Innovating on the Inside
Not every company names its growth strategy. But General Mills Inc. is a global marketing machine, so the Golden Valley-based behemoth dubbed its spring 2021 blueprint “Accelerate.” The company is restructuring to “increase agility,” which will result in the elimination of 700 to 800 North American jobs and another 600 to 700 worldwide—news that grabbed most of the headlines. But cost savings weren’t the only driver. The reorganization also created several new leadership roles focused on transformation, growth, and disruption. Like many Fortune 500s that are feeling pressure to move at the speed of startups, the company that created Cheerios wants to bulk up its innovation muscle.
“This is an acknowledgement that we can’t just do things the way we used to do it,” says Doug Martin, General Mills’ newly appointed disruptive growth officer. Previously the president of the company’s dairy operating division, Martin was promoted in June to oversee a new team focused on growth opportunities. That includes G-Works, a new internal innovation engine, and the 301 Inc. venture capital arm, which invests in and mentors emerging brands.
“There are things we do really well: delivering big brands everywhere in America safely and effectively. And we’re good at marketing those big brands,” Martin says. “But there’s a big difference between the skill set of someone running a billion-dollar brand and the skill set of someone who is going to create something new, from scratch.”
Enter Amol Dixit. Make that “re-enter.”
Dixit started his career at General Mills and spent 15 years climbing the ranks to a senior marketing manager position. In 2011, he became manager of a team that identified and executed investments in emerging food brands. “I wanted to be an innovation guy at General Mills,” he recalls. A year later, he left to do it his own way. He launched Hot Indian, a fast-casual restaurant concept with ambition to popularize Indian cuisine. Today, Hot Indian has two locations, at Midtown Global Market in Minneapolis and Mall of America (a third, in the downtown Minneapolis skyways, remains in pandemic limbo). Dixit has become a familiar face in the local food and startup scenes thanks to his pioneering concept, cheeky branding, and support of corporate titans like former General Mills chief marketing officer Mark Addicks, now a Hot Indian investor.
But as is often the case with startups, revenue doesn’t necessarily match the buzz. So with a trusted head chef running Hot Indian’s day-to-day operation, Dixit went looking for his next opportunity. He found it in the last place he expected: back where he started, at General Mills, running the G-Works incubator.
“This isn’t me coming back to get on the marketing career path,” Dixit says. “This is me seeing an opportunity to be an innovation leader. For me, it feels like the company is in a different place. Innovation is front and center. To be part of a group that is going to play a big role in achieving that ambition, it’s exciting.”
A Startup Mentality
General Mills isn’t Minnesota’s only large company stepping up internal innovation. Cargill launched the Entrepreneurial Digital Growth Engine (EDGE) last year to pursue new ideas unencumbered by the typical corporate process.
“Often in big corporations, the team comes up with a new idea and then applies traditional business decision-making, like ‘What’s the [return on investment]?’ The biggest tech giants wouldn’t be what they are today with that thinking,” says Lawrence Wang, Cargill’s director of digital strategy development. “We’ve always had it in our DNA to be innovative—but we need to learn how to take more risks and how to invest in the big market potential of new ideas.”
That means making investments without guarantees. Fail fast. Test cheaply. The pace of innovation today requires looking beyond the corporate walls, Wang says.
For many big companies, the most efficient way to evolve is through acquisitions. Wang says Cargill has learned a lot about the startup mentality by working with independent founders through its Techstars Farm to Fork Accelerator, but the company also wants to capitalize on the institutional knowledge of its 155,000 employees.
That’s what EDGE is meant to do. The program is staffed by a small team of people who have corporate innovation or entrepreneurial experience. Anyone in Cargill’s global workforce can put forth an idea, and the EDGE team will decide whether there’s a viable path to scale. If greenlighted, the employee with the idea might become a “founder” and work on the project part time—or more; EDGE will provide the resources, support, and necessary capital to pursue new ideas. Both Cargill and General Mills declined to say how much funding is available to their new startup programs.
“The goal is to develop a portfolio of investments,” Wang says. “You need a high volume of ideas to do that.”
As for General Mills, “We’re very good at flowing capital into things that are working,” Martin says.
