General Mills EVP on Becoming ‘Best Big Small Company’

By Stephen Ellison |  July 20, 2015

Peter Erickson, executive vice president of Innovation, Technology, and Quality for General Mills, is focused on a very clear goal: to help the company, with 43,000 employees and brands like Cheerios, Nature Valley, and Betty Crocker, become “the best big small food company in the world.”

But blending scale and agility is a tall order for most large organizations. We spoke with Erickson earlier this month to talk about how he’s approaching it; how the company stays close to consumers; and his efforts to position the $17.6 billion company as the “partner of choice” for inventors and startups working in the food industry.

Erickson has been with Minneapolis-based General Mills for 27 years, and he reports directly to CEO Ken Powell.

Erickson also shared an infographic, below, on consumer trends driving product innovation at the company.

Treating the World as Our Lab

Q. The General Mills innovation program is one of the longest-running among big corporations. What prompted the launch of the program, and what were some of the initial obstacles?

Erickson: Our commitment to innovation at General Mills has been around since the company was founded 150 years ago. Over the last decade, we’ve made a very concerted effort toward … reinventing innovation at General Mills. One of the first phases of that, which started about a decade ago, was our focus on looking outside the company – new ideas, new technologies, new connection points that could help drive growth for General Mills by bringing new capabilities into the organization. What we have come to learn is that there are lots of other really smart people out there that have tremendous ideas and capabilities that we can do a better job of leveraging.

So back in the day, we used this adage of a General Mills researcher used the lab as their world. We flipped that on its head and said a researcher needs to view the world as their lab. We really tried to open the doors of General Mills and be much more [overt] about what the needs of General Mills are, and inviting inventors and innovators from all around the world to connect with us to together try to drive growth.

Within the last several years, we have been working diligently on trying to [make] the consumer even more central to our development process. And we talk about creating consumer-first design, where we’re getting our researchers and innovation teams out into consumers’ homes, into the grocery stores, shopping with consumers, really trying to gain a lot more empathy for the various consumers we serve … and doing a lot of that through ethnographic research in observing consumers in their own environments to [figure] out those critical jobs that need to be done. Again, our belief is if we can get the individual who can solve the problem as close to the individual who has the problem, we dramatically increase the likelihood that we’re going to be able to bridge that gap and create something meaningful for the consumer, and ultimately meaningful for General Mills.

Making Long-Term Bets

Q. How has the program evolved over the years?

Erickson: When we look at all the stuff we’ve done across General Mills, really the overarching goal, the North Star that we see for ourselves, is this aspiration of becoming the best big small food company in the world. What we’re really talking about is [embracing] many of the best practices that small companies have today. The focus on the consumer and the understanding of the consumer is probably greater at small companies than at big companies. Small companies are very agile and quick and able to pivot in the marketplace – and they’re very efficient in their use of resources. So we’re trying to adapt some of those small-company techniques, but at the same time preserve some of the big company’s capabilities – things like the depth of talent that we have. We continue to invest in recruiting and developing and retaining some of the best and brightest minds in the food industry… Small companies would kill for some of the skills and capabilities that we enjoy within our organization today.

The second thing that big companies have is the ability to scale. When we have an idea that works, we’re able to scale it around the globe very quickly – and we have lots of examples of innovations that might have started in one part of the world that worked very well, and we’ve taken it to other parts of the world.

The third is the ability to make long-term bets. We have some very deep and long-term technology initiatives that we invest in that are helping us create advantages in technologies that we think can take General Mills well out into the future. Small companies tend to focus on what they need for the next week or the next quarter or the next year; we’re working on programs … that may not realize results and benefits for five or even 10 years. So when we think of this adage of the best big small company, it’s about all of that.

‘Looking to Learn from the Best’

Q. What are some of the keys to the program’s success and longevity?

Erickson: We don’t sit here believing we have the best approach to innovation, that we have an advantage that’s going to allow us to win forever. We are constantly looking to learn from the best, not just in the food industry but from many other industries that are focused on growth and innovation. So that spirit of continued improvement is one of the elements that has helped us be successful.

The other one is a willingness to experiment within the context of our organization. We do a lot of piloting – if we have a new approach or a new technique or new insight on how to drive innovation, we’ll try it in one portion of our organization, and if it works very well, we’ll scale it across the rest of the organization. If it doesn’t, then we learn from it and move on.

