Page 87 - Grow from Within Mastering Corporate Entrepreneurship and Innovation

74 grow from within

Tassimo Hot Beverage System—a platform innovation—“brings
coffee house beverages home,” according to Kraft’s 2005 press
release announcing it. Based on bar codes on the beverage car-
tridges, “T-DISCS,” that are inserted into the brewing machine,
Tassimo automates all aspects of the beverage preparation
process, from cappuccinos to teas. Kraft has also pursued inno-
vation along the organization vector to support Tassimo, part-
nering with Italy’s Saeco for production and Germany’s Braun
for distribution and service. Tassimo is an early example of
Kraft’s aggressive R&D program integrating information tech-
nologies such as bar coding, RFID (radio-frequency identifica-
tion), and Internet-enabled products into the kitchen, thus
positioning Kraft as a leader in the evolving home experience.
The Tassimo case also illustrates that business design along
each of the vectors of the business system presents the corpo-
rate innovator with a make-or-buy decision. Should the com-
pany modify its capabilities along a particular vector, or should
it partner with some entity that is able to bring that capability
to the new business? In some cases, the answer can be obvious,
like Kraft’s decision to outsource manufacturing, while for
other business system options, it might not be so clear. Kraft’s
relationships with its traditional distribution channels were
established and strong; however, it had little presence in loca-
tions such as electronics retailers like Best Buy or department
stores such as Macy’s. The company had the option of build-
ing these relationships on its own or relying on partners with
established channels for consumer durables.
Unfortunately for Kraft, Tassimo’s success was limited by a
number of factors, including an insufficient recognition that
Tassimo was not just a new product but a comprehensive sys-
tem that needed to be treated differently from the firm’s core
products. Although Kraft and its partners, Saeco and Braun,
developed a complete solution, the rollout of the complex com-