Abstract
The last decade has been a time of considerable investment in the development and commercialization of sustainably sourced materials. Despite the attention from leading academics, small to medium size enterprises, large suppliers, and large customers, and with sponsorship by a variety of government agencies, progress towards achieving successful commercialization has taken longer and been more arduous than most experts initially predicted. As programs have proceeded, the obstacles holding back development and commercialization have become apparent: technology has been more difficult to advance and scale up; development and commercial costs have been considerably higher; and the need for industry-wide versus company-specific solutions has brought many programs to a halt. There is a need to navigate this space with speed and insight, to manage these risks while striking the proper balance, and to nurture innovations appropriately.
Industry uses a number of different models to advance innovation. In recent years, Open Innovation models have become more popular alternatives than having one company go it alone. It has been generally accepted that Open Innovation models deliver strengths with entrepreneurial benefits. The most common forms of Open Innovation have been to pair up with a single partner or to participate in a consortium. However, these two commonly used approaches have drawbacks in certain situations such as sustainable material development: • Whereas working in paired partnerships offers the advantage of agility, it can carry a high level of risk for the partners. If industry-wide solutions are required to enable commercialization, this approach may not receive the input to create broad-based solutions in order to meet the needs of industry as a whole. • The consortia approach may generate broader solutions by getting the input of many, and may distribute risks. However, consortia have the downside of moving slowly. They typically need to manage a variety of conflicting interests and are burdened with a long alignment process. Too often, this leads to too many compromises, which can result in a slow road to delivering uninspiring results.
This paper presents a case study of the journey that The Coca-Cola Company, Ford Motor Company, H.J. Heinz Company, Nike, Inc., and The Procter & Gamble Company took in the formation and operation of the Plant PET Technology Collaborative (PTC). The technical complexity, investments required, and risks in advancing 100% bio-polyethylene terephthalate (PET) technology provided fertile ground to try something different, which resulted in the creation of a new business model. The Collaborative model discussed below is a new approach for the PTC member companies. Announcement of the formation of the PTC came in June 2012. While still early, the signs indicate that the Collaborative model can be an effective adjunct to other Open Innovation models. This model is based on demonstrating meaningful value to navigate complex, costly spaces by assembling a multi-company task force that has created the right expertise and is organized to work with focus and agility.
What Is a Collaborative?
A Collaborative is probably more easily defined by what it is not—it is not a partnership, and it is not a consortium. The Collaborative is a single team created to work on complex, long-term problems. It is strong and lean, agile and flexible. Membership in a Collaborative should be limited and by invitation-only. The different companies or organizations participating in a Collaborative should have aligned interests, access to all needed expertise, and sufficient funding and a strong sense of commitment to deliver the Collaborative goals. An administrative structure should be established to maximize the potential of all members and ensure smooth operation.
Bringing a Collaborative Together
The seeds of a Collaborative start with a general recognition among potential members of two main points: 1) there is a real challenge that is in need of a solution; and 2) there is significant dissatisfaction with the current approaches and their ability to achieve a desirable outcome. This shapes the opportunity for an entity with a strong enough need to step forward and assemble a Collaborative. The choice of potential participants starts by conducting a careful landscape analysis. The initial approach to the various candidates assesses the willingness to join and provides a perspective on how different members may fit and work together. Once a core group is identified, multiparty discussions can start to help shape the mission.
In the case of the PTC, The Coca-Cola Company took the leadership role. While Coca-Cola is the largest global buyer of PET, and led in first commercializing partially derived plant-based PET in their products with PlantBottle™ packaging, they recognized that the steps to 100% plant-based PET could benefit by having a broader base of participants in the solution. Detailed below is the thinking behind the composition and design of the PTC Collaborative. The time that it takes potential participants to gel into a working Collaborative will vary by the complexity of the effort and depend on developing a deep understanding of what is critical in order for the team to function well.
What Makes an Effective Collaborative?
Through the formation and initial operation of the PTC, five factors have emerged as important characteristics in creating a Collaborative with the potential to advance complex innovation: the right size, non-competing membership, aligned interests, common vision, common values and solid administration.
Right Size
Two elements of size should be considered for ideal effectiveness: the number of organizations that join the collaborative (“Members”); and the number of individuals from each Member working in the core team of the Collaborative (“Participants”). Together, both the number of Members and Participants should be small enough to be flexible and nimble, but large enough to contribute sufficient skills and diversity of thought and to mitigate risk.
For Members, the PTC does not believe that one size fits all, but recommends using a logical minimum number. The reason is that for every addition, the space into which a member can provide unique contributions shrinks. At the same time, the challenges related to speed, operation, and alignment increase rapidly. While the number of Members must be decided on a case-by-case basis, there will often be a sweet spot somewhere between three to six Members for solving many complex innovation challenges in the field of technology and commercial business.
