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

by Larry Huston and Nabil SakkabHarvard Business ReviewMarch 2006

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

Push the Culture No amount of idea hunting on the outside will

pay off if, the organization isn’t behind the program

Nurture the internal culture while developing systems for making connection

Involves not only opening the company’s floodgates to ideas from the outside but actively promotes internal idea exchanges

Find out whether work is done elsewhere in the company See if outside source has a solution If these two options yield nothing, then invent from

scratch

Push the Culture -- Rewards No matter where ideas come (inside or

outside) rewards are the same In fact, reward systems actually favor

innovations from outside the company, since these often move more quickly from concept to market

Two broad goals for rewards structure: Make sure best ideas rise to surface Exert steady pressure on culture, to shift

mind-sets away from resistance from “not invented here”

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

Adapt or Die Must be driven by top leaders in organization

Destined to fail if it is seen as solely an R&D strategy or isolated in a corner of organization

Maki it an explicit strategy and priority to capture a certain amount of innovation externally