Analysis

and new product ideas. In this instance with Otto’s Baby Food, their interaction with customers via social media is considered an informal but powerful channel.

Further activities in this channel can be seen through the support by testimonials from parents who are currently subscribers to their delivery service: real parents and even some celebrities who have helped to provide more weightage to the product. Consider, for instance, the transformation of an actor that first played a role as a resource into part of the knowledge base for Otto’s Baby Food through these activity links. When Lönne received funding from SFIN to conduct a worldwide market scan, SFIN viewed them as being aligned with their goal to potentially influence the retail landscape in Sweden.

Although SFIN acted as a resource (financial) at this time, it subsequently transformed into a knowledge base to which Otto’s Baby Food turns for understanding the Swedish retail market through the advice and contacts provided by Livsmedelakademin.

One can also view how the concept of Otto’s Baby Food can be seen as a repackaging of how milk was delivered by milkmen in earlier times but in a renewed urban concept, providing an urban product to these parents. Parents give high priority to their kids and the direct contact to them in this case provided Otto’s Baby Food with very good feedback, for example when they were choosing the design of the packaging. The parents have been an important group for Otto’s Baby Food as the feedback channel becomes more direct. Otto’s Baby Food has employed social media as one of the tools to ask their clients for feedback or testimonials. These have proven to have quite a big influence for the company as a marketing channel, as the buzz created by celebrity testimonials has been very positive. These actor bonds between the customer and producer can be seen as a new type of social media bonding that may not have been studied much in the area of network studies. In addition, due to the presentation of the product as one that is personal, communication manners are also updated in a personal manner through Twitter, Facebook, Instagram, etc.

We want to have new interesting products on to the market and tried by the consumers and see if they sell and behind that is a kind of basic thinking that open innovation combined with transparency in the whole value added chain will increase the innovative flow. And that means we need much more of interactivity and we need much more of consumer influx in decision making on what to do. And here was a guy who actually got consumers…he started from the consumers and that impressed us on a conceptual level. Somebody who actually listens to the consumers! That’s important!

Magnus Lagnevik, personal communication, 2014

4.3.5.2 Resource Ties

As pointed out in previous literature, how knowledge has been distributed has been neglected due to SMEs in low-tech industries interacting in an informal manner to exchange knowledge, which can be hard to captured. In this case, the interaction with external actors in order to access external knowledge sources, such as via customers (through social media, Facebook, Blogs, etc.), has meant the building up of knowledge bases to aid in developing innovation strategies for SMEs. First, the main management team of actors who have amassed experience from working at their own industries or companies comes together as a resource constellation during the innovation process. This creates a distributed knowledge base when interaction within the network of actors happens. For example, when sourcing for a way to manufacture the ecological gruel, the management team at BFR utilized the knowledge gained from experiences with Oatley, an oat-based functional beverage company founded by Rikard Öste, to find contract packaging companies that would be willing to produce a small consignment of products in the beginning. The knowledge that is utilized at the network level activates the web of actors and resource constellation to create a collective knowledge base that can be drawn from.

Otto’s Baby Food integrated and reconfigured resources in order to carve out a new category of baby food in the Swedish retail market. This was a sequence of episodes that cumulated to form the critical event wherein customers’ demand actually spurred retailers to approach Otto’s Baby Food so that they could carry their products. This is something that was, according to Pär Lundqvist, unheard of in his years of working with Swedish retailers. This view was echoed when Magnus Lagnevik also found the development where the big retailers who were normally resistant to being offered new product types actually took the first step in approaching Otto’s Baby Food so that they

could get a share of this fresh and ecological baby gruel market. Otto’s Baby Food’s access to knowledge and opportunities has allowed them to adapt these unexpected turns of events to their advantage. They were approached first by specialty stores, then subsequently by large traditional retailers who stepped out of their comfort zone. This happened for both ICA and also Coop (both currently have stores carrying Otto’s Baby Food products in Malmö, Lund, Stockholm, Uppsala, etc.). In this sense, they have not only carved out a new category of baby food, but also a new way in which retailer-suppliers work in a traditional Swedish retail landscape.

Proviva Baby was designed to be baby gruel with an added probiotic for those aged six months and above. One of the gurus in the baby doctor hierarchy who was sponsored by Semper reacted because they were not in support of giving bacteria to kids. They did not want to take on that fight at that point of time, as Proviva was just gaining more impact. Semper has become like a “legislator” in the baby food market. In hindsight, they may also have underestimated the influence of these stakeholders, who are often already associated with recommendation of other more established brands of baby food. Kenneth Andersson, the R&D manager of Skånemejerier, then knew about Lönne, who had worked at the marketing department as product manager for Proviva, and he had also followed the progress with Otto’s Baby Food. He recalled that the Proviva Baby project was a gruel product in a ready-to-eat package:

At that time, we had a project called Proviva Baby in 2001. It was never launched despite after having made all the studies both clinical and security.

