Open Innovation with Procter & Gamble
The TopDog USA tour continues …
Today we were allowed into the once ‘super-secretive’ headquarters of Procter & Gamble to learn about their famous and much lauded Connect & Develop programme.
So what did we learn? They had a major crisis at the start of the millennium – the business wasn’t growing, innovation success rate was down and, the most painful one for the employees, (many of whom are ‘lifers’ and are heavily invested in the company) was the stock price plummeted. (“I said to my wife, ‘Honey, I just worked the whole of the 90s for nothing!” shared one of our presenters while admitting ”I’m still angry about it.”) Suffice to say that CEO lasted the shortest time in the office.
The new CEO, AG Lafley set the target of growing the business by the equivalent of “2 Starbucks” ($5bn) each year and realized that the business needed to change dramatically. They threw of the cloak of secrecy and became ‘Open for Business’ with customers, competitors and pretty much anyone who they could do a deal with. They set up the connect and develop team to make money from the 20-25,000 patents they had and weren’t using, they started to post problems / innovation challenges publicly on websites and other medium (“we have 9000 scientists in P&G. Now we have access to over 2 million globally to solve our challenges), and they formed a Futureworks division to work on new spaces, and business model innovation.
All of which has been bloody successful for them.
What are some of the secrets of success?
- AG Lafley set them a goal that was focused on behaviour change not the end result – “over 50% of our initiatives need to involve at least 1 significant external partner within 5 years.” This was so different to how they were working previously (“The kremlin on the Ohio” was their internal nickname).
- Early on AG (as we now all like to call him), stepped in to support the iconic action of doing a deal with Chlorox, (“one of our most aggressive competitors”) to show that this was for real.
- They created new structures that augmented and dovetailed with what was already working in the business units and not disrupting business as usual.
- The goals of the connect and develop team are the same as those of the business units – they are entirely aligned.
- They created ‘poster children’ of early successes and then went and ‘sold them internally’ to get people on board.
- They were really clear about what P&G brought to any deal and what weren’t core strengths (“only do what only you can do”)
- Capture your learning – you only fail if you fail to learn.
Browse Timeline
Comments ( 1 Comment )
Christine Flanagan added these pithy words on Nov 18 08 at 3:53 pmHi Gordie - and great post. I had the great opportunity to spend some time with the father of P&G’s connect + develop program Larry Huston. Although he’s no longer with the company, you might be interested in the article I wrote for our community.
Basically, Huston likens the program to opening up your borders to free trade : P&G employs 7,500 people in its R&D division, but there are 1.5 million scientists throughout the world with expertise in P&G’s areas of interest. “It doesn’t take a genius to figure out that if you can engage the brains of your 7,500, plus the key ones from that 1.5 million, you can build better products,” he told me.
Huston and his team were really given a monumental task in 2001 when CEO A.G. Lafley publicly proclaimed that P&G would source 50% of the company’s innovation externally. It represented a major challenge for an organization that historically invented 90% of its innovations internally.
Enjoy the piece - happy to riff more if you’re interested. http://tinyurl.com/5j2hxx
Cheers, Chris