The third thing is we have great support from senior management. My direct boss, the CEO, he is constantly asking and pushing and prodding for us to continue to invest in and develop new capabilities and new approaches. And he’s given us a lot of latitude to try new things across the organization.

Q. You mentioned some strategies or approaches that haven’t worked over the years. Can you be more specific about what those were and why they didn’t work?

Erickson: I think we have tried different approaches to how we’ve structured our organization. Like lots of organizations, we tried centralizing and realized that we lost touch with the consumer. Then we decentralized and realized we didn’t have enough scale to be able to invest deeply. So we’re always trying to optimize the size and scale of our organization – sometimes it works well for us, and sometimes we end up taking a step back and trying something different. We’ve tried a lot of different ways of communicating and capturing knowledge within the organization.

Also, we’ve tried some different kinds of software, tools that allow us to be able to transfer knowledge more effectively. Again, some have worked really well, and others have been great learning experiences for us.

Striving to Be a Partner of Choice

Q. What made you decide to start seeking external resources with the G-WIN program [the General Mills Worldwide Innovation Network, which we’ve covered previously]?

Erickson: If I go back to my background, before I came to General Mills, I worked for a small company. I saw how impactful it was to be reaching out and leveraging resources outside. But to do that effectively, you really had to know what to ask for. One of the adages we talked a lot about in the early days is if you’re out there looking for everything, you’ll find nothing. But if you’re out looking for specific solutions to key technical challenges, you’ll find many ways of being able to deliver that. That was something I learned working for a small company.

[We are] really striving to be this partner of choice externally, where inventors and innovators will come to General Mills first with their ideas, because they know we treat them with respect, we take care of their technology, and we would share with them in the value that has been created.

Q. How much of a difference has it made?

Erickson: We’ve had a lot of products – and improvements to our existing products … that have been made because of the connection points we have leveraged with others outside. We did some research a few years back where we looked at all the new products we introduced and at that time, about 50 percent of everything we introduced had been leveraging a significant external component of innovation or technology. Those 50 percent that were leveraged were generating more profit and more growth than the other 50 percent by a very large factor.

Q. Talk about some of the projects or strategies that have blown you away.

Erickson: Certainly, over the last decade, some of the most consistently successful innovation we’ve seen has come from our snack business – in particular the work we’ve done around portable snacks, grain snacks. When you think about the Nature Valley line or the Fiber One product line, they have been hugely successful over a long period of time because we have been committed to continual innovation. Our competition is constantly trying to catch up, and in some cases, they have been able to match our product. But in all those cases, we’re on to something even better by the time they’ve figured out how to do the work that we’ve done. And the result of that is in our grain snack businesses, we’ve enjoyed some terrific share growth over a long period of time. And our consumers have rewarded that with more trial and repeat [purchases] that have helped those businesses grow.

Winners Need to be Willing to Invest

Q. Describe the company’s process for generating, selecting and developing ideas.

Erickson: As with everything at General Mills, we start with consumer. We [aim to] understand what that consumer need is. Then we build a series of hypotheses on how we might be able to solve that consumer need. We look into what are all the technologies that we think will allow us to address the various hypotheses that we generated – again, not just in food, but in other corollary industries as well. Then we develop a network of companies that are providing those sorts of solutions and technologies. We reach out to them, we talk about what they have, we determine if there is mutual value to be had by working together on solving that [need], and if all that works, then we ultimately choose to work together and co-invent the solution.

Q. Does this process ever involve direct competitors?

Erickson: We’ve had a number of situations where we created a consortium – where we had a variety of companies that might share a similar technology need, a similar problem that they’re trying to solve that we will work together on.

Food safety is one that’s fairly common across the industry, and it’s not an area where a lot of our competitors are looking to create a competitive advantage. We all benefit by having safe foods that consumers can trust. So that’s an area where it’s easy.

Packaging and sometimes different kinds of packaging formats are areas where you can find opportunities for consortia, where you can come together and leverage the collective scale to be able to reinvent an approach to the industry.

Q. What’s in store for the future of the General Mills innovation program and for the food industry in general?

Erickson: I certainly think the level of competition in our industry is not going to subside in any shape or form in the future. I think there are some parts of our industry that are focused on cost-effectiveness and driving growth by taking away things that can contribute to the bottom line. I believe the winners are going to be those that are balanced in that approach, that are being efficient in where they invest but are also willing to invest … in capabilities and technologies that are meaningful to consumers and that will drive growth into the future.