Emerce eDay 2008 Procter&Gamble

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  • Thank you for inviting me to this event to one of the most exciting areas of innovation. It is great to gather here to exchange thoughts about to better leverage crowd sourcing, the wiki economy and other approaches which democratize innovation. I hope this talk will help to fuel the interaction
  • Emerce eDay 2008 Procter&Gamble

    1. 1. The Many Dimensions of Open Innovation Andre Convents P&G, Section Head Connect & Develop
    2. 2. The Many Dimensions of Open Innovation <ul><li>Who are we and what are our values? </li></ul><ul><li>The need for organic growth </li></ul><ul><li>Open Innovation: “Innovating How We Innovate” </li></ul><ul><li>Three different approaches to open innovation at three stages of the innovation process </li></ul>At a glance 1 2 3 4
    3. 3. Who we are and what are our Values?
    4. 4. Who We Are <ul><ul><li>Over $80 billion in sales </li></ul></ul><ul><ul><li>300 brands in over 180 countries </li></ul></ul><ul><ul><li>#1 or #2 in 80% of our categories </li></ul></ul><ul><ul><li>138,000 employees </li></ul></ul>Our Purpose is to provide products of superior quality and value that improve the lives of the world’s consumers, now and for generations to come.
    5. 5. 24 Billion Dollar Brands 19 sold in Western Europe
    6. 7. Designed To Innovate <ul><li>“ Consumer is Boss!” </li></ul><ul><li>Win the “First 2 Moments of Truth” </li></ul><ul><ul><ul><li>When she Buys, When she Tries </li></ul></ul></ul>
    7. 8. Recognized Innovation Leader
    8. 9. The need for organic growth
    9. 10. What Is Innovation? “ Research is the transformation of money into knowledge.” “ Innovation is the transformation of knowledge into money.”
    10. 11. Innovation Centers in Western Europe Key facts about R&D at P&G:
    11. 12. What Happens If You Don’t Grow?
    12. 13. The Growth Challenge 0 20bn 40bn 60bn 80bn $ Requires an additional $100MM every week Current $83bn Total growth target 4-6%
    13. 14. Innovation Business Model Not sustainable for most companies “Do more with less and get more” Desired Innovation Budget Sales/Profit Actual Innovation
    14. 15. Branded Products and Consumer Value <ul><ul><li>Consumer skepticism about the level of meaningful innovation in brands </li></ul></ul><ul><ul><li>43% of Western European consumers indicate that all brands are the same on innovation </li></ul></ul>How do we create products that offer “irresistible and affordable” consumer experiences?
    15. 16. Challenges In Innovation Source: Research & Technology Executive Council “Idea-Sensing Efficiency – Practices for Broadening Access to External Technology Innovations” 10/01, page Essay 5 Innovation happens across the globe by many different organizations
    16. 17. Innovation Is Democratizing 200 million residents 15 million residents 11 million residents Social networks
    17. 18. Innovation Challenges Innovation Landscape Changing Cost Increasing Pace of Innovation Accelerating Resources Constrained Consumers More Demanding
    18. 19. Open Innovation “Innovating how we innovate”
    19. 20. Research & Development must become…
    20. 21. … Connect & Development
    21. 22. The Open Innovation Concept Discovery Market $ $ $ $ $ $ Value Creation
    22. 23. Culture Change Enabled By The Top <ul><li>“… 50% of P&G’s initiatives to have a significant partner and component from outside P&G.” </li></ul><ul><li>“ Our open innovation architecture is perhaps the biggest new idea or new approach that we have brought to innovation this decade.” </li></ul>A.G. Lafley in 2001 A.G. Lafley in P&G’s 2008 Annual Report
    23. 24. The Connection Challenge $5 Billion/yr New Sales Generation P&G R&D 9,000 People
    24. 25. Recent In-market Launches Pantene Hair Styling Products Olay Vitamins Crest New Tubes Tide Stainbrush Clairol In-Store Shade Selector Kandoo Wipes Pantene Sonic Comb Mr. Clean Magic Eraser Glad Press N Seal Charmin Fresh Mates Swiffer Duster Mr. Clean Autodry Olay Daily Facial Pillows Old Spice Shave Gel Visia Beauty Imaging Olay Regenerist Olay White Radiance Facial Mask SK-II Facial Mask SK-II Airtouch Foundation Prilosec OTC Crest Scratch N Sniff Pkg. Crest Liquid Dentifrice PuR / Whirlpool Refrigerator Filters PuR Furnace Filters OTC Drug Registrations Metamucil Capsules Pringles Dips
    25. 27. NASA Spent $75 Billion on Challenger <ul><li>NASA’s Challenger Program </li></ul><ul><ul><li>More than $75 billion invested </li></ul></ul><ul><ul><li>Staff of more than 4,500 </li></ul></ul><ul><ul><li>More than 30 years of effort </li></ul></ul><ul><ul><li>20% C+D </li></ul></ul><ul><li>Burt Rutan’s Space Ship One </li></ul><ul><ul><li>$250 million invested </li></ul></ul><ul><ul><li>Staff of 15 renegade inventors </li></ul></ul><ul><ul><li>Less than 4 years of effort </li></ul></ul><ul><ul><li>80% C+D </li></ul></ul><ul><ul><li>Risk reward (rocket competition) </li></ul></ul>vs.
