Application of Open Innovation in a Collaborative Supply Chain


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Application of Open Innovation in a Collaborative Supply Chain

  1. 1. Application of OpenApplication of Open Innovation in a CollaborativeInnovation in a Collaborative Supply ChainSupply Chain Packaging That Sells! 2009 Conference Jason Husk Group Manager, Open Innovation Networks The Clorox Company October 22, 2009
  2. 2. OverviewOverview This is notThis is not WHYWHY OIOI, but, but HOW OIHOW OI What are the key framing questions?What are the key framing questions? What are the mental models I need?What are the mental models I need? What are the work processes to supportWhat are the work processes to support our move to Open Innovation?our move to Open Innovation? How does this work in the supply chain?How does this work in the supply chain?
  3. 3. CloroxClorox’’s Decision to Pursues Decision to Pursue Open InnovationOpen Innovation Clorox: Founded in 1913Clorox: Founded in 1913 95 year history: leading brands in mid95 year history: leading brands in mid--size categoriessize categories $5B in sales, 8000+ employees$5B in sales, 8000+ employees 20 yrs acquisition20 yrs acquisition--driven growth &driven growth & ““fast followerfast follower”” strategystrategy Clorox Strategy Change in 2000:Clorox Strategy Change in 2000: Lead in InnovationLead in Innovation Enormous competitors; canEnormous competitors; can’’t spend way to successt spend way to success Innovation identifies new opportunities beyondInnovation identifies new opportunities beyond current capabilitiescurrent capabilities
  4. 4. Clorox RealityClorox Reality Clorox RB SCJ P&G P&G 3M Unilever Colgate Clorox U.S. Patents in CLX CategoriesU.S. Patents in CLX Categories…… Annual R&D SpendingAnnual R&D Spending…… Clorox RB SCJ P&G Clorox Partners Clorox Colgate Unilever 3M P&G Partners ……broader investment with Partnersbroader investment with Partners ……broader protection with Partnersbroader protection with Partners
  5. 5. Key areas to focus on:Key areas to focus on: Culture & MindsetCulture & Mindset Innovation Approach/ModelsInnovation Approach/Models Work ProcessesWork Processes Change is needed!Change is needed!
  6. 6. Changing the CultureChanging the Culture Must make a commitment to going outside forMust make a commitment to going outside for ideas and opportunitiesideas and opportunities This is not just an R&D mindset change, but anThis is not just an R&D mindset change, but an enterpriseenterprise--wide mindset changewide mindset change R&D has the bulk of the effortR&D has the bulk of the effort Must enroll Procurement, Marketing, Product SupplyMust enroll Procurement, Marketing, Product Supply Need to implement the appropriateNeed to implement the appropriate (collaborative) and effective work systems to(collaborative) and effective work systems to reinforce this strategic changereinforce this strategic change
  7. 7. Changing the CultureChanging the Culture in CLX Packaging Developmentin CLX Packaging Development Packaging just holds the productPackaging just holds the product THE OLD WAYTHE OLD WAY THE OPEN INNOVATION WAYTHE OPEN INNOVATION WAY Development ideas created internallyDevelopment ideas created internally by R&Dby R&D Innovation systems created andInnovation systems created and managed by the business unitmanaged by the business unit Networks managed ad hoc,Networks managed ad hoc, on a projecton a project--byby--project basisproject basis External partners not actively engagedExternal partners not actively engaged in strategic product planning, norin strategic product planning, nor rewarded for delivering innovationrewarded for delivering innovation Packaging is a key piece of thePackaging is a key piece of the consumer experienceconsumer experience Development ideas come fromDevelopment ideas come from everywhere, even outside the companyeverywhere, even outside the company Innovation systems reinvented at theInnovation systems reinvented at the crosscross--BU level to access and focusBU level to access and focus external product and technologyexternal product and technology solutionssolutions Strategic relationships identified,Strategic relationships identified, grown, and managed over timegrown, and managed over time External partners rewarded forExternal partners rewarded for delivering innovation via Win Balancingdelivering innovation via Win Balancing programprogram
  8. 8. Changing the Mental ModelChanging the Mental Model NewNew Tech orTech or ProductProduct ConsumerConsumer BusinesBusines ss ResultsResults
  9. 9. TechnicalTechnical ConsumerConsumer BusinesBusines ss Changing the Mental ModelChanging the Mental Model
  10. 10. New Model Drives ProgressNew Model Drives Progress Critical toCritical to understand thatunderstand that progress (read:progress (read: change) does notchange) does not happen in ahappen in a vacuum!vacuum! Power is inPower is in synchronizing andsynchronizing and integrating all threeintegrating all three How does thisHow does this change the way wechange the way we workwork…… TechnicalTechnical ConsumerConsumer BusinessBusiness
  12. 12. Work Process in OIWork Process in OI What do you want?What do you want? Use all three lensesUse all three lenses BusinessBusiness ConsumerConsumer TechnicalTechnical WellWell--defined problemdefined problem statement/hypothesisstatement/hypothesis Set initial metrics onSet initial metrics on how to evaluate ideashow to evaluate ideas Tools:Tools: Think TankThink Tank Idea TrackerIdea Tracker SCOUTING SELECTING SECURING SUPPLIER RELATIONSHIP MANAGEMENT
  13. 13. Identifying Needs & GapsIdentifying Needs & Gaps Design • Holistic Design Thinking • Build Emotional Connections • Design for Manufacture/Cost • Sensory Engagement • Active/Intelligent Decoration Materials • Sustainable • Stronger + Lighter • Sensory Engagement Forming • Performance • Unique Structures • Cost Advantage Dispensing • Convenience + Ergonomics • Control of Product • Consistent Delivery
