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Suggested Changes to Company Structure
Fronterra is strongly focused on the creation of value and employs multiple strategies to achieve this goal. One of the current strategies for strong value creation used by Fronterra is widely known as multi-hubs. According to this strategy, Fronterra manages and invests in several large pools of milk, dairy, and ingredient production all around the world. The hubs are located in North and South America (the USA and Chile), Europe, Asia (China), Australia, and New Zealand. Each of these hubs supplies a specific set of products. In that way, a complex and fully integrated supply chain is created. However, regardless of an actively functioning hub system, the company relies on one source of innovation located in the headquarters.
As a change to the existing company structure, it can be recommended that Fronterra switches to a system with multiple research and development offices working on innovation locally and taking into account the unique specificity of each hub and its specialization. This change corresponds with the idea of the creation of internal marketplaces for innovation (Davila, Epstein, & Shelton, 2013). At the same time, such change would help the company’s innovation become more precise and aimed at specific circumstances in which each of the hubs has to perform.
Systems Needed to Make Innovation Happen
When innovation processes are in place, systems need to be employed to manage the pool of ideas and identify the most valuable ones that will reach the stage of the commercialization (Davila et al., 2013). To boost innovation in Fronterra, it is important to pay attention to the initial phase known as ideation. This phase involves the generation of ideas and is enabled with the help of the structured idea management (SIM) designed to nurture and stimulate the production of ideas; this way, the process of innovation and the creation of new ideas could be integrated into the organizational culture at every level. Namely, creativity and the submission of new ideas for development should be rewarded in tangible and intangible manners. Additionally, to guide innovation, the management should provide themes and issues that require changes and then encourage innovative thinking concerning them – in that way, bundling and clustering of ideas will be organized to increase output. Finally, the systems dedicated to screening, sorting, and the selection of ideas need to be in place so that the further commercialization could be more effective.
To be able to measure innovation, it is necessary to subdivide this process into several aspects and make sure that all the components are measurable in their quantity or quality. When it comes to the stage of ideation or the generation of new ideas, the level of innovation and its changes can be determined using measuring the number of new ideas submitted over a certain period; moreover, the quality of the new ideas and the number of the ones that make it to the top (or the stage of commercialization) also can be measured.
To be more precise, a specialized set of KPIs targeting innovation specifically could be introduced and measured regularly. By their performance, employees of the organization should be rewarded for their participation in innovation. Creating measurable KPIs for innovation, it is critical to remember that the measured and incentivized aspects have to depend on the employees’ input so that the rewards and motivation could impact the produced results.
Davila, T., Epstein, M., & Shelton, R. (2013). Making innovation work: How to manage it, measure it, and profit from it. Hoboken, NJ: Pearson Education, Inc.