Executive summary

The report aims to find various innovation activities and impact on performance around Unilever. It
also attempts to find out the various approaches to achieve innovation with the use of internal and
external resources. The main aim of the research is to identify current and future trends of retail
industry and organization innovation requirements along with future capabilities development.
During the research for the given discussion, the secondary method is used, such as various
published research, scholars published, the official website of Unilever and so on. During the
research, it has found that online sales are increasing all over the retail market while some decline is
found in the offline or stores’ sales. Moreover, retail sectors offering products and services through
online and the internet has already increased in most retail sectors. A lot of traditional way of
operating business such as loyalty card is not as effective as it used to be. It is also identified that
Unilever uses the various approach to introduce innovation, e.g. Unilever Foundry and open
innovation which let the company solve core problems around 400 brands. Unilever engaging in
various activities such as R&D and maintaining a proper relationship with internal and external
parties will definitely help them to achieve and introduce effective innovation.

Introduction

This report presents various challenges and opportunities for Unilever in respect to the innovation.
Various innovations have introduced by the Unilever working with various internal and external
parties. The report states how the firm and the leader plan on innovation and how they use
resources, knowledge, information and data to engage in effective innovation. It also critically
discusses the importance of organizational knowledge, knowledge transfer to analyze and assess
innovation capability. The report basically develops an innovation road map that outlines the
preparation of the innovation process. It also researches on how company identify the issues and
challenges to utilize them to take benefits in the competitive environment. This report entirely
includes factors like the future of the retail industry by analysing current status, organization
innovation requirements, building future capabilities for the organization.

Future of the industry 2020 and beyond

The retail sector is fluctuating at the exceptional speed; along with this, create huge challenges and
opportunities. Retail industry faces slow growth rate in 2019 since 2010, with the topic of Brexit
uncertainty. The industry suffers the most tragic situation as about 85000 people lost their job and
about 9,169 stores were closed around UK. However, online sales are growing all over UK, reaching
about 21% of total sales. According to 1Retail Economies, it was reported that total worth of entire
retail sales in 2019 was £394 billion and about 2.9 million people employed all over UK. One of the
positive sides of the retail industry is that it has faced the growing sales of almost 3.4% in the year
2019 which shows that retail industry can grow further within such tough competition which needs
innovation. In the view of 2Richard J. Gilbert (2006), Innovation and competition are close things, for
monopoly or perfect competition market, investment in R&D is essential because it helps to come on
top to the people who hold it. Organization possessing the R&D competition has a unique

1
https://www.retaileconomics.co.uk/library-retail-stats-and-facts
2

https://www.researchgate.net/publication/4746508_Competition_and_Innovation/link/57125daa08aeebe07c
03a0ba/download
intellectual property authority to the new system. 3Tord Tvedten et al. (2019), states the
combination of both innovation and competition by summing up that strong competition brings the
innovation in the industry and who able to find it able to sustain as well. When competition is
tougher, business entity seeks for the uniqueness in the product, services and their operating
system, so R&D helps to achieve so. In the market where competition is in top-level, only those
businesses survive, which has plan and control to fulfil needs and desires.

Figure 1: Unilever sales for a given year

Looking at the industry trend in sales over some years doesn’t look good as a sale in 2019 goes very
slow. This result shows a slowdown in the sales rate because of the closedown of multiple stores,
which results in job loss of many staffs. Retail sector in UK is dominated by the supermarkets such as
Tesco, Sainsbury, Morrisons along with some department stores like John Lewis. Retail sectors
offering products and services through online and the internet has already increased in most retail
sectors. A lot of traditional way of operating business such as loyalty card is not as effective as it
used to be. Many big and medium retailers and wholesalers are using technology like augmented
reality and robotics, which help them to remain in the competition. The industry is influenced by
multiple factors which need to be observed by the retailers and wholesalers; out of them changing in
the consumer behaviour is one affecting the sales and profitability of business. Retailers should be
adaptable and innovative to those changes in the internal and external environment. Richard Wolff
says that to sustain in the market one should invest in the technology instantly. In some cases, high
street retailers face issues regarding monetary pressure because of government’s national living
wage and high business rate along with expensive rent.