    26. 28. Three different approaches to open innovation at three stages of the innovation process: 1. Solving problems in the product development cycle 2. Commercializing business solutions via case studies 3. Brand-building, marketing and consumer co-creation
    27. 29. <ul><li>Solving problems in the product development cycle </li></ul>
    28. 30. Prospecting for Technology P&G Internally: - 9000 researchers - 150 technologies - 40 communities of practice <ul><li>External innovation assets </li></ul><ul><li>>1 million researchers </li></ul><ul><li>Top emerging technologies & world-class expertise in P&G sciences </li></ul><ul><li>>1,500 science universities </li></ul><ul><li>Venture Capital </li></ul><ul><li>P&G Suppliers: >100,000 R&D people among our strategic suppliers </li></ul><ul><li>Government Labs: > 100,000 Scientists </li></ul>Significant innovation assets exist externally
    29. 31. P&G Technology Entrepreneur Network <ul><ul><li>>50 technology entrepreneurs worldwide </li></ul></ul><ul><ul><li>1,100 leads in first year </li></ul></ul><ul><ul><li>18,000 fairs </li></ul></ul><ul><ul><li>Product pickup in 126 countries </li></ul></ul>
    30. 32. Pay-for-performance External Networks External Web-based Problem Solving Innocentive.Com External Business Solution Discovery NineSigma.Com Access to global community of +20,000 Chemists Access to community of +10,000 Companies and Research Labs Results : On average, each problem is attracting 70 solvers from around the world. Results : 50% hit rate on identifying significant new partnerships and capabilities
    31. 33. Your Encore Tap in the passion of retirees
    32. 34. 2. Commercializing business solutions via case studies
    33. 35. Commercialize Business Solutions <ul><li>Accelerate Innovation </li></ul><ul><li>Build Brand Equity </li></ul><ul><li>New Business models </li></ul><ul><li>Operate more efficiently </li></ul>
    34. 36. Swiffer – The Brand Developed via C+D
    35. 37. Reapplying Cooked Technology & Advertising <ul><ul><li>Launched by Unicharm in Japan September 01 </li></ul></ul><ul><ul><li>P&G expressed interest in October 01 </li></ul></ul><ul><ul><ul><li>Japanese copy proved top 20 scores for all key measures. Reapplied successful “consumer copy” for launch </li></ul></ul></ul><ul><ul><ul><li>Used product from Japan for all consumer research work </li></ul></ul></ul><ul><ul><ul><li>Leveraged Unicharm manufacturing expertise to launch Dusters within 18 months </li></ul></ul></ul>How can we identify and commercialize cooked technology AND marketing?
    36. 38. Swiffer Sweep ‘n’ Vac Cross Licensing Wider exposure Better deal for trade & consumers Royal
    37. 39. Commercialize Solutions <ul><li>Accelerate Innovation </li></ul><ul><li>Build Brand Equity </li></ul><ul><li>New Business models </li></ul><ul><li>Operate more efficiently </li></ul>
    38. 40. Glad Joint Venture C+D with a competitor – An example
    39. 41. Glad Joint Venture Discovery Market $ $ $ $ $ $
    40. 42. Glad Joint Venture Discovery Market $ $ $ $ $ $ Glad Press ‘n Seal
    41. 43. Joint Venture Partnership Architecture <ul><li>Clorox Contributes </li></ul><ul><ul><li>Glad Brand </li></ul></ul><ul><ul><li>Business Infrastructure </li></ul></ul><ul><ul><li>R&D: Technology Depth </li></ul></ul><ul><ul><li>Manufacturing </li></ul></ul><ul><ul><li>Distribution and Marketing </li></ul></ul><ul><li>P&G Contributes </li></ul><ul><ul><li>Patents, Other IP </li></ul></ul><ul><ul><li>Production Technology </li></ul></ul><ul><ul><li>R&D: Technology Breadth </li></ul></ul><ul><ul><li>Selected Personnel </li></ul></ul><ul><ul><li>Global Reach </li></ul></ul>
    42. 44. 3. Brand-building, Marketing, and Consumer co-creation
    43. 45. Open Innovation - Trends John Seely Brown Books, companies and consultants: “Open innovation is the norm”
    44. 46. Crowd Sourcing To Create New Products
    45. 47. P&G Second Life Contests & Activities Promotion for Wella’s Shockwaves Gillette – Activate Your Attraction
    46. 48. Word of Mouth Marketing <ul><ul><li>Connectors trigger consumer-to-consumer relationship marketing </li></ul></ul><ul><ul><li>350,000 mother connectors who want to hear about exciting new brands and products </li></ul></ul><ul><ul><li>Connectors have social networks 5 times larger than normal, have a propensity to talk and are highly influential </li></ul></ul><ul><ul><li>Both offline and online communities reach as many people as possible </li></ul></ul>
    47. 49. Hairsay Consumer Co-creation
    48. 50. Designed To Innovate Defined Broadly Consumer Insights Product Innovation Package and Graphics Marketing Go-to-market Supply Chain
    49. 51. For more information, visit: www.pgconnectdevelop.com

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