Our challenge, our purpose was to prevent allergies and promote a new defence, which is a big problem in the Western world especially. One person made his PhD thesis just on this. Before the launch, we called the leading paediatricians, and they came down to them and we asked their opinions on this and all we have done. "You are going to change the whole industry for baby food in Sweden." Do more research they say, but they were heavily connected to the baby food companies. But we did not dare to launch it at the risk of jeopardizing the brand name of Proviva (it was worth a lot of money and increasing in sales)—so it was not launched.

Mats Lönne, personal communication, November 2013 The whole incident enabled the Dream Team to be very much aware of how high-profile the baby food category was and how the media could be quite sensitive to any developments in this area. This made them even more cautious

about having everything checked thoroughly. They have had the bad experience of the supplier not being totally upfront on what the ingredients were. They subsequently began screening the ingredients even more and took more precautions than the rules required, and they kept themselves updated on the legislation aspect, especially when it came to baby food. This cautionary awareness of the available resource constraints or competitors allowed them to be in a better position to approach the market launch of the product.

Another important resource to consider is the experience of the Dream Team themselves in relation to the adjustment of business strategies. For example, while BFR started out with the subscription model for the baby gruel, this method of operation sparked the interest of the retailers as the consumers were asking for the products to be sold at normal retail outlets. Due to the combined experience of the Dream Team, including Rikard Öste, Pär Lundqvist, Lennart Alftrén, Rolf Bjerndell, and Mats Lönne, they were more in tune with how the market was reacting and adjusted their business model accordingly. Currently, consumers are able to indicate their interest to purchase Otto’s product at a retail outlet near them on Otto’s social media page. With this “demand,” Otto Baby Food is then able to understand and advise the retailers on the stocking of their products at their retail stores.

4.3.5.3 Actor Bonds

When this team of actors came together in 2011, they pooled together their experience and learned as a team to avoid similar pitfalls when developing the product for Otto’s Baby Food. Both events also made them realize the value of establishing direct contact with the consumers and thus they did not want to sell the product in the normal, central way, instead going the other way round to the consumers by distributing it directly. Their combined experience has informed them as to the power of the retailers, the influence of expert opinions, and major competitors, and in this attempt to enter the baby food market, they did it in a different way. It was a successful retail concept to the extent that it had prompted the large retailers to knock on their doors to ask to be able to sell it.

The web of actors (consisting of Lönne, Bjerndell, Öste, Alftrén, and Lundqvist) bore the experience with the powdered baby gruel and Proviva Baby in mind. Lönne prepared thoroughly before the product development process by undertaking a worldwide scan of the baby food market and drawing references from other types of studies for the business model as a whole (for example, using studies conducted by SFIN and the concept of Grocery Bags

Deliveries—Matkasse). In addition, Björn Öste also provided knowledge about contract packing and both he and Bjerndell utilized their network contacts to secure manufacturing possibilities for the production of the ecological fresh baby gruel. By riding on the proven success of Oatly, which Rikard Öste founded, they reconfigured resources within the firm to provide a drink that met the criteria of what their customers wanted. This shared experienced implies that the learning that had occurred from this “failed” event ensured that these basic grounds were covered during the product development phase itself. Even before that, the critical event where their experience with producing dried baby gruel for the supermarket chain provided critical actor bonds that endured through the years, even while they were working for other types of companies. All this would not have been possible if not for the already established ties between each dyad based on previous projects. For instance the two actors from the current management team tried to execute the project Proviva Baby in the period 1998-2000. This dyadic relationship between Lönne and Bjerndell was built during Lönne’s time with Skånemejerier and during the Proviva Baby project. Although the project did not become commercialized, the actor bonds established then were key to the establishment of Otto’s Baby Food. Similarly, the ICA private-label powdered baby gruel project formed bonds between actors from Aventure AB (Rikard Öste) and Potato Specialists (Alftrén and Lundqvist).

Lönne, the main informant, had referred to the current management team as having both the industry experience (both skills and knowledge) and the right attitude when they were developing the product and strategy for the company.

In this early stage of Otto’s Baby Food’s innovation journey, the willingness to work together and having access to knowledge from different sources was also observed when the actors reaffirmed each other as being the “dream team.”

When actors interact together, bonds are established wherein opinions and viewpoints are shared. At that point, the actors themselves are considered to be a form of resource with their unique experience and skills. These dual roles that the actors play as nodes within the web of actors extends beyond that which is related to resources, especially when they engage in activities to coordinate the processes of production, operation, and management with other actors (both current, new, or potential).

The changing society with constantly “upgraded” knowledge about baby food meant that there was a cyclical interaction process that was particular to that of the consumer and food manufacturer. This implies that the interaction is no longer purely based on the product, but on a combination of product and services. In such cyclical interaction, early users are seen as playing an

important role in the success of the innovation process. In this instance, it can be seen that in this innovation process of fresh, organic baby food, the creativity of the customers was being harnessed for the support process of Otto’s Baby Food.

