Innovation is the key ingredient to the New Zealand dairy industry's success, maintains Fonterra chief executive Theo Spierings - particularly in a changing economic landscape.

"We're living in a period of unprecedented technological innovation, which is disrupting both society and business," says Spierings. "What's worked in the past has no guarantee of working in the future."

"We're investing in our capabilities in order to be ahead of emerging trends."

Those investments are organisationally visible. Earlier this year, Fonterra launched an open platform, the Fonterra Ventures Co-Lab, to spur the development of new initiatives and technologies. It's a simple concept, but a potentially powerful one. The Co-Lab is a website which allows anyone in the world to submit an idea to Fonterra, which the Ventures team will then review.


If they think the idea has legs they will get in touch with the individual about a potential partnership to develop the idea into a reality.

Similarly, the co-operative has launched an internal programme to enable innovation across all areas of its business. The programme, called Disrupt, encourages the ideas to come from within, and involves a 12-week accelerator programme for staff to participate in. If the idea is a success, it could lead to the staff member switching jobs to focus on the new concept full-time.

"We're cultivating an internal culture of entrepreneurship with programmes like Disrupt, which harnesses the talent and creativity of our people to bring new business models to life," says Spierings. "We're also leveraging partnerships with innovators outside our organisation through initiatives such as our Ventures Co-Lab platform."

The impetus for such a culture is the company's position as a key supplier in a market becoming ever more vital to humanity.

"Factors like population growth, the rising middle class and a growing demand for authentic nutrition from a trusted source present a huge opportunity for us," explains Spierings.

"However, the challenges facing the future of food are also without precedent. If current trends continue, by 2050, food demand will increase by 50 per cent. At the same time, more resource constraints have emerged."

To meet those challenges, the cooperative is encouraging its many members to innovate on the farm as well. Farms are being augmented with ever more sophisticated technology. Spierings says this is part of a strategy of "embracing tomorrow's innovation today".

"Our farmers are leading the way with precision farming through internet of Things solutions to improve productivity," says Spierings. "And we're using the latest technology to build more intimate connections with our existing and potential employees, farmers and customers."


And if the internal culture Spierings speaks of translates into product innovation, the benefits would be observed worldwide. The co-operative already serves more than 1 billion consumers worldwide in over 100 countries, and says its ambition is to "make a difference in the lives of two billion people by 2025".

But just as an innovative culture is important, the chief executive is eager to stress the importance of Fonterra's Kiwi heritage complementing and contributing to that.

"It's the Kiwi mindset that's given us the ability to take our products to the world to continue to meet the new and changing nutritional needs of our consumers with innovative and leading solutions," says Spierings.