Radical breakthrough innovation often happens in garages, window-less offices, and coffee shops. Small companies innovate. Ideas take off and get big when they are taken to scale. In other words, big business brings innovation to the world. When these two join forces, good things can happen, like when Toyota invested in Tesla Motors to the tune of $50 M to expand its electric vehicle manufacturing capability.
According to Adam Lowry, founder of Method, two things keep big businesses from truly innovating: incumbency and culture. The laundry soap jug, he says, may be the SUV of the consumer products division. As one of the smallest consumer products manufacturers, Method has to radically innovate. Procter & Gamble, on the other hand, would be insane to throw a grenade onto the brand they’ve worked so hard to craft over the years.
As the GreenBiz Innovation Forum continues in Day 2, Phil Giesler of Unilever Corporate Ventures and Andrew Williamson of venture capital firm Physic Ventures joined Lowry on stage to discuss the meld of big business scale and small business innovation. Mr. Williamson suggested that when they see a small company that is innovating in an area that interests the company or its partners such as PepsiCo, they will scope the potential and invest in the company to help it ramp up. For instance, if PepsiCo is interested in a new packaging technology like Novomer that develops, in essence, carbon negative plastic bottles, it will work through its venture partners to ramp up production and help the company become the provider of PepsiCo’s new product packaging.
Method pushed the envelope in laundry soap, which was followed by the small and mighty All brand from Unilever, and finally the industry pallbearer Tide followed suit, reducing its packaging and concentrating its product. Marc Gunther, the moderator of this discussion, asked then if this meant that eventually Exxon might become the solar giant as a result of innovation in the small companies. Giesler simply responded that small companies and entrepreneurs are a different breed, and are simply not interested in the pension plans offered by big companies. As a result, these kinds of partnerships between big and small offer exactly this kind of innovation/investment combination that allows for the best of both worlds.
Scott Cooney is the author of Build a Green Small Business (McGraw-Hill) and Principal of GreenBusinessOwner.com