final report Reviews of the Collaborative Innovation Strategies Program P.MDC.0024 Tim Kastelle & John Steen Uniquest Pty Limited Project Code:

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1 final report Project Code: Prepared by: P.MDC.0024 Tim Kastelle & John Steen Uniquest Pty Limited Date published: December 2012 PUBLISHED BY Meat and Livestock Australia Limited Locked Bag 991 NORTH SYDNEY NSW 2059 Reviews of the Collaborative Innovation Strategies Program This is an MLA Donor Company funded project. Meat & Livestock Australia and the MLA Donor Company acknowledge the matching funds provided by the Australian Government to support the research and development detailed in this publication. This publication is published by Meat & Livestock Australia Limited ABN (MLA). Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. Reproduction in whole or in part of this publication is prohibited without prior written consent of MLA.

2 Abstract This report is part of stage 2 of the evaluation of MLA s Collaborative Innovation Strategies Program (CISP) program. As stated in the report for review of Stage 1, the objective of stage 2 is: to conduct company-level research by undertaking case studies across five CISP participant companies, in order to identify common success factors and constraints on program effectiveness. This will allow both case study companies and other participants to adjust their implementation of CISP in light of the lessons learned across the five companies. To complete stage 2 of the program, John Steen conducted a series of interviews over four days with Plant A managers in Brisbane in October Following from these interviews, a survey of employees was conducted in November The baseline study (Plant B review) was terminated prior to commencement. Plant A is an example of a successful innovator because there is good alignment between the innovation focus and the business model. Plant A creates margin by developing customised goods for its supply chain. Innovation that helps to create better products or improve margin by lowering production costs will improve the financial performance of the business. Through the interviews, we find evidence that the appointment of an innovation manager as part of the CISP initiative assisted the development of the innovation capability of the business. By being a field testing site for innovations sponsored by MLA the business has become proficient at trialing new technologies and processes. This is probably the lasting legacy of the CISP for Plant A. On the other hand we do see a drift in the innovation portfolio in the direction of horizon 1. This is discussed in more detail in the recommendations section. Page 2 of 18

3 Contents Page 1 Background Project Objectives Methodology Results and findings (Plant A review only)... 8 Page 3 of 18

4 1 Background MLA has engaged UQ Business School to evaluate the effectiveness of MLA s Collaborative Innovation Strategies Program (CISP). This evaluation will consist of three main stages: 1. Develop an approach and methodology for the review (completed). 2. Two innovation audits/case studies of enterprises involved in the CISP program. The companies to be evaluated are: Plant A (Review of Stage1 CISP program) Plant B (Baseline evaluation of Plant B s innovation capability) Each of these stages is outlined in further detail below. The objective of the Collaborative Innovation Strategies model is to catalyse the growth of an innovation culture within enterprises and to support the development of effective innovation strategies. Now in its third year after several years of research and refinement, and with ten companies who have been or are engaged in the program, there is a requirement to review the model to assess effectiveness to date and future development options. The objective of the broader review (as outlined in the final report for the initial feasibility study - A.MDC.009) is to evaluate the success of CISP to date and to suggest ways to improve the program going forward. The results of this project will contribute to this review. The conceptual map for the broader review project is shown in the figure below (see Figure 1): Figure 1. Conceptual map of the review process. Page 4 of 18

5 To date UQ Business School have developed an appropriate research program to review the CISP program, encompassing questions, scope, methodology and objectives. Stage 1: Approach and Methodology This stage was completed in 2010 and forms the basis of Stages 2 and 3 below. Stage 2: Innovation Audits/Case Studies Each enterprise level innovation audit is part of a larger project designed to evaluate the effectiveness of MLA s Collaborative Innovation Strategies Program (CISP). More specifically each audit will address and evaluate the comparison of the actual implementation of the CISP against the ideal designed program and the impact of the CISP at the firm level. These enterprise level audits will address Evaluation Points 2 a comparison of the actual implementation of CISP against the ideal designed program and 3 the impact of CISP at the firm level in the diagram above. Each audit will also evaluate whether the firm has met several criteria necessary for it to qualify for entering phase 2 of the CISP program. This will be done by conducting a number of in-depth case studies or innovation audits with firms participating in CISP, in order to identify common success factors and constraints on program effectiveness. This will allow both case study companies and other participants to adjust their implementation of CISP in light of the lessons learned across the five companies. The case studies or innovation audits will focus on a range of CISP participant companies to represent diversity of business in the processing sector. The innovation audit for Plant C has been covered under a separate contract and is now completed. Included in this proposal, is a start-up baseline review with Plant B which will feed into first go/no go point and to inform priorities for Stage 1 (as well as providing baseline for completion of Stage 1). These companies have been chosen in consultation with the MLA CISP team as representing the inherent diversity in the CISP participant group, across variables including ownership structure, management style, and sophistication of the current innovation process and organisation size. Page 5 of 18