These two critical events as shown in Figure 15 helped pave the initial phase of the innovation journey of Otto’s Baby Food. For instance, the events, including the encounter between Inger Björk and Rolf Bjerndell where they discussed baby food in the market, motivated and allowed the strengthening of actor bonds through the development of the project but were even more important when the project failed. The group (comprising Rikard Öste, Alftrén, and Lundqvist) bore the lesson of ICA private brand powdered baby gruel in mind and this enabled them to re-approach the market in a more intuitive way. This was seen, for example, in undertaking a worldwide scan of the baby food market and drawing references from other types of studies for the business model as a whole. They also approached it with a new way of branding by establishing direct contact and transparency all the way from delivery back to the source. It was an incredibly important lesson about how the food retailers worked, especially when it came to protecting their sources of income.

4.3.5.4 Continuing the journey

Provided market intelligence and as an influence group on social media.

Provided advice and support. Also provide network influence and access to production contacts.

Provided advice and financial support. Also provided access to scientific knowledge and product development.

Provided business advice and access to logistics arrangement

Provided advice for product development and formation of business strategy and provided financial investment.

Provided commercialization advice and aided in product development.

Figure 15

BFR ARA network

Critical Event 1 The Dream Team Critical Event 2 Maintaining the Freshness

When this team of actors came together in 2011, they pooled together their establishing direct contact with the consumers and thus they did not want to sell the product the normal, central way, instead going the other way round to the consumers by distributing it directly. Their combined experience has informed them as to the power of the retailers, the influence of expert opinions, and major competitors, and so in this attempt to enter the baby food market, they did it in a different way. It was a successful retail concept to the extent that it had prompted the large retailers to knock on their doors to ask to be able to sell it.

It was their failures that provided the incentive and opportunity to learn.

This is seen quite clearly even as the knowledge about developing baby food products had emerged from two separate critical events. Similar threads can be seen from both the “failed” projects, which was completed or near completion but was later pulled out because of the “objection” of other major players in the market.

Key actors are also deemed to be important in the innovation of microenterprises. These actors have been described as “spiders in the web” and play critical role(s) in the innovation process. While microenterprises have been described as lacking in resources and hence are on a constant quest for external resources, the empirical data have indicated that by including key actors in the board or as part of the microenterprise’s network, access to such resources are

“inherited.” The selection of such key actors is an important factor to the success of microenterprises’ innovation journey.

Mats Lönne, the main informant, had referred to the current management team as having both the industry experience (both skills and knowledge) and the right attitude when they were developing the product and strategy for the company. In this early stage of Otto’s Baby Food’s innovation journey, the willingness to work together and having access to knowledge from different sources was also observed when the actors reaffirmed each other as being the

“dream team.” The critical events allowed the strengthening of actor bonds through the development of the project, but even more importantly through the project’s failure.

The retail landscape has been quite rigid and Bjerndell felt that they would run into problems if they were not open to new ways of doing things. The thing to start with is that Otto is an urban product targeted at customers who are concerned parents with financial resources, good purchasing power, and insight into nutrition for kids. Those were the demographics that they had chosen to focus on, and thus the Greater Goteborg area, Stockholm area and the western part of Skåne were chosen because these areas have a good

concentration of target families with small children. There has been strong demand from other areas of Sweden that want to buy the product. This has in part been built up by one of the marketing techniques of potential customer being able to put a store on a wish list for Otto’s Baby Food to distribute their products there. Consumers are now more in control of the information they choose to receive or find out. And Bjerndell’s thought is that products should be aimed at more prevention. Probiotics, in Bjenrdell’s view, are one of the key ingredients in the new nutrition trend. Now consumers need to have good stuff and to enhance it further. Baby food companies such as Semper have reacted to the Otto’s Baby Food products by examining their ingredients in detail. The conclusion has been that the product itself has nothing that they can find fault on. The way in which they have approached the market is by establishing direct contact with their customers through direct delivery. This direct interaction with customers also acts as a form of knowledge bases. Their relation with the customers had started from a company-customer interaction to evolve into one of collaborating to develop the product, marketing channel, and positioning as they utilize the feedback from their customers to improving their products further.

This form of “discontinuous innovation” can be viewed from another perspective: The experiences are connected to present events and actors over time, and there is no discontinuity in that way. They are able to connect, and, in some cases, it was good that the management team’s past experience with trying to introduce new baby food products to the market enabled them to apply a combination of old and new knowledge bases to the present approach to the baby food market.

This case also aligns with what Storbacka and Nenonen (2015) suggested on social networks as an important strategy when establishing a firm, in that relations can be used to mobilize complementary resources, garner support, and build business relations. These relationships can act as bridges to connect to other resource nodes in the network.