Small companies have the nimbleness to achieve radical innovations, but they lack scale. On the other end of the spectrum are large companies that have the scale, but face the uncertainty of taking something that is working and trying to do it in a new way.

These represent challenges impeding the development of the kinds of radical breakthroughs needed to address some of the world's biggest challenges, such as climate change and ecosystem degradation.

"What science is telling us at the moment is to make sustainability real, we need big, transformational changes in the way the industrial world economy works," said Marc Gunther, GreenBiz.com senior writer.

Gunther explored on Wednesday how some of the world's largest companies are taking steps to find and nurture small and sometimes little-known start-ups working on radically innovative technologies but lack the funding and the scale needed to move the needle forward.

Business leaders at the GreenBiz Innovation Forum also heard firsthand from a small company that has made radical innovation part of its business model -- by necessity.

"For Method, we're probably the smallest consumer products company out there, with few exceptions," said Adam Lowry, Method co-founder. "So for us, in order to compete in the category, we have to radically innovate because we don't have the scale."

He pointed to Method's concentrated laundry detergent that is eight times more concentrated than conventional versions, uses 75 percent less packaging, and boasts a 35 percent smaller carbon footprint. It is the second iteration of Method's 3x laundry detergent, which the company discontinued even though it represented a significant portion of its business.

"As a smaller company, we have to do that. We don't have a choice," Lowry said. "And b), it's easy for us to do. Let's face it: We don't have Wall Street breathing down our necks."

Method is a $100 million business with nine people working full time on research and development. In comparison, Procter and Gamble has 9,000 working in global R&D. Unilever has 15 global brands, each with revenue greater than $1 billion.
The sheer size makes it difficult for large market leaders to launch new brands, said panelist Phil Giesler, director of innovation for Unilever Corporate Ventures. The company has over the years tried to launch new products and services, such as barber shops, but few have succeeded.

"The reason they didn't work wasn't because they were bad ideas," Giesler said. "They were all good ideas, and in some way or another they were all taken up in some form. But we realized we just didn't have either the skills inside or the attentiveness to build these businesses and give them the focus and requirements, in terms of capital, and resources."

Unilever realized a long time ago that smaller companies were better suited to test the boundaries of innovation.

"When you're looking at radical new technologies which are coming very much from left field ... you can't expect corporates to be able to cover all those bases itself," Giesler said. "It's a very inefficient way of working. So the venture community really helps because it enables these companies to come out of the woodwork much earlier.

Startup Novomer illustrates this phenomenon, according to panelist Andrew Williamson of Physic Ventures, a spin-off of Unilever Corporate Ventures that works in partnership with two corporations: PepsiCo and Unilever.

Unilever, which has a long-term goal of reducing the carbon footprint of its packaging, sent its R&D scientists to meet with Physic Ventures. The partners jointly scouted a number of different ways to reduce the carbon impact of packaging.
"We looked at biodegradable packaging, recyclable materials, all kinds of different technologies," Williamson said. "We developed an investment thesis on the most promising packaging technologies, and have scouted for investment opportunities ever since."

A few years ago, Physic Ventures invested in Novomer, the Massachusetts-based company that invented a catalyst for converting carbon dioxide into a range of plastics, polymers and chemicals.

"It was early stage, not something that would have hit the radar of the packaging technology folks at Unilever probably for five years," Williamson said. "But because we had invested, we were able to give them kind of an early look at the technology and explore a partnership earlier."

Unilever now assumes a different role with Novomer: Customer.