Although large food companies were historically very successful in innovation, they have struggled in the past few years, and smaller companies have been gaining relevance in the food innovation arena.

Many food organisations have created structures that are very efficient in innovation, which they have ever been, giving the impression that they are getting closer to the consumer. However, often those structures are not truly effective, blinding them to the simple truth: They have to recapture the passionate energy of start-ups.

The sweet spot is often the intersection between R&D and innovation arenas, and this is where innovation becomes a true profit centre. In fact, the connection between the technical and commercial sides of innovation is often a challenge for a food company.

There is a great difference between being a leader in R&D and being successful in innovation. A R&D leader focusses on technical insights, while an innovation leader can understand how those fit the business model and market opportunities. The tipping point lies in getting down to the basics of what we are trying to create for the consumer.

For a long time, many food companies thought that longer-term innovation needed to be driven internally, but it is not necessarily true and they should leverage more external ecosystems. In particular, start-ups are keen to work with food corporations because of their good and long reputation in the market. Indeed, the key problem for start-ups is accessing the sort of scale that only a large corporation can offer. The true challenge is how a food organisation could partner with start-ups.

It is fundamental to build a corporate culture where people understand the value that partners bring and that they could never get as quickly and effectively on their own. Indeed, this kind of collaboration needs a different approach, and a start-up should not be considered as a traditional supply partner. Moreover, food companies must consider that even though they invest in venture money, it is not a guarantee or a contractual stipulation that they would have access and it involves risk on their side.

The real dare for food organisations is how they could manage and balance this duality of having a major business driven by efficiency and, at the same time, being able to explore in new innovation spaces. The strategic approach has to take into account that they could foster internal capabilities in the short term with a strong focus on fast turn rates and efficiency, while investing in new business models, looking at the medium-long term, also through collaboration with external ecosystems and start-ups, and even acting as a catalyst and an aggregator that brings the innovation pieces together.

Nevertheless, it is important to be aware of the size of the opportunity and to understand if there is a clear profit pool to go after and a business to be generated, in addition to a strong commitment within the organisation to move the positioning into that specific space.

In addition, interaction and learning with customers are paramount, considering that sometimes organisations learn things that help accelerate an idea and make it bigger, better, and stronger. Sometimes, they learn things that suggest that an idea should stop or follow a different path.

Looking ahead, it is clear that digital technologies are fostering innovation in the food sector. As an example, one of the most important things for costumers is understanding the ingredients in their foods and where they are from. Now, it is possible to tell people in which corner of which field, in which country, at which time a particular ingredient was grown. Customers want more precise information. This matters not only in the supply chain, but also in innovation.

Another future direction will be food personalization, meaning food that addresses individual needs and desires. Consumers want foods that are designed personally for them, and this will be a huge change for food companies, because they have developed solutions to serve millions of people. It will be a big transformation in the food business.