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New Trend in Innovation – “Open Innovation”

by on January 10, 2010

Procter & Gamble Co. has transformed its traditional in-house research and development process into an open-source innovation strategy it calls “connect and develop.” Embrace the collective brains of the world. Make it a goal that 50% of the company’s new products come from outside P&G’s labs. Tap networks of inventors, scientists, and suppliers for new products that can be developed in-house.

The radically different approach couldn’t be shoehorned into managers’ existing responsibilities. Rather, P&G had to tear apart and restitch much of its research organization. It created new job classifications, such as 70 worldwide “technology entrepreneurs,” or TEs, who act as scouts, looking for the latest breakthroughs from places such as university labs. TEs also develop “technology game boards” that map out where technology opportunities lie and help P&Gers get inside the minds of its competitors.

To spearhead the connect-and-develop efforts, CEO Larry Huston took on the newly created role of vice-president for innovation and knowledge. Each business unit, from household care to family health, added a manager responsible for driving cultural change around the new model. The managers communicate directly with Huston, who also oversees the technology entrepreneurs and managers running the external innovation networks. “You want to have a coherent strategy across the organization,” says Huston. “The ideas tend to be bigger when you have someone sitting at the center looking at the company’s growth goals.”

Reference:
http://www.businessweek.com/magazine/content/06_17/b3981401.htm
http://www.pgisrael.co.il/webfm_send/51

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3 Comments
  1. I went through this website and actually got enlightened by this brand new model of organization. The essence of this organization is “open”, which seems simple on the surface. However, this open frame is innovative and productive.
    C&D project provides a platform to collect innovative ideas, to integrate resources which used to be globally distributed. This project can make the most of the resources outside the firm itself, which actually saves its own cost. What is more, this platform provides great chances to individual as well as small firms. In a word, this project, if properly handled, can integrate the innovative resources which used to be distributed.

  2. What I see as the most important factor here is the fact that the management is able to efficiently identify the ideas which already have some degree of success; something which is a working product, prototype or technology and also has evidence of consumer interest. And then by providing all the internal resources required, including a full-time senior executive for any connect-develop initiative, they successfully establish a new product in the market. The entire process from R&D to getting a product into stores takes them less than year or so. This beats the competition!

  3. I had a chance to look over Proctor and Gambles Connect and Development site, and I was not impressed with it’s commitment to open innovation. If you are looking for a more level playing field take a look at the website for <a href="http://www.innocentive.com/&quot; title="Innocentive". You can participate as either a seeker of opportunities or post open challenge innovation competitions for their network of collaborators to tackle. The scope is much larger that Proctor and Gamble in that innovation challenges range from a multitude of corporate industries to government and non-profit organizations.

    -Paul

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