In the case of the PTC, we selected five Members to represent the full range of end uses of PET (rigid containers—Coca-Cola, Heinz, P&G; flexible films—Heinz, P&G; fibers—Ford, Nike, P&G). This brought together a small team with significantly different skill sets (synthetic capability, biotechnology, engineering, and end-use processing). The result was a highly capable, synergistic team that spanned the breadth of what is needed to make industrial commercialization a success.
For Participants, the same logic of enlisting the logical minimum also applies. The vision was to bring in the necessary skills to the core operation with the fewest participants that could address the needs. For the PTC, the core focus is on technology development and commercialization. This leads to a technical group with strong commercial participation, and all adjunct needs being covered by separate sub-teams assembled and called in by each Member on an as-needed basis to supplement the total effort by each of the Members.
Non-competing membership
Innovation best thrives when there is openness, transparency, and trust. Perhaps the most important characteristic in assembling an effective Collaborative is to limit membership to non-competing entities. Coca-Cola, Ford, Heinz, Nike, and P&G are all large end-users of PET with virtually zero overlap in their businesses. By having only non-competes participate, the fear of negative consequences resulting from open communication is greatly reduced. As such, a foundation can be laid for a Collaborative to operate as a single team, enabling the important elements of big ticket innovations to be addressed.
A Collaborative is not a consortium. In a typical consortium, participation is open for those willing to pay the membership fee. This may lead to membership consisting of companies from the same or overlapping industries who are in direct competition. Such membership naturally restricts the permitted scope of work and/or discussion topics due to legal requirements and competitive business concerns. The consequence is that the focus of consortia may default to limiting work on pre-competitive activities or addressing industry standards. For such work, this can be an effective structure. However, for innovation activities that may lead to a competitive advantage, such consortia may inherently be less impactful. Anti-trust considerations will narrow the acceptable range of project work, and when work occurs, communication may be reined in as competition is present.
The non-compete structure of the PTC is a game changer. The structure permits an expanded scope of work to be addressed. It fosters open, transparent communication.
Aligned interests
To operate effectively, the Members of the Collaborative should have aligned interests. A number of factors can contribute to this: cultural fit, a common view of the challenge, sharing a vision of the ideal state, the recognition that there is added value from working together, and participation in an environment in which all win (or lose) together. This requires the Members and Participants to go beyond surface elements and invest the upfront attention in the underlying principles that contribute to successful team dynamics.
The PTC members all share sufficiently similar cultures. Each is strongly committed to innovation, is recognized as a leader in building strong brands and brand equity, and operates a principle-based organization. Each company has aggressive corporate sustainability programs and all share similar needs to advance viable, sustainable alternatives to petro-based materials. Each had previously launched market initiatives using sustainable resins: • Coca-Cola—PlantBottle™ packaging on sparkling and still beverages • Ford—automotive interior, exterior and under-hood components • Heinz—PlantBottle™ packaging on ketchup • Nike—recycled resins for sports apparel • P&G—Pantene Nature Fusion packaging
As buyers of PET, each Member had interest in seeing affordable, sustainable alternatives being made commercially available at the earliest possible time. The fact that all Members are customers implies that none of the individual members would make a profit at the expense of another member, eliminating potential conflicting business interests. This set up the dynamics to create a true win-win situation.
The value in aligning non-competing industrial concerns is that the Collaborative becomes a stronger team that can bring a deeper understanding, identify the best lead options, and undertake a stronger program compared to any individual company. The structure allows each company to operate lean teams, while still getting the benefit of large teams without having to pay for the effort. The Collaborative was established to conduct and share in the cost of joint research. This structure allows Members to serve as one another's free, high-powered consultants, enhancing individual as well as joint programs. The net result is significant productivity gains. Combined, the elements of culture, goals, non-conflicting business interests, synergy, and productivity gains all result in a state in which interests are aligned. The old adage proved true that it is easier to fly with a tailwind behind than in the face of a headwind.
Common vision
Any team needs a strong game plan that is well executed in order to succeed. The strength of the game plan comes from sharing a common vision of what to do, how to do it, and knowing how to adapt as the game progresses. A Collaborative is no different.
The experience of the PTC is that the tools commonly employed in business to drive to a common vision and gain alignment are fully sufficient to support a Collaborative. No new or unique tools need to be created or applied. Nonetheless, the effort invested in driving to a common vision is critical. It should not be short-changed and may be substantial. For any long term and complex program, regular renewal of the mission and work plan is essential as learnings advance and the character of the Collaborative takes shape.
Solid administration
Many technologists are especially passionate about two things—they love science and abhor administration. A technology Collaborative is no different, but it does have the unique need of managing the interaction amongst multiple players. Administrative items of scheduling, note taking, invoicing, payment, and contracts are all essential elements to operating a well-oiled machine. A number of different, but equally effective models can be considered for the administration of a Collaborative: 1) have a single lead Member carry the load; 2) rotate responsibility on a regular basis; or 3) engage outside professional services. The answer to which model is best is case-dependent and requires consideration of a number of factors: • How much time is any one Member willing to invest in administrative aspects? • What are the capabilities of the different Members for providing administrative services? • Is there need or value in having independent third party capabilities to work on specific items? • Will self-administration be sufficient to provide an acceptable balance of power? • How to best drive alignment on individual tasks?
