Natura – a Case of Open Innovation

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Natura – A case of Open Innovation   Introduction

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Natura was born as company in 1969. The great values to justify the creation of this company were two: cosmetics and relationships. The main slogan since its creation is Well Being Well. This is the concept that its products and services must reflect how is important to them is always offer goods to promote well-being and health style of life that guide its business plan and strategies. The guide values are: humanism (respect and stimulate human and Individualism to build diversity and to contribute with the society), Balance (harmony and natural dynamic), Transparency (no discrimination or ambiguity. Look quality) and finally Creativity, that means to Natura always establish challenge to its employees and partners to dare to innovate. They want to achieve an innovative relations with the continuous development and improvement in order to have new and innovative knowledge. (Management Innovation Exchange, 2012). All concepts is based on helping customers and partners to have a healthy life building relationships that connect you with your own body with the environment and with others. This mindset guides the development of good and services, the network relations and the corporate strategies that seek for a behavior aligned with welfare, sustainable and local culture. The companyhas approximately 7000 employees, a system of consultants as sales partners that already reaches a number of 1.6 million and more 5000 suppliers. The company also maintain contractors and more than 32 communities that working in the agro-extractive. This is thebiggest Brazilian company of the beauty industry and has operations in Latin countries as Argentina, Mexico, Colombia, Peru and France. The company also completed the acquisition of a Australian cosmetics company called Aesop to explore a new market niche related to urban environment in order to achieve new markets which the company did not achieve yet. (Natura, 2014).

Open Innovation Model – External Creation and Commercialization

Many approaches have been tried for companies in the most diverse industries over these last decades in order to innovate and achieve its goals. In this last generation, after the 90 decade, the companies had realized the challenge of creating speed to market at the same time to achieve the unique solutions demanded by customers. How could the companies achieve faster development and efficiency? They were needing to challenge their business model as fast as they could. For this reason Open Innovation came as a great solution to develop the business speed and efficiently. At that time the companies had operated with a close innovation model, using this to keep their competitive advantage. However they realized that without a model to allow them to share knowledge, capabilities and specialty with others they could not achieve a meaningful innovation. (Ahmed & Shepherd, 2010). To apply Open Innovation the companies are not ceasing the internal R&D activities. However they will need to develop new capabilities to search and access to external knowledge and technology as much as they can in order to promote the integration between the internal and external research. We may consider an innovative company that has implemented at least one innovation in its path or it has stimulated through open innovation research, technical knowledge or technological improvement in partnership with scientists, professionals, entrepreneurs and suppliers. (OECD, 2005). Natura has been example of innovative company that has adopted open innovation as a way to lead innovative processes inside and outside the company walls. The company has a long story of innovation. In 1976 it was pioneer in the use of collagen in its cosmetic products. However the company was using Close Innovation model until 2003 when they started to apply Open Innovation as strategy to its selling distribution method and to integrate innovation as internal culture. (Natura Campus, 2014). They believe that good ideas can come from anywhere, inside and outside the organization. The focus was a radical innovation, for this reason they invested in an open innovation approach developing partnership with universities, academic research and technology centers called STCs, doing partnership with national companies and entrepreneurs also with international institutions.

Natura Campus – Starting the Open Innovation Model

The goal was creating a space of collaboration and build relationship to integrate the innovation culture through all company and to deliver innovation using partnership in order to produce R&D, new knowledge and a continuous process of innovation. They established partnership with universities launching Natura Campus program to consolidate it. The program was developed with the objective to change the internal culture and to apply Open Innovation model. The production of knowledge through R&D had served as base to apply this innovation process internally. In 2014 Natura Campus was consolidate as a space for collaboration and relationship building partnership with science and technology companies and entrepreneurs, aggregating everyone, national and international partnerships, to work together to build shared value. (Natura Campus, 2014). The Natura Campus has been developed by promoting the connection of networking to strengthen the innovation system. They use to promote workshops for interaction and offer opportunities of development in a global network of science, technology and innovation. Also they stimulate communication with specialized blogs that contribute to identify science opportunities. Innovation ecosystem is the focus of the research and development which has resulted in innovative products called Ekos and launched in 2000 by Natura, resulting in a great well successful case of innovation. Natura Campus has counted with an open channel to receive ideas and to promote new opportunities for partnerships in innovation. (Natura Campus, 2014). Nowadays Natura Campus has more than 280 partners collaborating to the innovation development and the company has invested 2,8% of its total budget to this space of research, integration focused in produce innovation. (Natura Campus, 2014).