Industry using technology to collect the data, especially when they purchase the products
from online that ultimately helps to identify consumer behaviour and needs and plan accordingly. AI
retail sectors are reshaping the shapes by observing the heat maps by tracking where customer go
and which promotions they seek for, which is recorded by LIDAR sensors. With the help of AI can
3
https://www.tandfonline.com/doi/pdf/10.1080/23311975.2018.1564167
generate about £27 billion every year in the industry because wholesalers using it grow their
business in geometric mean. There are wide ranges of technology in use such as virtual assistant
which facilitate in making recommendations which bring value to customers. Thus, the future of the
Retail sectors can be bright with the alignment of technology such as AI, augmented and VR. One
trend in the retail industry, which has not changed since long time is the physical presence of the
stores becoming strong media channel which is considered as first meeting point of consumers and
brands. Because of changing customer behaviour and use of technology, consumers are searching
for proper physical experiences in stores and while shopping.

Organization innovation requirements

Unilever Plc is committed to introducing the innovation in their products, services, and internal and
external processes. Unilever foundry is one of the unique start up started by company which is
known as collaborative initiation works as the platform for start-ups and creative and innovative to
gather and collaborate. This approach has given the Unilever to face and solve out the core
challenges occurs in almost 400 brands. Unilever with the application of foundry facilitates in
connecting with other programs in company containing various ventures that invest in rising and
growing companies to enhance growth.

Figure number 2: Innovation process used by Unilever in past

Figure mentioned above shows some steps involved in innovation and how they change their
process of innovation. These two figures show how Unilever adapted to the new system for
innovation caused because of different factors. Different changes have occurred in the system and
process for being innovating organization. This reflects that environments are unstable, and changes
occur from time to time which force organization to introduce innovation in the system of operation
to sustain and compete. 4Fabio Ribeirete et al. (2017), states that innovation is continuous process
and execution of multiple decisions intentionally made to enhance the performance of the
organization, grabbing the opportunities in the dynamic market and answering to the various
challenges in the environment of business. Innovation plays a vital role in taking benefits of the

4
https://www.scielo.br/pdf/gp/v24n2/en_0104-530X-gp-0104-530X2161-16.pdf
opportunities and dealing with the challenges. Unilever is very committed analyzing the various
challenges that occurred in the business environment, so making most of it to compete in the
market. Innovation can be said as the combination of resources and considered as the outcome of
learning processes where knowledge is aligned into new problems solving ways and shared meaning.
5
Harry Boer and Willem E. (2001), out view on the resource-based view as it observes characteristics
of resources and competencies and the way such resources help business to differentiate with other
firm and gain competitive advantage. The resource-based view help to know the various capabilities,
working from premise which allocation of the resources is heterogeneous around the competitive
business environment.

Unilever is committed to providing various innovations such as product, process and organizational
innovation and continuously researching on finding new ways to be unique out of that. Organization
to be innovative it requires proper team work and generation of new ideas which usually occurred as
the outcome of collective knowledge, which don’t come from particular lone. As a result,
organization to acquire effective innovation, it requires both internal and external networks of the
business entity should be well developed. Therefore, innovation is a result of the teamwork and
effort in which well-managed and participative group of people generate and executive plan.
Moreover, Unilever Plc comes with the short terms requirements to decide on the long term
investments. Company is also focusing on considering only stakeholders who have knowledge about
business issues, feasibility and processes rather than considering consumer to co-create. Unilever is
fulfilling their innovation requirements and necessities through different approach to it which allows
generation of capable , fruitful relationships with various stakeholders and open the door to agile
innovation benefits of small companies, meanwhile considering openness to new ideas and
concentrating to core business and priorities.