  14. 14. Work Process in OIWork Process in OI How will you find it?How will you find it? What is your searchWhat is your search strategy?strategy? NetworksNetworks InternalInternal –– what do wewhat do we already know?already know? ExternalExternal –– who else iswho else is looking at this?looking at this? Tools:Tools: Oval IdeasOval Ideas NetbaseNetbase –– AccelovationAccelovation,, illumin8illumin8 SCOUTING SELECTING SECURING SUPPLIER RELATIONSHIP MANAGEMENT
  15. 15. Work Process in OIWork Process in OI How will you knowHow will you know when you have foundwhen you have found it?it? Importance of setting initialImportance of setting initial metrics on idea evaluationmetrics on idea evaluation Cull list of potentialCull list of potential partners from hundreds topartners from hundreds to the feasible fewthe feasible few Evaluate externalEvaluate external solutions vs. initial metricssolutions vs. initial metrics Does this solution deliverDoes this solution deliver the business case?the business case? If not, determine where toIf not, determine where to change:change: Metrics for evaluationMetrics for evaluation Feasibility of businessFeasibility of business casecase SCOUTING SELECTING SECURING SUPPLIER RELATIONSHIP MANAGEMENT
  16. 16. Work Process in OIWork Process in OI How do you getHow do you get access to theaccess to the solution?solution? What type ofWhat type of agreement do youagreement do you need to put in place?need to put in place? What enables andWhat enables and fulfills the businessfulfills the business case?case? What deal enables thisWhat deal enables this ideaidea……and the nextand the next three after it?three after it? SCOUTING SELECTING SECURING SUPPLIER RELATIONSHIP MANAGEMENT
  17. 17. Changes in Work ProcessChanges in Work Process Partnership TypePartnership Type OneOne--timetime NeedNeed LicenseLicense PlatformPlatform OnOn--GoingGoing AllianceAlliance FocusedFocused OnOn--GoingGoing JointJoint DevelopmentDevelopment
  18. 18. AgreementsAgreements –– Doing the DealDoing the Deal Take the long viewTake the long view Think through the whole process andThink through the whole process and future interactions while living the currentfuture interactions while living the current dealdeal Change in negotiating techniquesChange in negotiating techniques –– Collaborative vs. ConfrontationalCollaborative vs. Confrontational What are the differentWhat are the different ““currenciescurrencies”” we canwe can use?use? FinancialFinancial IPIP CoCo--brandingbranding
  19. 19. Work Process in OIWork Process in OI How do you manageHow do you manage the relationship?the relationship? Is this a oneIs this a one--time deal,time deal, or the start of a longor the start of a long-- term relationship?term relationship? How applicable is thisHow applicable is this partnerpartner’’s portfolio vs.s portfolio vs. our enterpriseour enterprise’’s?s? How sustainable is theHow sustainable is the competitivecompetitive advantage?advantage? What is the nextWhat is the next Scouting opportunityScouting opportunity this partner can help?this partner can help? SCOUTING SELECTING SECURING SUPPLIER RELATIONSHIP MANAGEMENT
  20. 20. Managing Open InnovationManaging Open Innovation CollaborationCollaboration Deep, strategic partnering yields impactful innovationDeep, strategic partnering yields impactful innovation Technology solutions enable defined opportunitiesTechnology solutions enable defined opportunities developed through strong relationships & cooperative effortdeveloped through strong relationships & cooperative effort Manage topManage top--tier partners viatier partners via ““WinWin--BalancingBalancing”” Selected most strategically aligned suppliers to join programSelected most strategically aligned suppliers to join program Mutual investment in relationshipMutual investment in relationship Annual partnership reviewAnnual partnership review with quarterly checkwith quarterly check--insins Meaningful rewards forMeaningful rewards for delivering innovationdelivering innovation Deep understanding of strategyDeep understanding of strategy & development pipeline& development pipeline
  21. 21. InitialInitial ‘‘ProductProduct’’ Successes withSuccesses with Open InnovationOpen Innovation 2001: Armor All Wipes2001: Armor All Wipes Improved technology: NonwovensImproved technology: Nonwovens Results: Dramatic sales, new categoryResults: Dramatic sales, new category 2003: Clorox Bleach Pen2003: Clorox Bleach Pen New delivery systemNew delivery system –– package, formulapackage, formula Results: Strong sales, multiple design awardsResults: Strong sales, multiple design awards 2004: Clorox Teflon Bath Cleaners2004: Clorox Teflon Bath Cleaners Du Pont partnership on nonDu Pont partnership on non--stick, polymersstick, polymers Results: 8 pts share gain, #3 to #1 in categoryResults: 8 pts share gain, #3 to #1 in category 2000: Clorox Disinfecting Wipes2000: Clorox Disinfecting Wipes New technology: Nonwovens conversionNew technology: Nonwovens conversion Results: Explosive sales, new categoryResults: Explosive sales, new category
  22. 22. Successes ContinueSuccesses Continue 2007: Armor All Wheel Protectant2007: Armor All Wheel Protectant TechnologyTechnology ““pushpush”” from Winfrom Win--Balancing partnerBalancing partner Results: New product category in auto marketResults: New product category in auto market 2005: Glad Force Flex Trash Bags2005: Glad Force Flex Trash Bags P&G Joint Venture; core polymer technologyP&G Joint Venture; core polymer technology Results: Market share & category grew 5 ptsResults: Market share & category grew 5 pts 2008: Green Works natural cleaners2008: Green Works natural cleaners Deep supplier partnerships to build new brandDeep supplier partnerships to build new brand Results: In 6 months grew market 300%Results: In 6 months grew market 300%
  23. 23. Case Study:Case Study: Clorox Disinfecting WipesClorox Disinfecting Wipes Project borne from consumer insightsProject borne from consumer insights leaving theleaving the canister out leads to increased usagecanister out leads to increased usage How do we get consumers to leave this package out?