Types of Innovation

As previously studied we can consider innovation as an implementation of a new idea or the development of existent product or service, or process, a new marketing method or a new organizational method in business model, workplace organization or external relations. These are called the four types of innovation. (OECD, 2005). Innovation has been the main value of the Natura that is integrated in all company. They understand innovation as something that goes beyond product development. To them innovation is multidisciplinary vision that is present as a new concept to develop the business strategy, search for new opportunities and to create new model to logistics operations. (Natura Brazil, 2014). Natura has one focus regarding the development of its products: cause a flow of Well Being Well experiences for its customers. It has been the most important value to guide all business strategy and to align the internal R&D and the externals partnerships. (Natura Brazil, 2014). Innovation might be implementation of one or more types of innovations. The main types of innovation are the product, process, marketing method or organizational method. In order to have an innovation case at least one of these four topics must be new or significantly improved to the company.

Main type of innovation – Natura Ekos

We study the differences between invention and innovation. Innovation is the implementation and commercialization of the invention of a product or service. (West & Borges, 2010). Therefore to be considered an innovation is need that product or service displays a high degree of novelty, being new at least one of these elements: to the company, to the market or even a new product in the world. (OECD, 2005). Natura has sustainability and innovation as a value to doing business. They sought to adopt a business model that achieves a balance between economy, society and environment always seeking for novelty and improvement. The result they hope to achieve is being a company that encourages transformation of partners, suppliers and customers mindset. Through this principle aligned with the vocation for innovation the company began a trajectory of research, learning and working together with traditional communities of the Brazilian Amazon forest to get raw material for production of totally innovative goods and create a sustainable network of extraction of natural resources. This new model has emerged called Ekos product line. (Natura Ekos, 2014). The product was launched in 2000 with the focus in booster and reveal the Brazilian multi culture and bring a social and sustainable program attached in the product concept. The brand started an innovation pattern regarding to aggregate a new product around the concept of biodiversity, health and still a business model that includes a social project. (Natura Ekos, 2014). We will study through the main types of innovation and their characteristics, applying for Natura case.

Product innovation

To be characterized as a product innovation company needs to bring to market a new or significantly modified good or service of their characteristics and uses. This innovation could include technical specifications, new technology or new uses or combination of existing knowledge and technology. (OECD, 2005). Focusing on the quest to create a new model of product the company has launched the Natura Ekos line in 2000 The concept behind the product was based on achieve an environmental conscience inspired by nature environment aligned with good relationships between people. (Natura Ekos, 2014). The product is considered highly innovative because all the research has been directed to the traditions, cultures and Brazilian biodiversity. The line is wide and offers products for men, women and children for both showers, hydrating skin, hair care and all kind of wellness. The raw material used had never been produced in the standard offered by Natura, just being used by indigenous and natives of the northern region of the country in communities handmade processes. Natura improved and developed new products using this local raw material and started a huge commercialization to domestic and international market. (Natura Ekos, 2014). However the innovation of online Ekos not stopped since its launch. Each year a new launch or improvement of products was conducted. To name a few in 2008 a major innovation occurred when a technique was developed that allowed to create ever smaller particles leaving the formula of some products in the most effective skin hydration. In the same year was released products based on cocoa that has outstanding characteristics in hydration of all body. (Natura Ekos, 2014).

