How (and why) iFood practices open innovation

What is open innovation and how does iFood put it into practice? Marcos Gurgel, director of Corporate Venture, Open Innovation and Jet Skis at iFood, explains here.

By Marcos Gurgel, director of Corporate Venture, Open Innovation and Jet Skis at iFood

Even today, innovation, for many companies, is synonymous with secrecy. This is what happens in an R&D (research and development) laboratory, behind closed doors, with few people involved in projects that take years to develop.

But no one can be better at everything all the time. If there are people and companies in the market that have already solved the same problem, wouldn't it be better to save time and investment by working in partnership with them?

This is the principle of open innovation, which opens the laboratory for more people to enter. The three main characteristics of open innovation are: carrying out projects collaboratively, more quickly and with broader knowledge creation, as information is also shared with people outside the organization.

The result is that, by sharing its vision of the problem with more people, the company finds a better and faster answer. There is a tremendous gain in dynamism in innovation projects, because the organization no longer has to go through the entire R&D path alone.

Instead, it starts to act more like a project manager, while its partner brings the ready-made technology and adapts it to its reality. In open innovation, the perfect (which can take years to achieve) gives way to the accomplished, that is, to a first version ready to be tested, pivoted and improved to reach the solution more quickly.

Drone deliveries

An example: when iFood thought about delivering by drone, imagine how much effort it would take to develop its own technology. We would have to learn how to build robots, train drone operators, create an area for maintenance and repair of the machines and another focused on relationships with the government to get approval to operate, just to start the game. It wouldn't be worth it.

Looking at this challenge through the lens of open innovation, we thought it would be best to look for companies specialized in drones in the market and form a partnership to find the best solution for our needs.

And it worked: in 2021 we carried out the first successful drone delivery tests in Campinas (SP) and Aracaju (SE). All this much faster than if we were isolated in our laboratories creating the solution from scratch.

A valuable exchange takes place in our open innovation partnerships. On the one hand, iFood brings a more agile company in terms of construction to have a solution more quickly.

On the other hand, startups enter an environment where they can grow at a much greater speed and with the support of our structure in technology, product, design and digital marketing, for example. And counting on the customer base and the ecosystem that we have already developed to gain scale in its development phase hyper growth.

Navigating alone, entrepreneurs can arrive at the same place, of course. But, when they join our ecosystem, they reach this level at a speed that is 18 to 20 times greater.

Live commerce

Another example of open innovation that I really like to mention is that of live commerce. Our team of technology and inovation It looks a lot at China, Europe and the United States to understand how they are creating new businesses. During this prospecting, they noticed a boom in live commerce abroad.

Upon learning this, I asked the iFood technology team how long it would take to do it. live commerce. They gave me an estimate of 6 to 12 months to complete such a project. Now, imagine if I asked this team to dedicate itself for months to testing something that we still don't know if it will be successful in Brazil? Does it make sense to invest so much effort into a product just to test it?

My answer is: “no”. Looking back at the market, we found several startups in Brazil that already had ready-made solutions for live commerce —and in the model white label, which could be adapted as an iFood feature.

The development of live commerce at iFood, therefore, it is an open innovation model in which we select a pool of startups, we chose a “winner” and ran the PoC (proof of concept) with it.

In relation to the traditional path of developing a new product, we save time. We did not go through the discovery, research and development phase and reaching the MVP (minimum viable product), as the company already had the product white label for us to test.

We went straight to the PoC phase and tested whether the solution fits our market to see if it was really worth spending a year investing in having our own tool. Or whether it is better to become a partner in the startup or buy this solution on the market. The difference is that with open innovation we can reach this decision infinitely faster than if we did all this on our own.

Farm to table

Another open innovation partnership began when we realized that the thesis of farm to table it was super advanced in Asia. This means disintermediating the chain to take the food directly from the rural producer and sell it to the consumer at a lower price.

Once again we researched the Brazilian market, we understood who the players and we partnered with a startup, which ended up being acquired at the end of the open innovation process.

Throughout the process, this company, which had three people in the technology area and one in the product area (and zero digital marketing budget), began to have support from iFood's technology, product and marketing areas.

In all of our open innovation partnerships, we make our internal assets available to startups, should they need them. Our intention is always to let the startup walk on its own legs, but relying on our structure.

We reached 2022 seeing a market that is still in its infancy when it comes to open innovation in Brazil. Companies are learning to deal with startups with less bureaucracy and providing conditions for entrepreneurs to develop, and not be forgotten within a large corporation, as this harms the open innovation ecosystem.

It is also necessary to resist the temptation to buy startups for the sake of hype or for reasons other than putting open innovation into practice (but rather marketing or purchasing before the competition).

Today, it is still large companies that prospect entrepreneurs. In the future, ideally, startups will also start knocking on our doors to form these partnerships. When this relationship happens fluidly, like a two-way street, without barriers, it will be a sign that, finally, the open innovation ecosystem will be mature in Brazil.

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