The PTC addressed these questions early on and quickly came to a unanimous conclusion that engaging outside management services would be the most efficient way to serve its purpose. The basis for this decision was both the avoidance of negatives and the creation of positives. Few of us like this work and all had little time to devote to such effort. We wanted the Participants laser-focused on technical execution, not administration. As a result, an outside management company (The Kellen Company) was hired to perform this task, playing a key role as a facilitator in maintaining a positive pressure to move the activities forward. As part of this effort, Kellen brought in outside legal counsel to provide on-going legal support to the collaborative, construct the charter agreement, and work to obtain alignment on legal agreement and templates between the Members. It is a big task to align five large multi-nationals with strong legal departments, and something that would be far more difficult if PTC chose to manage without third party facilitation.
Benefits and Challenges
Under the PTC structure, the members are seeing meaningful benefits of participation—both expected and unexpected. Innovation productivity receives a big win via participation in a Collaborative, which is a natural outcome from the basic structure. Benefits of cost sharing are obvious: savings, more projects, and the ability to do projects that could have been cost prohibitive. Wins also come in the form of the technical and business consultation enabled through participation in the Collaborative. This can have meaningful impact both on the joint work of the Collaborative and the individual work of the member companies. Additionally, participants have the opportunity to benefit from cross-education that would not have occurred otherwise. Taken together, these lead to a deeper, more thorough technical understanding of opportunities and selection of partners and project work. Some recent examples of tangible benefit the PTC has realized include the following: • The fundamental scientific review of the available technology options for producing 100% plant-based PET, which have been summarized and appear in this month's issue of Industrial Biotechnology (Collias D, et al. 2014;10(2):91–105). • Participation of each of the PTC Member companies in the Bioplastic Feedstock Alliance (BFA, • A recently agreed research program between the PTC and the University of Delaware and the Center for Catalysis and Energy Innovation (CCEI). The aim of the PTC-CCEI program is to focus on unique synthetic routes and catalyst development and selection for producing bio-terephthalic acid (TPA), a key component required to produce 100% plant-based PET.
Such outcomes were part of the in-going expectations when the PTC was formed, and more are expected to follow. However, participation in the PTC also delivered some positive surprises. All PTC members have observed an amazing energy and passion within the Collaborative, and many have commented that the degree of cooperation within the PTC can even be superior to what occurs within their own companies. Such behavior may open up new doors and business opportunities.
One such example is the Ford Fusion Energi concept car with PlantBottle™ Technology interior. This was introduced at the Los Angeles Auto Show in November 2013. In this example, Ford partnered with Coca-Cola to use the PlantBottle Technology for the interior fabric surfaces covering seat cushions, seat backs, head restraints, door panel inserts, and headliners. Coca-Cola had previously demonstrated market success with bio-PET on packaging by launching the PlantBottle™ packaging in 2009. Heinz further continued this success by partnering with Coca-Cola to launch its ketchup in the PlantBottle™ packaging in 2011. However, no one had ever considered applying the PlantBottle technology beyond packaging. The Ford Fusion Energi research vehicle marked the first occurrence. Had it not been for the PTC, such opportunities may not have been realized.
Another benefit of the Collaborative model is risk management. Commercializing a material such as terephthalic acid would require substantial amounts of money to construct large manufacturing plants to compete with the incumbent fossil fuel-derived terephthalic acid. Part of risk management is the ability to absorb the initial upcharge that is expected when biobased terephthalic acid is introduced into the market. A Collaborative like the PTC has the potential to mitigate such risk. Additionally, when a Collaborative is assembled well, the richness of skills has the potential to address economies of scale and to accelerate the experience and learning curves to reduce and eliminate the upcharge shortly after the market introduction.
All such benefits are attractive for any organization that wishes to catalyze innovation and drive innovation productivity. However, these benefits do not come for free and take some effort to get off the ground. If the Collaborative aims to work not just amongst Members, but to engage externally with other partners as well, considerable effort may be needed to align contracts and obtain the necessary approvals for each agreement. It takes some time investment and skills in working in an Open Innovation environment to address these challenges, to work toward a common vision, and to create effective team dynamics. While some of this upfront investment may take longer than anticipated, in the case of the PTC, it was clearly worth it.
Conclusions
While still in the early days of the PTC, we are off to a good start. The synergy, passion, and trust that the team has built are truly impressive. The PTC has successfully navigated beyond the initial start-up bumps and has started collaborating on joint research, industry analysis, and business opportunities. The Collaborative model is beginning to demonstrate itself to be an effective element in the Open Innovation toolbox enabling intelligent mitigation of risk and driving innovation.