Process innovation

When the company implements a new means of production or delivery method also when it includes a significant changes in technical aspects, equipment or software. Typically process innovation occurs to reduce the unit costs of production or delivery or to produce a new or improved product. (OECD, 2005). Natura Ekos line brought great innovation in order to get raw material. The whole process was created so that the values  of sustainability and social consciousness were the main driver of production and relationship. Right from the start there is a team of social scientists, psychologists, economists, biologists and managers of Natura conducting an innovative and special work: they take care of the relationship with the twenty-six groups of small farmers throughout Brazil and harvesting the raw material as fruits, roots, seed among others and which are used in the elaboration of products. (Natura Ekos, 2014).

Marketing innovation

The new concept of marketing innovation says that an implementation of a new method involving significant changes in product design or packaging, product promotion, product placement or their price can be considered a case of marketing innovation. When the changes occur in the product form without alter the product’s use or characteristics it is called a new product design. Product placement is the first use of a different media such movies or TV shows. When the company introduces a new sale channels to sell its goods and services to customers it is called product process. And finally we have the product price that is a new strategy to differentiate the product or service introducing a new price in the market. (OECD, 2005). The Natura Ekos line around the concept of environmental consciousness and contact with nature has always brought an innovative product design that reflects this idea. However other innovations occurred since its launch. In 2010 inspired packaging were created in the tradition of the bottles of the popular markets and commemorative popular parties of the country. (Natura Ekos, 2014). Moreover in 2011 the company relaunched the Ekos brand with significant changes both new products as new design of already existing products. The plastic containers are 50% recycled after consumption and 40% of paper are recycled after consumption, helping to preserve the trees. The packs of refills are made with what they call ‘green plastic’ from sugar cane, a renewable source and it does not pollute the environment. (Natura Ekos, 2014). The Natura focus is achieve a product design totally aligned with their values and that can put together ethic and design.

Conclusion – One case of Organizational Innovation

The implementation of a new organizational method in the way of doing business, a radical change or a significant improvement in the workplace or in labor relations by establishing best practices can be considered an organizational innovation. (Fagerberg, Mowery & Nelson, 2005). The Natura understand that innovation is a process that must permeate all its activities. It is not only new products or new process instead it is the core of the company. This value can be expressed by the creation of products and the way to develop process and strategies, but also their commercial model, management system and all relationships with employees, partnerships and customers. This principles and practice led the company to be elected the 8th most innovative company in the world by Forbes Magazine in 2011. (Management Innovation Exchange, 2012). The idea “Well being Well’(‘bem estar bem’ originally in Portuguese) is the main idea that deliver the company to produce goods that will help people to adopt a balance life, preserving the environment and investing in great relationships. More than look for profit the Natura Company is seeking for a greater well-being for all. (Management Innovation Exchange, 2012).

References

  1. 1Ahmed, P. & Shepherd, C. (2010). Innovation management: Context, strategies, systems and processes. Pearson Education. Chapter 5.
  2. Fagerberg, J., Mowery, D. C., Nelson, R. R. Eds. (2005) The Handbook of Innovation. Oxford: Oxford University Press.
  3. Management Innovation Exchange. (2012) Innovation in Well-Being—the Creation of Sustainable Value at Natura. Retrieved from https://www.managementexchange.com/story/innovation-in-well-being
  4. Natura. (2014) Sobre a Natura. Retrieved from https://www.natura.com.br/www/a-natura/sobre-a-natura/
  5. Natura Brazil. (2014) Cosmetics Leader in Brazil. Retrieved from https://www.naturabrasil.fr/en/about-us/cosmetics-leader-in-brazil
  6. Natura Campus. (2014) Sobre o Programa. Retrieved from https://www.naturacampus.com.br/cs/naturacampus/sobre
  7. Natura Ekos. (2014) Valores da Marca. Retrieved from https://www.naturaekos.com.br/valores-da-marca
  8. OECD (2005) Oslo Manual. Guidelines for Collecting and Interpreting Innovation Data. Paris, Organisation for Economic Co-Operation and Development Publications. Chapter 3
  9. West, J. and M. Borges (2010). Contrasting innovation creation and commercialization within open, user and cumulative innovation. Academy of Management. Montreal. Aug 9-10 Page 1 of 11 Student: Sergio Dantas de Souza Lecturer: Ana Marsanasco Total words: 2.257 Number: 14.870
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