G-Works’ mission is much the same as Cargill’s EDGE, but General Mills took a different approach to setting it up. The department consists of 20 “builders” divided into threeperson teams. (Most came from other departments in the company; a few, like Dixit, were external hires.) Each trio includes a commercial lead, a technical lead, and a trend specialist. The G-Works teams identify “opportunity areas” and find a consumer problem they want to solve. “We’re very open in how we define opportunity areas,” Martin says. The key, he says, is finding space between existing products. For example, “We shouldn’t have a G-Works team coming up with a new cereal flavor.”
G-Works’ first product is already on shelves at local Hy-Vee stores and Amazon. Good Measure is a snack brand targeted to people with diabetes. It resulted from a team digging into the unique pain points faced by people who have to think about how what they eat interacts with their blood sugar. Nearly one in six adults in the U.S. has been diagnosed with prediabetes or diabetes, according to the Centers for Disease Control and Prevention.
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It’s the sort of niche product line that might have come from a solo founder with diabetes who experiences dietary struggles every day. G-Works is an attempt to improve on the ideation and support for smaller ideas, Martin says, rather than what has become the sweet spot of many large companies like General Mills: making big brands bigger.
“The competition from smaller brands has clearly been exposed in the food space,” Martin says. “We’d like to rebuild some of that muscle of creating and nurturing brands in their infancy so that, one day, they can be big enough to live comfortably within the bigger machine that is General Mills.”
But can big companies really get out of their own way?
At 3M, a freewheeling spirit of entrepreneurship was in effect long before Jeff Bezos and Richard Branson built rocket ships to launch themselves into space. Company leaders today often recite the edict of William L. McKnight, who became 3M’s president in 1929: “Delegate responsibility, and encourage men and women to exercise their initiative.”
That philosophy, held by several early company leaders, led to 3M’s longstanding “15% culture,” which allows employees to pursue passion projects on company time that may or may not be related to their day jobs. Post-it Notes are the classic example: A 3M scientist charged with making strong adhesives came across one that stuck lightly to surfaces and didn’t bond. After several years of noodling with potential applications, a colleague griping about how his scrap notes fell out of his hymnal inspired the eureka moment.
“I’d argue almost all of our products come out of 15% time,” says John Banovetz, 3M chief technology officer.
The company doesn’t track 15% time. Some employees mark it on their calendars; for others, it’s more of a general understanding that daydreaming is good for business.
“As a leader, I don’t want to know what you’re working on,” Banovetz says. “As soon as I know, it creates that compulsion of , ‘This has to work.’ ’’ For large companies to successfully create a culture of innovation, it’s essential to support ideation, Banovetz says. “Knowing that only three in 10 ideas may succeed, it’s more important to promote that personal initiative. The payoff is long term.”
In today’s business environment, where successful entrepreneurs become celebrities and VC firms throw mega-millions at potential unicorns that have yet to turn a profit, you have to wonder: Would that 3M scientist have left the company and tried to launch Post-its alone?
The lure of entrepreneurship has become more powerful and, seemingly, more tangible, says Myles Shaver, professor of strategic management and entrepreneurship at the University of Minnesota’s Carlson School of Management. “There’s a bigger focus today on entrepreneurial education. Students want to take these classes.”
That path was less obvious when Dixit earned his MBA in 2002. “If I had to label myself, I don’t know if ‘entrepreneur’ was the thing I would have said back then,” Dixit says. “I think I’m an innovator, and you can apply that anywhere.”
The “working in a garage, subsisting on ramen” stories of starting a company tend to get glamorized, but the realities of being a startup founder can take their toll. “There’s the emotional side: I have the feeling that the best possible version of Hot Indian hasn’t yet seen the light of day, and that’s on me. I’ve made some bad decisions over the past eight years, but I still have such belief in the brand and what we’re trying to do,” Dixit says. “Then there’s the practical side of it: I have leases, bank debt, investors, employees. There are always obligations, and you’ve got to do everything in your power to meet those obligations.”
Corporate innovation support eliminates some of the more nerve-racking aspects of starting up. “It allows me to focus on the task at hand,” Dixit says.
But the reward of writing payroll checks is the determination it creates to succeed.