Figure 2: Innovation at the present

Building future capabilities for the organization

https://www.researchgate.net/publication/247832314_Innovation_What_Innovation_A_Comparison_betwee
n_product_process_and_organizational_innovation/link/56179a4808ae0224ebce98e5/download
Workforce alignment, along with the organizational process is utmost for the business organization
to meet the future needs and to cope with the dynamic changes occurred in the customers’ needs.
6
Martin Bell (2012) et al. says that innovation is the result of collective work and outcome of
alignment of all the organizational people and process. Organization to generate the innovation it
requires not only the knowledge of top leaders of company but also consider entire workforce
within organization along with the reliable market and customer information. Until and unless,
company doesn’t have proper and accurate information; innovation can’t be built. Business catches
up of capabilities to create and control change in technologies, going from level of technology
imitation bases on the limited innovative ability to deeper levels of capacity which enable to carry
out modest portion of innovation, going forward to get along and creatively innovation activities in
global arena. Organization to build the capabilities required internal efforts along with the external
efforts as well such as suppliers, consulting firm, lead users, research Corporation and competitors.
Business’s internal capability that facilitates in the supporting and generating innovation contains
various human resources and knowledge bases required to interact with outside capabilities. But
such capabilities are not to gain external knowledge rather they are to integrate them to the firm’’
internal information and knowledge bases and to harmonize various stakeholders in generating
nature of knowledge.

Figure 4: Innovation capability; dynamic emphasis on technological and organizational dimensions

Firm generating innovation capability especially connected to the technological aspect based on
human resources, attributes, skills and knowledge bases and organizational aspects like firm’s
differentiation, integration, specialisation and co-ordination. Lower ups in the firm to capability
building process facilitate systematic ways of incremental innovation, emphasizing on building core
technological aspects of capability which are moving vertically in above figure 3. At the starting
point, associated firms problems are about firm’s specialization and differentiation. After all, the firm

https://www.researchgate.net/publication/239790616_Innovation_capability_building_and_learning_mechani
sms_in_latecomer_firms_Recent_empirical_contributions_and_implications_for_research/link/579e6a1708ae
802facbdecff/download
goes to the advanced levels of innovation, organization start to more by transition phase where firm
move upwards constantly to gain advanced along with the internationally leading level of capability,
where firm move horizontally to detail the requirements about creating capabilities for integration
and co-ordination. Unilever is committed to making more capabilities around the organization by
being simpler and being more agile and focused on core business. 7Changes are necessary for the
better long term performance and increase the value of shareholder, which also supported through
4 growth programme. 8While building capabilities, Unilever is committed to connecting with various
external parties such as various global partners, top universities, SME’s and start-up. Such links to
the suppliers and universities motivate and support in generating open innovation. Company
believes on the bigger, better and faster innovation, which is achieved through proper co-ordination
with internal and external links. R&D of Unilever plays huge role in company success and it accounts
for about 2% of total turnover in Unilever. Unilever processes in R&D simply discover, design and
deploy them. Unilever posses almost 6,200 professionally working in R&D out of those 1000
professional work in Discovering function. Further, improvement and engagements are expected, so
that future capabilities become stronger that meets changing needs, behaviour and desire of
customers.

Conclusion

Innovation is the result of integration and teamwork of both internal and external affairs.
Combination of both innovation and competition by summing up that strong competition brings the
innovation in the industry and who able to find it able to sustain as well because of the closedown of
multiple stores resulting job loss of many staffs. Retail sector in UK is dominated by the
supermarkets such as Tesco, Sainsbury, Morrisons along with some department stores like John
Lewis. Different approach in innovation like open innovation and Unilever Foundry has given the
Unilever strength to face and solve out the core challenges occur in almost 400 brands. Innovation
can be said as the combination of resources and considered as outcome of learning processes where
knowledge is aligned into new problems solving ways and shared meaning. Organization to be
innovative it requires proper teamwork and generation of new ideas which usually occurred as the
outcome of collective knowledge, which don’t come from particular lone. Business catches up of
capabilities to create and control change in technologies, going from level of technology imitation
bases on limited innovative ability to deeper levels of capacity which enable to carry out modest
portion of innovation, going forward to get along and creatively innovation activities in global arena.

7
https://www.unilever.com/news/press-releases/2018/building-the-unilever-of-the-future.html
8

https://www.academia.edu/6133963/Access_is_the_new_ownership_a_case_study_of_Unilevers_approach_t
o_open_innovation