From pop up stores to smart chillers: How Frucor builds an innovation pipeline

This is part 2 of the interview with Richard Raj of Frucor on taking 'first mover' advantage in digital transformation - read part 1 here.

Richard Raj, Group Digital Solutions and Innovations manager for Business Technology at Frucor Beverages, wanted his team to work on a raft of innovation projects, but with other departments and their technology partners participating.

So last year, he and his team kicked off an 'innovation pipeline'. They christened it inov8 IT, which was a simple process where people can register their ideas.

It is like a Facebook page but on Sharepoint, he explains. He and CIO/Group IT director Pieter Bakker got approval from the executive board to approve innovation and digital initiatives up to $10,000.

He says this was important, because it removes the bureaucracy that could stifle the innovation idea.

He comments on every idea and encouraged others to comment.

Once an idea takes momentum and people say that it is great, he will ask the person to write a one-page proposal and how much it will cost to prototype it.

He extended the offer to some of their IT suppliers. He told them it is an opportunity for them to work with the IT team on a prototype. If the prototype is successful and will be produced, “they may be the first one we go to if we implement it”.

They started with a few ideas and then doubled these by the fourth quarter.

They then organised a showcase for their projects in both the New Zealand and Australian offices.

“We needed to communicate to the wider leadership team about all the good stuff we are working on,” he says.

In New Zealand, they booked a big room and invited the executive team to attend the breakfast event. The executive teams were divided into six groups. Each group visited the stations where the team and some suppliers demonstrated the concepts or projects.

In Australia where they had a smaller team, the whole company participated. This time it was held during the afternoon tea break.

They were able to see, for instance, how ibeacons, 360’ video, mobility and augmented reality devices and solutions can be applied to their business.

“In one such station, the NZ CEO said, ‘why are you doing this as a demonstration, we should be doing it in production straight away’, recalls Raj.

Each showcase lasted an hour. In previous instances, it would have taken a team a few months or more to write a case, get funding, mobilise and engage, then convince the management towards a prototype and then demonstrate it, he says.

With the innovation pipeline, “It is like creating a shortcut to get the whole innovation thing going.''

As well, he noticed an increase in inquiries from other business units since doing the showcase. Before, a business team with an idea will often go to the supplier directly to inquire.

One manager recently told him, “'Look, I am doing this promotion, would it be good to create something more digital?' This is when he knew that the process is starting to come full circle and create the engagement benefits."

Raj now regularly assigns his team members to work with their internal customers and to throw in two or three ideas for the customer to consider for promotions or for internal use.

“It is a win-win for us and it builds the credibility of IT beyond the showcase, in a really solid way.

“We have shown that we understand the new technology and can advocate for them for big projects.''

He says working on the organisation’s digital strategy is a step change for the team.

“There is a lot of small changes IT supports, but it has hardly ever been given the chance to participate in leading in this way. A lot of companies still see IT as a support department,” he says.

Inasmuch as technology is disrupting business models, it is disrupting IT itself.

“If we (IT) don't aggressively change, inevitably I don't think we will be ready for that new job of leading digitalisation.

''If we will be using service providers,'' he says, referring to the rise in cloud based technologies, “we should at least be brokering it.

“We know whether the service is good or not, or is it secure, how will it integrate, and where the data will go. The least we can do in the digital space is to be the master in brokering those services and be very very good at negotiating the best deals”

Data management is a critical component of an organisation’s arsenal, as it moves to digitalisation, he says.

“You can do things in little websites and be digitised, but when we are talking about proper digitalisation you have to have big transactional data engines,” he states.

While this applies less to small startups, it does to a company like Frucor. He says compared to five years ago, these transactional engines are more affordable and organisations need to start collecting the data for them now.

“Even if you don't exactly know what you are going to do with it, this information is gold. You should start storing it for the time you will need to mine it for consumer insight,” he states.

In the big data world there is much unstructured data as there are structured data. Once again, he says, “it is important to immerse yourself and really understand the technology around big data”.