“We’re still figuring out how to do this in a corporate setting as effectively and efficiently as possible,” Dixit says. “In traditional corporate jobs, there’s a playbook for how to build, how to manage, how to grow. Here, we’re building that playbook. All of these accelerators and venture funds, we have to think about the equivalent for corporate entrepreneurship. How prescribed should the playbook be? How do we plug into the food startup world? How do you gain big company resources while gaining empathy for what it means to be an entrepreneur?”
At G-Works, Dixit has the space to explore all of those questions and experiment with the answers.
“We don’t know what perfect looks like here,” Martin says.
For now, G-Works members receive the same sort of compensation package as any other General Mills employee. But everything is up for discussion and disruption, Martin says. “We need to think about incenting the right behavior. We’re not going to do that on Cheerios. But here, the whole model assumes a level of failure that’s pretty high—and now and then, you’re going to hit it out of the park.”
At 3M, accolades come to those who shine, but there’s no monetary award for a successful 15% project, Banovetz says. “My advice to other companies: Be conscious of the pivots that happen, and support the people who choose to pursue new ideas. Innovation is very much a team sport.”
Four Twin Cities-based corporate accelerators with proven results.
Not all of the big ideas come from big companies. More than 75 businesses in the Fortune 100 are now active in corporate venturing, according to Inc. magazine. In the Twin Cities, home to the most Fortune 500 companies per capita of any metro area, several corporations run their own external startup accelerator programs.
Beyond funding, most provide resources and expertise to help small businesses grow. The goal might be acquisition or partnership, but sometimes it’s simply about learning and mentorship. “When you think about a startup, what they need most is access to the market and expertise. Meanwhile, big corporations need access to innovators and solutions that could potentially be disruptive,” says Lawrence Wang, Cargill’s director of digital strategy development. “Our overall belief is we need to transform ourselves and be better at how we innovate internally, but we also know that there are a lot of big problems to be solved in food and ag and our environment, such as food safety, security, sustainability, and transparency. We can’t do it alone. We need a broader ecosystem of innovators to bring these things to life and market.”
Here’s a sampling of corporate accelerators active in the Twin Cities.
Cargill & Ecolab
Purpose: The six-month accelerator program—developed as a partnership between Cargill, Ecolab, and Colorado-based seed accelerator Techstars—aims to identify and encourage disruptive concepts and innovation along the food production chain.
Wanted: Early-stage food system disruptors, particularly digital innovation, robotics, genomics, and artificial intelligence
Alumni: Prepr, Dispatch Goods, Food For All, Canomiks
Purpose: Target Takeoff is geared toward consumer brands. The five-week program runs several times a year, each time focusing on a specific category (wellness, food and beverage, pets, etc.). It provides participating startups with mentorship from subject matter experts inside and outside Target, plus tailored curriculum to help scale into mass retail. In the final week, participants get the chance to pitch their businesses to Target buyers.
Wanted: Established retail companies looking to scale and learn how to get their products into Target retail stores
Alumni: Sienna Naturals, Busy Baby, Mented cosmetics, PlantPaper
Target also has a second accelerator called Forward Founders, an eight-week online program geared to earlier-stage product companies with founders from traditionally underresourced populations.
Allianz Life & Securian Financial
Purpose: Jointly developed by Allianz and Securian with the help of gener8tor, a company that specializes in building economic development programs, this accelerator invests in five insurance technology startups each year, supporting them through a three-month concierge program. Each startup receives a $100,000 cash investment, Twin Cities office space, and access to gener8tor’s global network of mentors and investors.
Wanted: Insurance technology startups
Alumni: Inkit, Trust Stamp, and Rocket Dollar
Purpose: General Mills invests in emerging food and beverage brands and provides access to resources and networks to help with product development, supply chain, marketing, and channel development.
Wanted: Emerging food and beverage brands that have demonstrated success in the market and ability to scale quickly
Alumni: Beyond Meat, No Cow, Good Culture, Kite Hill
“One example is our partnership with Halo Investing, the world’s first independent, multi-issuer technology platform for structured notes [debt obligation]. We initially invested in Halo in 2019 and since then have continued to collaborate with them on things like the distribution of the AllianzIM Buffered Outcome ETFs and their new annuities platform, which launched this spring.”
—Chad Virgin, managing director, Allianz Life Ventures