  24. 24. Case Study: CDWCase Study: CDW Consumer insightConsumer insight drives better businessdrives better business resultsresults Business caseBusiness case advantages clearadvantages clear Need technology toNeed technology to encourage consumerencourage consumer behavior withoutbehavior without ruining productruining product financialsfinancials TechnicalTechnical ConsumerConsumer BusinessBusiness √√ √√ ?? What is the technology/suite of technologiesWhat is the technology/suite of technologies which deliver the consumer/business needs?which deliver the consumer/business needs?
  25. 25. Apply the 4Apply the 4--S ProcessS Process Scouting:Scouting: Who has design andWho has design and technology expertise?technology expertise? Selecting:Selecting: Strategic DevelopmentStrategic Development PartnerPartner –– Union StreetUnion Street Securing:Securing: Deal is a ProjectDeal is a Project Appendix in MAAAppendix in MAA SRM:SRM: How do we integrate withHow do we integrate with the entire developmentthe entire development teamteam –– all the wayall the way through the supply chain?through the supply chain? SCOUTING SELECTING SECURING SUPPLIER RELATIONSHIP MANAGEMENT
  26. 26. Concept design exploration DesignDesign Replaceable face and poly-bag insert Reusable body Weighted base helps hold container in place
  27. 27. 3D aesthetic exploration: shape, opening DesignDesign
  28. 28. Aesthetic exploration (environment of use) DesignDesign Kitchen and bathroom environment
  29. 29. Crisp edge design looks contemporary in the homeIntegrated lip design for stacking on store shelf Final container design selected Easy to grip, modern shape DesignDesign
  30. 30. MaterialsMaterials -- No dissimilar materialsNo dissimilar materials -- All components PolypropyleneAll components Polypropylene --100% recyclable100% recyclable Sustainability
  31. 31. Label text: Usage info and UPC on wrapped label .04” label gap strategically located in rear corner of package STM label design artwork Full wrap IML (In-Mold Label) MaterialsMaterials
  32. 32. ApplyingApplying Open Innovation to PackagingOpen Innovation to Packaging…… Clorox Disinfecting Wipes Canister: Launched Jan-09
  33. 33. Union Street/Clorox Open InnovationUnion Street/Clorox Open Innovation Keys to SuccessKeys to Success Robust application of Innovation Mental ModelRobust application of Innovation Mental Model and 4and 4--S ProcessS Process Quick alignment and decisions on partnerQuick alignment and decisions on partner strategystrategy Build the internal alliance/consensus before theBuild the internal alliance/consensus before the externalexternal Determine key development success criteriaDetermine key development success criteria Must vs. WantMust vs. Want What enables the business case?What enables the business case? Supplier integrationSupplier integration –– itit’’s all about the network!s all about the network!
  34. 34. ConclusionsConclusions Open Innovation impacts all aspects of product creationOpen Innovation impacts all aspects of product creation Determine where you want to innovateDetermine where you want to innovate –– focus on biggest gapsfocus on biggest gaps in overall system (technicalin overall system (technical--consumerconsumer--business)business) Build capability specific to your needsBuild capability specific to your needs –– no prescribedno prescribed templatestemplates Recognize the change management needed toRecognize the change management needed to systematize OIsystematize OI Develop change processes and work processes to support OIDevelop change processes and work processes to support OI Start with changing the mindset and cultureStart with changing the mindset and culture Identify Innovation Models that resonate with your companyIdentify Innovation Models that resonate with your company Build the supporting needs and gaps analysisBuild the supporting needs and gaps analysis Deliver work systems and networks to deliver against thoseDeliver work systems and networks to deliver against those needsneeds
  35. 35. Thank You