6 2 Project Objectives The objective of the broader review is to evaluate the success of CISP to date and to suggest ways to improve the program going forward. The broader review will include a summary of all the evaluation points included below: 1. Match between CISP and other intervention models (Stage 1); 2. CISP actual versus CISP ideal (Stage 2 case studies); 3. Impact on firm versus CISP objectives (Stage 2); Outcomes include: An evaluation of the innovation capability of the firms against three models: o MLA s model of firm innovation and entrepreneurial capabilities to assess their innovation structures and culture; o The innovation value chain to assess their skill at idea management; o The three horizons to assess their innovation portfolio and the distribution of innovation efforts. A set of recommendations for improving the management of innovation within each firm. A presentation of results to senior management within each firm. A final summary report delivered to MLA 3 Methodology The report uses a multi-method approach to triangulate the findings within the case study to ensure accuracy in the report s conclusions. The main sources of information were a survey of 23 Plant A employees, and interviews with 12 mid-senior managers averaging about 30 minutes in duration. When both of these information sources supported the same conclusion about innovation at Plant A (triangulation of evidence) we inferred that this conclusion had a high degree of validity. The following interview approach was used: 5-10 indepth interviews within each firm will be conducted, consisting of the Innovation Manager(s) and others directly involved in managing the innovation process, as well as senior managers such as the CEO, CFO, and Operations Manager. Assessment of all available data pertaining to the execution of projects co-funded by the MLA / MLA Donor Company and the participating firms. Conduct an online survey of key employees to evaluate the innovation value chain. Above is the standard methodology for each innovation audit/case study. Any variance from this methodology will be agreed between the parties prior to the audit commencing. The interviews used internationally-accepted research interviewing methodology (based on the techniques outlined by Steiner Kvale in InterViews). They were conducted around a set of standard questions that allowed scope for further exploration (semi-structured interview design): 1. How would you characterise your organisation s innovation capability at this stage? 2. What are the key challenges your organisation now faces in developing greater innovation capability? Page 6 of 18

7 3. How effective would you say CISp has been in helping to build your innovation capability? 4. In light of your experience so far, what parts of the CISp model and service delivery could be improved? John Steen and a research assistant were present at all of these interviews to allow note taking and accurate recollection of comments by interviewees. All interviews were recorded so that some statements could be rechecked for accuracy in this report. We have used similar methodology in both research and consulting work that we have done with over 20 firms. Our assessments of Plant A s capability is based on the knowledge and experience that we have gained in doing this work, and evaluated also through the lens of the research literature with which we are familiar. The survey is based on an instrument developed by Morten Hansen and Julian Birkinshaw (The Innovation Value Chain, Harvard Business Review, June 2007), which was subsequently modified in Empowering Change, from the Management Advisory Committee for the Australian Public Service Commission. We have used this questionnaire in several contexts within Australia, with data from over 700 people in roughly 170 different firms. We will also compare the results from Plant A with those obtained from the other firms that we evaluate as part of the CISp review in order to place the Plant A results in an industry context (See Figure 2- MLA Innovation Model Assessment). Strategic leadership Supportive culture Innovation-business strategy interface Knowledge & learning Firm innovation & entrepreneurial capability Collaborative structures Creative & entrepreneurial Individuals Enabling systems & processes Metrics Figure 2. Model of firm innovation and entrepreneurial capabilities Page 7 of 18

