Big Brands and the Innovation Struggle: Time to Turn to Startups?

What do a multi-billion pound global food corporation and a startup with two people working out of their kitchen have in common? It’s pretty simple: overcoming the innovation struggle is key to success for both companies. While the two extremes of the spectrum have vastly different challenges, some big brands are now turning to the startup world for help.

Startups have a huge advantage over the established players when it comes to innovation: their size and lack of ossified structures and pathways means they can be incredibly nimble. There are many fewer layers of organisation between an idea and a product on the shelves. Many big brands are looking to harness this directness and energy to galvanise their innovation strategies. Some, like General Electric, are seeking to overhaul their rigid corporate culture with lessons from the startup world. Others, like General Mills, Coca-Cola, and Danone, have started venture capital divisions of their own to invest in promising newcomers.

Food and drink multinationals spend far less on R&D than their counterparts in many sectors like tech and healthcare. They have been wrongfooted over the past five years by the shifting habits of consumers who are increasingly shunning established brands in favor of small, independent names they regard as healthier, more authentic and original.
The Independent

This is not an academic argument – £3 billion of opportunity is up for grabs in the UK alone in food innovation. With big brands losing $18 billion in market share over the 2011–15 period to startup businesses, it’s hardly surprising that major names are looking to learn from insurgent brands.

For some startups this new interest has meant funding from or outright acquisition by a multinational – something that would seem an obvious boon but needs careful handling to preserve the credibility of an independent brand. Still, the trend for big players to borrow heavily from the startup world seems certain to intensify as consumer tastes evolve.

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