Connecting Big and Small Business: Money Meets Innovation

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.

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Scott Cooney is the author of Build a Green Small Business (McGraw-Hill) and Principal of GreenBusinessOwner.com

Scott Cooney, Principal of GreenBusinessOwner.com and author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill, November 2008), is also a serial ecopreneur who has started and grown several green businesses and consulted several other green startups. He co-founded the ReDirect Guide, a green business directory, in Salt Lake City, UT. He greened his home in Salt Lake City, including xeriscaping, an organic orchard, extra natural fiber insulation, a 1.8kW solar PV array, on-demand hot water, energy star appliances, and natural paints. He is a vegetarian, an avid cyclist, ultimate frisbee player, and surfer, and currently lives in the sunny Mission district of San Francisco. Scott is working on his second book, a look at microeconomics in the green sector.In June 2010, Scott launched GreenBusinessOwner.com, a sustainability consulting firm dedicated to providing solutions to common business problems by leveraging the power of the triple bottom line. Focused exclusively on small business, GBO's mission is to facilitate the creation and success of small, green businesses.