8 The baseline study (Plant B review) was terminated prior to commencement. At the conclusion of the project, the consultant provided MLA with a report for each of the innovation reviews/ case studies. Each report outlined: An evaluation of the innovation capability of the firms against three models: o MLA s model of firm innovation and entrepreneurial capabilities to assess their innovation structures and culture; o The innovation value chain to assess their skill at idea management; o The three horizons to assess their innovation portfolio and the distribution of innovation efforts. A set of recommendations for improving the management of innovation within each firm. The Consultant also presented the results of the innovation audit to the senior management within the audited company. 4 Results and findings (Plant A review only) 4.1 Innovation-Business Strategy Interface: There is a high-degree of alignment between innovation and strategy at Plant A. Understanding the alignment is only possible by examining the internal changes to the company s supply chain after acquisitions and re-appointment of executives with a different approach to supply chain management. The company s supply chain has moved from a supply chain approach focussed almost exclusively on price to a more collaborative relationship that supports innovation in products that fit with the objectives of the supply chain business and the types of products that Coles wants to create for its customers. Plant A succeeds because it understands not just its customer but also its customer s customer and this has guided the type of innovation that is now prioritized by the business. Plant A s innovation focus has evolved from one that used to be centred on the adoption and development of world class technology that supported internal manufacturing processes, to one that is more customer-centric. Even though there is no document explicitly explaining the process and strategy for innovation, Plant A s level of commitment is very high towards innovation, which is a reflection of the support given for trials, new concepts and products from executives. Innovation has been embedded as a core value in the organisation, where employees are encouraged to participate and provide ideas which are aligned with the business strategy. This was consistent among many managers interviewed who expressed the importance of ideas that come out of the production line and involving everyone in the business. One area of concern though is the high level of dependence on their domestic client. Innovation at Plant A is driven greatly by the needs and requirements which are relevant to their domestic client customers. In many cases projects are bounded by the terms and conditions of the supply contract with from the company s supply chain. On one hand, this approach has turned out to be Page 8 of 18

9 highly effective (especially in the last couple of years) to develop better products for the end consumer, creating many synergies and collaborative structures between the organizations. On the other hand it has limited Plant A in the exploration of other opportunities to achieve higher organic growth. Product development is driven by horizon 1 projects or staying in business projects, and there is less attention paid to white-space innovation areas (ie: inventing products for customers that use novel packaging as an integral part of the product, identifying new customer bases, looking at different industries, considering different distribution strategies). Although we found some evidence of initiatives to develop alternative distribution strategies, these were apparently dependent on the remaining production from the company s supply chain (16% on average). Supply chain partnership strategy Figure 3. Strategic Focus and the Three Value Disciplines of customer value creation. Consistent with the reality of the industry, it is obvious that Plant A has built its reputation and stature based upon operational excellence and client-focussed innovation. Increasing changes in the marketplace, however, have accelerated the competitors ability to replicate Plant A s technical advances. Plant A will need to distinguish itself through customer relationships, new products and process changes. Innovation efforts will have to be accomplished hand-in-hand with the company s supply chain with a sense of quality and continued operational excellence in order to be embraced by Plant A s culture. There was also evidence of Plant A s commitment to delivering excellent products to meet the needs of its customers by innovating new products and creating value in key customer areas such as shelf life, packaging, ingredients and flavours. This is highly relevant to the organisation and supports the collaboration strategy with their domestic client. Page 9 of 18

10 4.2 Collaborative Structures: Collaborative structures at Plant A are very well developed. Internally there is high level of collaboration across many functions and roles, and it extends throughout the supply chain especially with their domestic client with whom collaboration has become the number one priority. Communication with the company s supply chain is two way on product development and done on a daily basis with high levels of coordination and open discussion to come up with ideas, develop concepts, trials and products. The collaborative relationship with the company s supply chain precedes any other project and drives a great deal of innovation outcomes. Plant A plays the role of lead developer, and is regularly discussing new ways of doing things to improve the cost structure of the product, or coming up with new ideas for products or packaging which adds value to the end customer. The company s supply chain occasionally orders trials and new concepts which are worked on together with Plant A. Another example of external collaboration which reinforces the argument of a solid collaborative structure within Plant A is the above mentioned initiative to find alternative distribution strategies. Overseas collaboration has resulted in the identification of opportunities and development of specific products to satisfy highly profitable seasonal markets. Even though collaboration occurs across many functions, we also found evidence of the occasional misunderstanding and weakness in cross-business collaboration. The engineering department and external services appear to be sidelined from product development. There could be room for improvement here and a more clearly articulated innovation strategy should include these critical support functions so that they understand the contribution that they make to the innovation agenda of the business. 4.3 Enabling Systems & Processes: The product development process is highly dependent on the terms and duration of the contract with Coles. We heard several comments on the importance of the terms of the contract with Coles and how it affected the size and focus of the projects. The comments consistently support the idea that innovation is driven by the relationship with Coles. There is also an expectation that a new contract with Coles would support more innovation. Although we didn't find evidence of a formalized innovation management process, we found components of important innovation routines in the development of new products or the re work of existing ones. Particularly in terms of generating ideas, managers in manufacturing meet on a weekly basis with employees to express ideas, and are constantly interacting with Coles to come up with new ideas. A brief and business case needs to be developed, which is approved at three levels: 1. Internal 2. the company s supply chain 3. MLA. Extensive data is gathered to plan out trials and develop concepts (a minimum of 3 trials and 3 validation processes based on shelf life are run to support the results). Lean manufacturing plays an important role in the stabilisation of the manufacturing process and scaling up production for new products or re-work of existing products. This is something that Plant A does exceptionally well. There is a concern among some managers that Plant A Page 10 of 18

