As food companies look for new and inspiring sources for innovation, Nestlé USA has uncovered one of the most valuable within its own walls.
The packaged food manufacturer behind Lean Cuisine, Hot Pockets and DiGiorno, received more than 6,000 ideas from its nearly 20,000 employees since it started its Open Channel program in 2019.
The innovation platform, which allows anyone from a worker at its U.S. headquarters in Virginia to an employee at one of its 20 U.S. manufacturing plants to submit an idea, has resulted in 46 initiatives. Several products have made their way to the marketplace, including Stouffer’s Bite-Fulls, Outshine Smoothie Cubes and Stouffer’s Spicy Mac & Cheese.
The program is now a meaningful source of new revenue for a global food and beverage giant that had more than $105 billion in global sales during its 2023 fiscal year.
Doug Munk, senior director of innovation at Nestlé USA, told Food Dive that Open Channel is nearing “$200 million in incremental revenue” that the company would not have had without the crowd-sourcing platform.
As Open Channel marks its fifth year in existence, Munk sat down to discuss the program, how it’s evolved and what has made it a success for Nestlé.
This interview has been edited for brevity and clarity.
FOOD DIVE: Why did Nestlé USA start Open Channel?
DOUG MUNK: We’re always evolving how we innovate to drive relevance for consumers, either where they shop, how they engage with us, or the products that we serve and deliver. We’ve really built an entrepreneurial culture that empowers all our people to innovate. And no matter where they are in the organization, no matter what title, what level, what function, whether they’re a frontline employee, or whether they sit in our Arlington, [Virginia] offices right now.
With that spirit, we launched Open Channel five years ago. It was an employee crowd-sourcing program that is really built on the belief that ideas can come from anywhere, and the program has really played a central role in achieving Nestlé‘s growth and innovation goals over the past five years.
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This isn’t just a program but this is how we innovate. And so even when we have what I call the more traditional innovation paths, there is a lot more openness to hearing from others outside of what we believe are the best ideas.
What are some products on the market now that have come from Open Channel?
MUNK: Our first challenge was focused on surfacing any food and beverage idea, and the idea was raised of how can we bring Stouffer’s beyond meals. So that led to this idea of Stouffer’s Mac and Cheese Bite-Fulls, really hitting on the trend of consumers wanting to snack more but leveraging the equity of Stouffer’s. Other SKUs have been launched from this bites platform. Bite-Fulls is one of the top-grossing items from Open Channel.
[Outshine] Smoothie Cubes was another idea. This actually started as an idea from someone in our contract manufacturing group to meet consumers’ desire for health and wellness but intersecting with convenience.
Provide us with more detail on Smoothie Cubes and how they came about.
MUNK: Kelaine Cleary, she is now a director in our manufacturing team. She was a manager at the time. She was going through a very laborious effort to make her smoothies, buying the fruit, buying the chia seeds, putting it in the blender. It was costly. It was inconvenient, and she wanted a solution for herself, and that’s the beauty of this.
A lot of the ideas are around the unmet needs that they’re solving for themselves or their family members. And so it was a real pain point that she realized this challenge enables her to put forward an idea of how to solve for that. … She worked with our chefs to create prototypes that we served on our first pitch day to bring this to life. … She’s the one who created the product, worked with the manufacturing facility, went out to the retailers, sold it, demoed it. She became the entrepreneur moving that idea forward.
How has Open Channel evolved from when it launched in 2019?
MUNK: The evolution of the program is really underpinned by something we knew going in — that a lot of crowd-sourcing platforms die after a year or two at most. But to sustain it, we need to think about this program the same way that we think about innovation, which is we always need to reinvent ourselves to make sure that we are staying relevant to our employees.
To do that, we’ve always continued to reinvent Open Channel year after year. And one way that we’ve done that is we’ve taken this program to our factories. Our frontline employees are the ones who are closest to our products every day. Most of the ideas before had come from our corporate offices, but we really wanted to engage them at factories.
The second area where we evolved is we asked our Nestlé USA employee base of nearly 20,000 employees about leveling up our capabilities. And from that, we launched a Digital Transformation challenge where actually four ideas were greenlit, one which I’m excited about.
We have this augmented reality technology that sits with our field sales representatives where they work with their retail store managers to show them displays and planograms of our products. But we’ve taken the digital capabilities ideas, and we initiated virtual reality tours of our factories, 3D printing in our factories, to just help us transform our digital capabilities, drive relevance and keep up with the pace of the consumer.
And then finally, we’ve focused on driving this because we’ve had a lot of demand on our business to see the impact of crowdsourcing.[I recently sat in] on a pitch day for beverage that’s looking for cost savings initiatives. We’re doing challenges with the divisions. We’re doing it with the functions. We just recently finished one around finance.
Because ideas come to us at anytime, sometimes in the shower in the morning, on the way to work, at any time, we have an “always on” platform where any employee could submit an idea at any point in time and we review those along the way.
How are you incorporating the consumer more in the innovation process?
MUNK: We see some of our best ideas and feedback happen in these consumer interviews and focus groups … What if we could tap into that in a way where we can really drive focus with people outside of Nestle? Yes, we have nearly 20,000 amazing employees that come up with ideas, but the potential to drive what we see is the impact within our four walls and bring this outside is really where we’re taking Open Channel next. And so what better way than to hear from consumers? Startups? These are the innovators that we believe we can tap into and we feel like we’re just getting started.
Right now, we have our first external challenge where we’re actually currently accepting submissions with the challenge framed around how do we drive relevance with the growing Gen Z demographic that influences so much purchase behaviors not only for their cohort, but for those older than them, and of course, their parents who are buying for them. And so driving relevancy with our brands is critical in terms of the future of Nestle’s success and growth.
We want to partner with Gen Z on driving the next big thing in food and beverage… Who knows what Gen Z wants more than Gen Z? And so this is really how we’re evolving Open Channel and honestly, this is just the start. We’re really looking to evolve our external engagement. … [This challenge allows us to] focus around a specific generation that has obviously a lot of increased purchasing power and influence.