-term partners we can scale across the organization,” Hammond says. “These are typically stable startups that have raised a round or two of funding and already have a go-to-market strategy.”
Unilever has chosen to continue relationships with startups in about half of the pilots. In the case of 30 of the pilots it is looking to actively scale the partnerships. “There is no one-size-fits-all formula,” says Hammond. “It can mean investment, a continued supplier-client relationship on a global scale, a contractual relationship that will enable the startup to move more successfully across a number of markets or it can mean more heavy lifting.” One example is Olapic, a New York City-based visual content market engine that collects consumer photos and videos from social media sites such as Instagram, Vine, Twitter, Pinterest and Tumblr to help brands and retailers increase sales and marketing campaign performance. “Olapic is now part of the roster for Unilever and we are looking at how we can scale them across our businesses,” says Hammond.
Another pilot, which took place in Bangladesh, involved a startup called NextBillion located in Unilever Foundry’s 250-desk co-working space in Singapore. NextBillion addressed the challenge of reaching rural consumers in Bangladesh by bringing people together via a pop-up movie theater that shows entertaining mobile content and uses these gatherings to also screen educational videos about good health and personal hygiene and distribute product samples from the brands Lifebuoy soap and Pepsodent toothpaste. “It is a great way to tap into a market and we are now doing similar pilots in Myanmar and a few other places in Southeast Asia,” he says.
So what are some of the key things Unilever has learned about what works and what doesn’t when engaging with startups? “It is important to make sure we are answering a business challenge rather than getting caught up in a particular technology,” says Hammond. “As a big organization you have to be sure to make it easy for a startup to navigate your organization by clearly identifying an entry point. And you need to be clear on the components the startup is expected to deliver, set really clear objectives and describe what success looks like.”
It is also important to inspire the internal organization by demonstrating that working with startups is tied to a real opportunity, he says.
“There is no right model for this,” says Hammond. “Unilever Foundry is only one part of our external innovation strategy. For us it is about creating a framework that can help these startups to scale so we can demonstrate that their way of doing things really is more efficient and more sustainable than our current ways of doing things in the core part of the business,” says Hammond. “If we can prove that with an MVP, that is a clear indication that we should engage with these startups on a larger scale.”