Agribusiness: Fonterra thrives on disruption

Innovation pilot introduces Startup thinking into the business
Judith Swales -- COO Velocity and Innovation.
Judith Swales -- COO Velocity and Innovation.

There is a marked buzz when you talk with Fonterra staffers at their open plan HQ down on Auckland's Fanshawe St.

It's not just the impact of the surroundings (although they certainly enhance collaboration), but the obvious excitement as New Zealand's biggest company takes disruptive lessons from the Startup world and introduces new entrepreneurial thinking into the business.

The driving belief is that "one big idea can change the game" in its industry. And executives want Fonterra be in the driver's seat.

The fruits of Disrupt -- an innovation pilot -- will come to the fore in October when Fonterra top brass decide which proposals to emerge from an Accelerator process will be funded into fully-fledged business opportunities.

The Disrupt programme has top-level support from chief executive Theo Spierings, Judith Swales (Chief Operating Officer -- Velocity and Innovation) and Christina Zhu (Managing Director China).

This is a galvanising step for Fonterra. Some 700 managers and staffers from three markets have been engaged in Disrupt. There have been workshops. A Hackathon. And now several potential businesses are at the Accelerator stage.

"It was actually Theo's vision," says Disrupt leader Komal Mistry. "Fonterra innovates every day in different parts of our business.

"But it was really looking out at disruptive innovation and going 'What can we do to drive that?' "

Swales says if you look at how consumers have changed over the five-10 years, "the magnitude of change and the pace has been quite substantial".

The workshops were challenged to consider: "How are our consumers going to interact with our products?"; "What are they going to look like in 5-10 years time"; What will their expectations be?"

Mistry is upbeat: "We knew we had talented people but this really took it to another level. To go, wow, you see these people come together and they're so passionate about their ideas and they're just bringing that to life."

Adopting a Startup mentality is not second nature to corporates. The 700 who took part in the kickoff workshops were introduced to lean methodology: going out and testing things and trialling straight away.

Komal Mistry -- GM Fonterra Ventures.
Komal Mistry -- GM Fonterra Ventures.

"This is a very different way to how we're used to working," explains Swales. "Typically ideas come either top-down or they come very functionally. This is saying, if you've got a good idea, get a great team of people around you and just see what it could look like -- which is completely liberating for organisations like us."

"Founders" came up with 110 startup ideas and recruited teams. They were given tools and a month to work on it in their own time.

There was also coaching support from mentors throughout the business and from the Startup world.

Just over 50 submissions were narrowed down to 11 to compete in the Hackathon. A few were selected to take their ideas into a formal Acceleration programme.

Fonterra put funds aside for Disrupt. "It wasn't an astronomical amount of money but it was enough to get it off the ground," says Swales. "It wasn't tens of millions, that's for sure."

She adds that the proposals are confidential at this stage but they are exciting ideas. "Depending what comes out in October will start to give us a sense of how big this can be and then clearly we'll review when we go to do the second round and apply the funds to obviously manage this to best effect".

The programme has brought together employees from multiple markets and functions that had never crossed paths which is fantastic for our co-op.

Both Mistry and Swales say Disrupt has introduced a new way of entrepreneurial thinking into the business. Those who have been through the programme have taken these learnings into their day jobs and it is having a positive impact.

Participants ranged from all walks of the organisation, from working in distribution centres in Takanini, to plants in Hautapu and Internal Auditors in the corporate offices.

"The programme has brought together employees from multiple markets and functions that had never crossed paths which is fantastic for our co-op," says Mistry.

Swales emphasises the new ideas are very technologically driven and at the cutting edge of new business.

"It's still the dairy industry -- different ways of connecting consumers with milk products," she assures. "We're not becoming a tech start-up or anything.

"But our farmers are interested to know where are we taking the business in the future, and where will the growth come from, and I think hopefully we will start to give everybody an insight that we're looking at new problems and we've got new ideas, and I think that will be exciting for everybody."

- NZ Herald

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