In the dynamic landscape of business, companies often adopt various strategies to foster innovation and drive growth. These strategies can be broadly categorized into two types: hunting and farming. While "hunting" involves seeking external opportunities and quickly integrating them into the company, "farming" refers to cultivating innovation internally over time.
Hunting: The Pursuit of External Innovation
Hunting is about identifying and acquiring external innovations, companies, or talents that align with the organization's strategic goals. This approach is more aggressive and opportunistic, akin to a predator seeking its prey.
Acquisitions are the quintessential hunting strategy. By acquiring other companies, businesses can instantly gain new technologies, products, market share, or expertise. This method is direct and usually requires significant investment, but it allows companies to rapidly enhance their capabilities and competitive position.
Example: Unilever's Acquisition of Dollar Shave Club
Unilever, a multinational consumer goods company, is not traditionally seen as a technology firm. However, it embraced the hunting approach by acquiring Dollar Shave Club for $1 billion in 2016. This move allowed Unilever to instantly gain a significant foothold in the online retail and personal grooming market, showcasing how traditional companies can employ hunting strategies to innovate and expand their market presence.
Farming: Nurturing Internal Innovation
In contrast to hunting, farming is about nurturing and growing innovation within the organization. This approach is more about creating a conducive environment for new ideas to sprout and mature over time.
Innovation Teams, Incubators, and Accelerators are typical farming tools. These initiatives focus on internal development, providing resources and support to encourage innovative thinking and experimentation within the company.
Partnerships can also be considered a farming strategy when they are used to foster long-term collaboration and mutual growth, rather than immediate acquisition or merger.
Example: Procter & Gamble’s Connect + Develop Program
Procter & Gamble (P&G), another consumer goods giant, has successfully implemented a farming strategy through its Connect + Develop program. Instead of solely relying on internal capabilities, P&G collaborates with external innovators to co-develop new products. This approach has led to successful innovations and reinforces the farming model where internal and external resources are cultivated to yield new products and solutions.
Balancing Hunting and Farming
The most successful companies often balance both hunting and farming strategies to sustain growth and innovation. Hunting allows companies to quickly leapfrog to new capabilities or markets, while farming fosters a steady stream of innovations that can provide long-term competitive advantages.
Example: Nestlé’s Innovation Approach
Nestlé, the world's largest food and beverage company, employs both strategies. It has made strategic acquisitions, like buying Atrium Innovations to expand its presence in the health and wellness sector, demonstrating the hunting approach. Simultaneously, Nestlé operates Nestlé Research, a robust R&D infrastructure that exemplifies the farming approach, cultivating innovative products and sustainable practices within the company.
Innovation in business, much like in nature, requires a balance of strategies. Hunting and farming represent two sides of the innovation coin, each with its unique strengths and applications. Companies that skillfully integrate both approaches are often those that lead their industries and shape the future. Whether through the swift acquisition of a promising startup or the patient nurturing of internal projects, the goal remains the same: to innovate, grow, and thrive in an ever-changing business landscape.