Reposting this preso so it is more easily viewable; an earlier version was cut off.

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. 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. 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. 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. 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. 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. 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. Changing the Mental ModelChanging the Mental Model
NewNew
Tech orTech or
ProductProduct
ConsumerConsumer
BusinesBusines
ss
ResultsResults

9. TechnicalTechnical ConsumerConsumer
BusinesBusines
ss
Changing the Mental ModelChanging the Mental Model

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

11. Work Process in OIWork Process in OI
SCOUTING
SELECTING
SECURING
SUPPLIER
RELATIONSHIP
MANAGEMENT

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. 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. 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. 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. 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. Changes in Work ProcessChanges in Work Process
Partnership TypePartnership Type
OneOne--timetime
NeedNeed
LicenseLicense
PlatformPlatform
OnOn--GoingGoing
AllianceAlliance
FocusedFocused
OnOn--GoingGoing
JointJoint
DevelopmentDevelopment

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. 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. 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. 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. 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. 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. 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. 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. Concept design exploration
DesignDesign
Replaceable face and
poly-bag insert
Reusable body
Weighted base helps hold
container in place

27. 3D aesthetic exploration: shape, opening
DesignDesign

28. Aesthetic exploration (environment of use)
DesignDesign
Kitchen and bathroom environment

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. MaterialsMaterials
-- No dissimilar materialsNo dissimilar materials
-- All components PolypropyleneAll components Polypropylene
--100% recyclable100% recyclable
Sustainability

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. ApplyingApplying Open Innovation to PackagingOpen Innovation to Packaging……
Clorox Disinfecting Wipes Canister: Launched Jan-09

35. 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!

36. 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

37. Thank You