11 sometimes struggles to transition from idea to successful implementation as the planning process appears to be as thorough as some think it should be. In terms of longer-term and more radical initiatives, Plant A seems to have no process in place. Long term projects are limited by the longevity of the contractual relationship with the company s supply chain. Furthermore, their former focus on world class technology adoption was perceived as world class innovation. After the change of the business strategy to become fast followers in technology adoption, Plant A seems to have lost momentum on game changing innovations based on emerging technologies. A more focussed framework to manage innovation outside the relationship with company s supply chain, may enhance the innovation performance of Plant A and rebalance the innovation portfolio to include more radical process and product innovations. It is worth noting that the innovation manager previously supported by CISP will now have a greater focus on new product development. While this is supportive of the company strategy, it further accentuates the move to focussing innovation on more short term outcomes that deliver value to the client at the expense of long-term strategic issues such as labour productivity and energy efficiency. 4.4 Metrics: There was consistency from managers throughout the interviews in expressing the importance of financial and commercial metrics to assess risk in projects and show the impact on the bottom line for the company. Qualitative arguments are accepted but they need to be linked to the business strategy. It is also noteworthy to point out how Plant A shares KPI s with suppliers to align their performance with Plant A s own objectives. These appear to be very effective in aligning innovation with the bottom line and business strategy, but there is little evidence from the interviews that show specific innovation metrics and KPI s to measure Plant A s innovation performance. One senior manager recognised the difficulties of calculating true returns on investment. For example, a new process improvement may improve productivity by a small degree but also create a better working environment for employees. While this should result in reduced staff turnover, attributing a part of turnover improvement to the new process is imprecise. The business case for innovation projects at Plant A is therefore a combination of quantitative assessment and along with qualitative measures and the logic of the business case. Metrics and KPI s at Plant A seem to support some innovation outcomes, but the lack of measurement in Plant A s innovation performance creates clashing points of view about the actual impact of projects and innovations. We believe that implementing metrics to measure the performance of the innovation process would help Plant A to improve their level of innovativeness, and send a clear message across all functions of the direction and expectations of innovation in the organisation. 4.5 Creative & Entrepreneurial Culture: Plant A s culture is very open to new ideas and the expectation of change in processes and products is quite embedded in the business. There appears to be a high level of respect and trust Page 11 of 18

12 among peers that the jobs to be done would be done correctly. This is a consistent outcome of the interviews, with a majority expressing that at Plant A executives doors are always open to brainstorm ideas and have casual conversations which could then be rolled out with their support. It is worth noting, that this is not an formalized action by Plant A, rather it is casual and tacitly understood as part of the company s culture. We believe that this culture is driven by particular personalities in the executive management team and was probably also supported by the appointment of the innovation manager under the CISp program. At an operational level, it was noted by many managers that field employees are curious about outcomes and projects, and are open to change. This is extremely important in supporting and implementing innovations. Plant A appears to have put in place the right culture for this and support employees when procedures and products are being changed. Creativity and problem solving seem to be highly influenced by the lean manufacturing philosophy, where it was noted in many instances that ideas are mostly related to cost savings. Except from the stories about the big technology adoption projects from their past strategy, it became evident that there entrepreneurialism has become more focussed on short-term gains. 4.6 Knowledge & Learning: Learning and training appeared across many interviews as activities that are encouraged by Plant A, some pointing out the possibility of taking time to learn and attend fairs, seminars and forums. These were a major source of ideas for Plant A. It was also noted that Plant A invests in training, and it even goes to the extent of organising tours overseas to explore new products and look around. This serves the purpose of bringing new ideas into the organisation which becomes very important for pursuing opportunities that go beyond immediate productivity gains from taking cost out of the business. Team leaders and management encourage participation and learning through weekly meetings and feedback. Plant A also provides great support for trials which are run almost on a weekly basis and provide validation to new concepts and developments, as well as learning opportunities that increase the knowledge base of the organisation. 4.7 Supportive Culture: Plant A performs well and shows continuous support and commitment towards innovation. Plant A s emphasis on customer relationships at the operational level have made it difficult to establish other areas of strength and few people in Plant A have a strong gut feel for what the company looks for in innovation. This appears to be leading to recurring conflicts and some level of frustration among some technical and non-technical areas and functions. Again, this comes back to the need to be more transparent and communicate the innovation strategy of the business. Although Plant A is no-longer involved with the CISP program, we noticed that there was a general lack of awareness of the program in the company. Page 12 of 18

