Connect and DevelopInside P&G’s New Model for Innovation

Aashik Ambawat (6)Siddhartha Lodha (32)Rohit Pereira (40)Suresh Bhat (110)Akshita Bhatia (4)Upama Saha (41)Joshi M (22)Malvik Majithia (IB 24)

Consider P&G launched Pringles potato crisps in

2004 with pictures and words on each crisp. Previously, it would have taken 2 years to market and considerable risk and investment internally.

New approach to innovation, accelerated Pringle Prints to launch in less than a year and a fraction of cost.

Make snacks more novel and fun, print images on the Pringles.

The PastResearch &

Development

Bulk of investment just on developing a workable process

Internal team would have hooked up with an ink-jet company that could devise the process

Then we would have entered into complex negotiations over the rights to use it.

The Present & FutureConnect & Develop

Created a technology brief that defined the problems we needed to solve

Circulated it throughout our global networks of individuals and institutions

Through European network, small bakery in Italy was discovered that hade developed similar technique for cakes and cookies

Adapted solution to our needs

Business achieved double-digit growth over the past 2 years (2004-2005)

Where to Play

Top ten consumer needs Inquiry led to top-ten-needs list for each business and one for the

company overall i.e. company reduce wrinkles, improve skin texture and tone

Needs lists are then developed into science problems to be solved, often spelled out in technology briefs

Adjacencies (New products of concepts that help us take advantage of existing brand equity) i.e. expanded Crest brand beyond toothpaste to include whitening

strips, power toothbrushes, and flosses

Technology game boards (evaluate how technology acquisition moves in one area might affect products in other categories) Like a multi-level game of chess Which of our key technologies do we want to strengthen? Which

technologies do we want to acquire to help us better compete with rivals? Of those that we already own, which do we want to license, sell, or co-develop further?

Misconception that Connect & Develop is only about outsourcing innovation to low cost providers…Connect and develop, by contrast, is about finding good ideas and bringing them in to enhance and capitalize on internal capabilities. (most successful examples are Olay Regenerist, Swiffer Dusters, and the Crest SpinBrush.

How to Network Proprietary networks

Technology entrepreneurs (network of senior P&G people known as 70 technology entrepreneurs. They crate and actively promote external connections to decision makers in P&G’s business units)

Suppliers (top 15 suppliers have an estimated combined R&D staff of 50,000. 30% increase in innovation projects jointly staffed with P&G and suppliers’ researchers)

Open Networks NineSigma (connect companies with scientific/technical

problems with companies, universities, government and private labs, and consultants that can develop solutions)

InnoCentive (similar to NineSigma brokers solutions to more narrowly defined scientific problems)

YourEncore (brings people with deep experience and new ways to thinking from other organizations and industries into their own)

Yet2.com (an online marketplace for intellectual property exchange. Brokers technology transfers both in and out of companies, universities, and government labs)

When to Engage Technology Entrepreneurs conduct initial screening Logs product into online “eureka catalog”

What is it? How does it meet our business needs? Are its patents available? What are its current sales?

Concurrently, Technology Entrepreneurs may actively promote the product to specific managers

These managers will assess its alignment with the goals of the business and subject it to a battery of practical questions

If the item continues to look promising, it may be tested in consumer panels and if response is positive, moved into product development portfolio

Then over to external business development (EBD) group for negotiating, licensing, collaboration, or other deal structures

Words of WarningThree core requirements for a successful connect-

and-developStrategy:

1) Never assume that “ready to go” ideas found outside the company are truly ready to go

2) Don’t underestimate the internal resources required

3) Never launch without a mandate from the CEO

Push the culture Radical change in internal culture

Encourage employees to accept “outside ideas” Product development

- Internal scanning

- Look outside

- Invent Reward System (speed matters)

- Tap best ideas

- Shift mind-sets

Adapt or Die"Connect + Develop has helped deliver some of P&G’s "Connect + Develop has helped deliver some of P&G’s leading innovations, and is critical in helping us deliver on leading innovations, and is critical in helping us deliver on our renewed growth strategy moving forward. Connect + our renewed growth strategy moving forward. Connect + Develop has proven to be a winning strategy, with still more Develop has proven to be a winning strategy, with still more room for growth."room for growth."

Bruce BrownChief Technology Officer

"We want Connect + Develop to help deliver a "We want Connect + Develop to help deliver a dozen more Swiffer Dusters – really breakthrough dozen more Swiffer Dusters – really breakthrough

innovations that change the marketplace, grow a category, innovations that change the marketplace, grow a category, and have consumers saying: 'I need this product'.“and have consumers saying: 'I need this product'.“

Laura BeckerGeneral Manager Global Business Development and C+D

Learnings from open innovation

Open innovation is kick-started by innovations in networking

Complementary P&G Innovation Strategies

Dangers of Open Innovation “Lean innovation” might become fragile

innovation and lead to a progressive loss of internal capabilities to develop their own innovations.

Managing the intellectual property and its negotiations

High complexity model Identifying the “Serial Innovators” Subjective evaluations

Open Innovation elsewhere Audi Production Award GE Ecomagination Challenge Nokia IdeasProject Open Xerox Dell IdeaStorm Vodafone BetaVine My Starbucks Idea Heineken Ideas Brewery