Open Innovation Solution to a Cotton Shirts Wrinkling Problem
A semiconductor expert studying polymers supplies a technology that P&G needed to develop a product to keep cotton shirts wrinkle-free.
Procter and Gamble
Procter and Gamble’s decision to give its innovation model a face-lift and adopt open innovation strategies in the early part of the last decade was a daring move by the consumer products giant. It had to do something as it was being squeezed by competitors, sales were uninspiring and stock prices were falling.
P&G’s Open Innovation Risk
The move was spearheaded by the new CEO A. G. Lafley but uncertainties loomed large. The company already employed some of the world’s most intelligent and sought after scientists, and therefore some internal figures wondered if innovative solutions could really be found outside the group. There was also the risk that company scientists might revolt against having to champion ideas not conceived by themselves.
Lafley and his management colleagues took all this onboard and believed the risks were acceptable when they created ‘Connect and Develop’. Through this model the company looks externally for solutions to its needs and any technologies that will improve products and services, and contribute to the creation of new product lines.
Procter and Gamble now reaches out to inventors, entrepreneurs, universities, suppliers and competitors. It also works with online open innovation brokers to find solutions to some of its technical problems. The desire was never to replace internal R&D capabilities, but to put them to better use.
Open Innovation Success
One notable Procter and Gamble problem that was solved by an outside scientist involved a product the company wanted to develop to keep cotton shirts wrinkle-free. P&G could not come with an anti-wrinkle method on its own and so approached a knowledge broker who posted a few details of the dilemma to its network of solvers.
From the volume of submissions received a solution was found, though it came from an unusual place, not one that P&G had expected. The answer was sent in from the laboratory of a professor studying polymers related to the semiconductor industry. His idea when applied to garments neatly solved P&G’s wrinkle problem.
This open innovation approach is a marked departure from the company’s previous innovation model where it only relied on internal resources and a small trusted network of suppliers to create or improve products. Writing in the Harvard Business Review two P&G executives explained why the company opted for open innovation and how it could be of benefit.
“As we studied outside sources of innovation, we estimated that for every P&G researcher there were 200 scientists or engineers elsewhere in the world who were just as good—a total of perhaps 1.5 million people whose talents we could potentially use. But tapping into the creative thinking of inventors and others on the outside would require massive operational changes … And we needed to change how we defined, and perceived, our R&D organization—from 7,500 people inside to 7,500 plus 1.5 million outside, with a permeable boundary between them.”
To date more than 1,000 active agreements have been reached via ‘Connect and Develop’ and as of 2010 more than 50 percent of Procter and Gamble’s product initiatives involve collaborations with external innovators.
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