13 4.8 Innovation Value Chain: The innovation value chain is a tool based on the premise that innovation is a process rather than an act. Many organisations mistakenly believe that innovation is only about idea generation. However, this is only part of the process, and it is usually not where organisations fail. Research shows that to innovative effectively, organisations must be skilled at all parts of the innovation process. Innovation value chain analysis is used to identify the weakest part of the process within an organisation. This is followed by undertaking action to improve the weak link. The analysis can be used iteratively then to slowly improve overall innovation performance by progressively improving each weakest link in turn. Idea generation Idea diffusion Idea selection Sustaining ideas Idea implementation Figure 4. Innovation Value Chain Model (Empowering Change, 2010) We conducted a survey to assess how effective Plant A is in each part of the innovation value chain. 23 people completed the survey: 5 Team Leaders/Supervisors, 16 Managers, 1 Team Member and 1 in the Other category. 3 of the respondents have worked at Plant A for less than 1 year, 6 have been there for 1-3 years, 2 for 3-5 years, 7 for 5-10 years and 5 for more than 10 years. None of the results varied significantly between the different demographic groups. The survey asks 25 questions, with a three point Likert Scale, where 1 is Agree, 2 is partially Agree and 3 is Disagree. Consequently, lower scores indicate better performance. The point scale is used for two reasons. The first is that this is the scale that has been used by Hansen Page 13 of 18

14 and Birkinshaw and in Empowering Change. Consequently, all of the other data that we have gathered has used this scale. So for the sake of comparison it is important to continue to use this scale. The second reason is that the evidence for which scale is most effective is mixed. Five and seven point Likert Scales tend to lead people to avoid the extreme ratings, leading to clustering in the middle. Particularly in smaller samples, such as those we are using during the CISP review, the three point Likert Scale is preferred. The questions included in the survey, along with the average score for each are included in Table 1: We can take these answers and calculate a score for each of the five parts of the innovation value chain and compare these to our pool of MLA surveys and other firms: For the sake of comparison, we have also included the average scores for firms that we have surveyed for MLA, and also scores for all of the firms that we have surveyed with this tool. The total number of people in all surveys is 185, in 6 firms, in 3 different industries. None of the firms that we have surveyed to date are in what would generally be considered innovative industries. The comparison data is indicative only this type of survey is vulnerable to the halo effect, where Page 14 of 18

