An Example of Open Innovation Success with Procter & Gamble

Published May-22-17

Breakthrough:
Procter and Gamble's development of a new lip balm through an open innovation partnership.

Company:
Procter & Gamble, United States

The Story:

Open innovation works. Conceptually, it has always been a nifty concept, albeit an abstract one for some organizations. However, claims about its many benefits are backed up by several academic studies. For example, a 2014 study ('Managing Open Innovation Projects with Science-Based and Market-Based Partners') that appeared in the journal Research Policy found that 489 projects inside a European manufacturer that involved open innovation achieved greater financial return than those that did not. And according to surveys by Sabine Brunswicker and Henry Chesbrough in 2014 and 2015, companies that used open innovation were getting better innovation results.

Connect and Develop

To capitalize on the paradigm and leverage external smarts, Procter & Gamble developed Connect and Develop, which has been responsible for numerous open innovation success stories. One such example was P&G's partnering with OraLabs to produce a new lip balm called Covergirl at a time when this market was suddenly exploding.

P&G wanted to develop this new product quickly, which would not have been possible if it had gone down the lengthy internal research and development route. And so through Connect and Develop it announced its needs openly to attract partners with solutions.

Going Public with Needs, Wants and Problems

Being open about needs and problems may seem like a daunting option, especially as the competition is probably watching and will see what you are working on. But the potential benefits are huge which can dwarf any risks. The principle advantage is that it allows others to come forward and propose innovative and customized solutions for you, which is what happened with Covergirl.

When this kind of innovation works best, you receive solutions you hadn’t thought of and forge connections with others you may not otherwise have come into contact with. This can result in a new or improved products or services in speeded-up time frames and lead to long-lasting mutually beneficial relationships.

Innovations and solutions to problems don't have to reside within a company's own four walls. They can come from anywhere. More companies are realizing this and seeing the limitations of the 'invent it ourselves model' to build sustainable growth.

Open Innovation Collaborations

Through a licensing partnership with OraLabs, Procter & Gamble market a number of different products, including Breath Mist, a fresh breath vaporizer and Scope Minibrush, an on-the-go toothbrush that doesn't require water.

The multinational's embracing of open innovation continues apace with more than 2,000 successful agreements with partners all over the world. This is a key plank of its strategy to deliver year-on year growth.

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