“You need engines, you need technology that can listen and could interpret the massive volume of data very quickly.''

For example, if there are a thousand Facebook, Instagram and Twitter information posts about your company and your product, and you are looking for a sentiment about your company.

“You can keep on reading until you get to an idea that everybody hates you or everybody loves you. The sentiment engines can get the sentiment analysis done and you can monitor it every day.''

The next level is to manage the sentiment, like working on the issue, or talking to the parties involved, he says. “A negative sentiment that is unmanaged will mushroom to bigger one.

“But if you have started to see the sentiment when only three people were talking about it, you can pinpoint the three followers and resolve the issue. You can reply and collaborate with them and say, here is the reason why it happened. Or you can say you made a mistake. You can control the sentiment right there.”

He says in print media, the swelling of sentiment can happen, but will take a bit longer. “In the digital space, in social media, it gets blown up quickly.”

He says big data is also important in other parts of the organisation. For instance, in every factory and logistics operations, you can tap the data from every step of the operations and see how effective they are.

“You can start seeing things you have not seen. You can get the ‘sentiment’ on what you are doing internally, as much as what is happening to your customers.”

Reducing the digital divide

Companies that have missed the boat “a little bit” on digitalisation on the leading edge can exploit the next big event, which he says is around Internet of Things.

“Imagine if devices start talking to each other,” he says. ”Then data and algorithms start to do things for you or find out things for you. Like worms travelling between devices between machines between the Internet of Things, finding things for you.''

For example, if you want to buy a shirt, you can walk on Queen Street and the . algorithm is going to find where to take you to the right shop.

''Right now I can google the shops. Or I can say, find me the right shirt and have it delivered to me.''

“As the engines and data management become really smart and become faster and faster, AI becomes stronger and stronger for me. That AI algorithm will be my virtual agent and I can say, find me the right shirt, for my stocky size and height in the colours it knows I like, without asking it.”

It might then be talking to the tag on the t-shirt in one of the stores and searching if there is a shirt your size on the rack or to try a particular size, like a search engine would.

He thought about applying IoT concepts with chillers with sensors. The concept could have been the chillers send data about the consumer behaviour and preferences of the buyers of the drinks, to the point of informing the back office the chillers were running out stock for example or not being stacked in the most preferred way’

''At the moment you could perhaps do that mathematically, but if you want to be ‘just in time’, you want to make sure the fridge out there is always stocked up.

''The customer can call you or you already know the demand and the sales staff in the area can deliver the stock. If you do not do so and your competitor is there, suddenly you may not be as favourable as them.

''If you had an effective online mechanism, you can also ping the customer a request to say the stocks you need are on special. They may not know this is on special and are able to get it for half price."

Pop up store

Another project had Frucor setting up a pop store in Auckland’s central business district.

“Frucor were brewing ideas with the business team on how they can get insights on our consumers and try a few things out.”

One of these was to set up a fresh juice bar (pressed) where consumers can order through Facebook or an App They found a space near Shortland Street. The solutions for this was ready in a matter of weeks and was an effective collaboration with the technology team and his business partners, he says.

If the customer is within CBD, they could order a custom cold pressed juice from their office. The app would alert Urban Sherpa, one of their external partners in the project that the order is ready for pickup at the store and they deliver it to the customer.

For him, it was not about the juice bar as a big revenue item it was more about engaging with consumers, understanding them directly and trialing how a fast and effective IT collaboration with business teams could work, he says.

“We sell to supermarkets, to dairies,” he says. "We want to know what consumers want, if they like a particular type of juice, should we put it in a bottle? Can consumers customise the juice from the app and order that?"

Apart from understanding the consumer preferences, they also gained an insight on the type of technology and process needed to support these types of opportunities.

“I don’t think we can yet see the full potential of digital and there are more surprises to come” he concludes.

“The big transformation in the digital space is invigourating. If you take advantage of it, you are setting yourself up for the future.”

Send news tips and comments to divina_paredes@idg.co.nz

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