15 the answers to the questions tend to be more positive if the respondent views their firm in a positive light, and negative if their overall view is negative. Consequently, the best use of these results is to assess within one particular firm where their relative strengths and weaknesses are in the innovation process. That said, the overall scores for Plant A are good. In the other firms that we have surveyed, the Idea Generation score has consistently been the lowest of the five, as it is here. Plant A has better than average scores in Idea Generation, Idea Selection and Idea Implementation, but below average scores in Sustaining Ideas and Idea Diffusion. This suggests that while the overall process of idea management is adequate, some attention should be paid to the idea diffusion steps, both within and outside of the firm. Idea Generation: As is the case with nearly every organisation that we have surveyed, Idea Generation is the strongest part of the process at Plant A. The two highest rated questions were people feeling supported to come up with ideas and knowing who to go to get their idea recognized. This supports our case study evidence on supportive culture and processes. Given that this is the strongest area for Plant A, addressing these issues should be a lower priority. Idea Selection: This is an area where Plant A is close to the average of firms we have surveyed. Idea selection is challenging for firms but the two items where respondents identify particular issues is the transparency around idea selection and the avoidance of longer-term and riskier projects. Once again these results support the findings from the interviews. Idea Implementation: The interviews showed that the trial procedures and supportive culture for change were assisting the successful introduction of new products and processes. The survey also supports this finding. However, respondents also recognize a lower level of capability in implementing more radical innovations. Sustaining Ideas: This is the section that addresses innovation culture. While Plant A has a track record of innovation and leading the industry there are some areas for future concern here. In particular, survey respondents felt that people weren t sufficiently recognized for good ideas and that there was room to embed a learning culture into the business. This result suggests that it might be worth examining how innovation is rewarded and celebrated in the company. This is important for sustaining the innovation culture. Idea Diffusion: Arguably it isn t in the best interests of the business to have good ideas spread to competitors but this does point to the idea that Plant A doesn t collaborate much with other processing firms to develop new processes and products. This also fits with the incremental innovation focus of the business where development risks are small enough to be borne by Plant A. Respondents also felt that Plant A could do more to capture lessons learnt from unsuccessful innovations. Innovation Value Chain response by Management Level The responses to the value chain questions were also segmented by management level. This revealed that senior managers felt they had more control over the idea generation process, which is typical of senior managers in organisations that we survey. Page 15 of 18

16 On the other hand, senior managers are more pessimistic about other parts of the value chain. This could be because they are more involved with the strategy of the business and are less certain about the company s ability to manage more radical innovation projects and sometimes don't see why some innovation projects are selected ahead of others. This last point suggests ambiguity around innovation strategy. This lower rating (higher scores) of the value chain by senior managers is a surprising result and differs from the usual pattern of these surveys. We believe that this may reflect a general support for innovation but this tends not to translate into goals and priorities in the form of an official innovation strategy for the organization. Process Step Managers Team Leader Others Idea Generation Idea Selection Idea Implementation Sustaining Ideas Idea Diffusion Table 3. Innovation Value Chain by Management Level 4.9 Three Horizons and the Balance of Innovation in the Business Portfolio The three horizons model is a useful tool to conceptualise the portfolio of innovation projects in a business. A typical portfolio balance in an organization would be in terms of resource allocation across the three horizons (Figure 4). Interviews with some managers suggested that the balance may have been too far towards H2 and H3 in the past. However, the dominance of the Coles contract for the business may be pulling the portfolio too far into the H1 area. This is supported by the evidence from the survey and interviews that Plant A is less proficient at managing and implementing more radical innovation projects. We understand that there have been some failures in the past that have steered the business away from attempting 'new to the industry' innovations but some interviewees mentioned that there were opportunities for working with MLA and other businesses on processes to tackle longterm strategic challenges such as energy and the high-cost of labour. Page 16 of 18

17 Figure 5. The 3 Innovation Horizons 5 Opportunities arising General Observations Plant A is an example of a successful innovator because there is good alignment between the innovation focus and the business model. Plant A creates margin by developing customised goods for its supply chain. Innovation that helps to create better products or improve margin by lowering production costs will improve the financial performance of the business. Through the interviews, we find evidence that the appointment of an innovation manager as part of the CISP initiative assisted the development of the innovation capability of the business. By being a field testing site for innovations sponsored by MLA the business has become proficient at trialing new technologies and processes. This is probably the lasting legacy of the CISP for Plant A. On the other hand we do see a drift in the innovation portfolio in the direction of horizon 1. This is discussed in more detail in the recommendations section. Page 17 of 18

18 6 Recommendations Our first recommendation is that Plant A should review the innovation strategy to determine whether the balance of innovation projects is best aligned with the business. It is clear that the expertise in new product development is highly advantageous for the partnership with the company s supply chain but a strategic review should highlight longer term issues for the business that need more exploratory and developmental innovation projects, possibly in collaboration with other businesses and research organisations. The capability for managing more high-risk/high-return projects is not as strong as short-term projects and this is an issue for the business as it confronts challenges systemic challenges such as productivity and energy efficiency. We also believe that Plant A should be able to better document the returns from innovation projects as a means for making successes more transparent. Innovation seems to be embedded in routines at the operational level that support trials and changes in systems but the innovation agenda is less clear among the senior management team. Plant A has a product development strategy as part of the supply chain alliance but does not have a comprehensive innovation strategy that supports needs across different business functions in the short, medium and longterm. Page 18 of 18