Application of OpenInnovation in a Collaborative Supply Chain Packaging That Sells! 2009 Conference Jason Husk Group Manager, Open Innovation Networks The Clorox Company October 22, 2009
OverviewThis is not WHY OI, but HOW OIWhat are the key framing questions?What are the mental models I need?What are the work processes to supportour move to Open Innovation?How does this work in the supply chain?
Clorox’s Decision to Pursue Open InnovationClorox: Founded in 1913 95 year history: leading brands in mid-size categories $5B in sales, 8000+ employees 20 yrs acquisition-driven growth & “fast follower” strategyClorox Strategy Change in 2000: Lead in Innovation Enormous competitors; can’t spend way to success Innovation identifies new opportunities beyond current capabilities
Change is needed!Key areas to focus on: Culture & Mindset Innovation Approach/Models Work Processes
Changing the CultureMust make a commitment to going outside forideas and opportunitiesThis is not just an R&D mindset change, but anenterprise-wide mindset change R&D has the bulk of the effort Must enroll Procurement, Marketing, Product SupplyNeed to implement the appropriate(collaborative) and effective work systems toreinforce this strategic change
Changing the Culturein CLX Packaging Development THE OLD WAY THE OPEN INNOVATION WAY Packaging is a key piece of the Packaging just holds the product consumer experience Development ideas created internally Development ideas come from by R&D everywhere, even outside the company Innovation systems reinvented at the Innovation systems created and cross-BU level to access and focus managed by the business unit external product and technology solutions Networks managed ad hoc, Strategic relationships identified, on a project-by-project basis grown, and managed over timeExternal partners not actively engaged External partners rewarded for in strategic product planning, nor delivering innovation via Win Balancing rewarded for delivering innovation program
Changing the Mental Model New BusinesTech or Consumer sProduct Results
Changing the Mental Model BusinesTechnical Consumer s
New Model Drives Progress Critical to understand that Technical progress (read: change) does not happen in a vacuum!Consumer Business Power is in synchronizing and integrating all three How does this change the way we work…
Work Process in OI SCOUTING SUPPLIERRELATIONSHIP SELECTINGMANAGEMENT SECURING
Work Process in OI What do you want? Use all three lenses SCOUTING Business Consumer Technical SUPPLIERRELATIONSHIPMANAGEMENT SELECTING Well-defined problem statement/hypothesis Set initial metrics on SECURING how to evaluate ideas Tools: Think Tank Idea Tracker
Work Process in OI How will you find it? SCOUTING What is your search strategy? Networks SUPPLIERRELATIONSHIP SELECTING Internal – what do weMANAGEMENT already know? External – who else is looking at this? SECURING Tools: Oval Ideas Netbase – Accelovation, illumin8
Work Process in OI How will you know when you have found SCOUTING it? Importance of setting initial metrics on idea evaluation Cull list of potential SUPPLIERRELATIONSHIP SELECTING partners from hundreds toMANAGEMENT the feasible few Evaluate external solutions vs. initial metrics SECURING Does this solution deliver the business case? If not, determine where to change: Metrics for evaluation Feasibility of business case
Work Process in OI How do you get SCOUTING access to the solution? What type of SUPPLIERRELATIONSHIP SELECTING agreement do youMANAGEMENT need to put in place? What enables and SECURING fulfills the business case? What deal enables this idea…and the next three after it?
Changes in Work Process Partnership TypeOne-time Focused Platform Need On-Going On-Going License Joint Alliance Development
Agreements – Doing the DealTake the long viewThink through the whole process andfuture interactions while living the currentdeal Change in negotiating techniques – Collaborative vs. Confrontational What are the different “currencies” we can use? Financial IP
Work Process in OI How do you manage the relationship? SCOUTING Is this a one-time deal, or the start of a long- SUPPLIER term relationship?RELATIONSHIP SELECTING How applicable is thisMANAGEMENT partner’s portfolio vs. our enterprise’s? SECURING How sustainable is the competitive advantage? What is the next Scouting opportunity this partner can help?
Managing Open Innovation CollaborationDeep, strategic partnering yields impactful innovation Technology solutions enable defined opportunities developed through strong relationships & cooperative effortManage top-tier partners via “Win-Balancing” Selected most strategically aligned suppliers to join program Mutual investment in relationship Annual partnership review with quarterly check-ins Meaningful rewards for delivering innovation Deep understanding of strategy & development pipeline
Initial ‘Product’ Successes with Open Innovation2000: Clorox Disinfecting Wipes New technology: Nonwovens conversion Results: Explosive sales, new category2001: Armor All Wipes Improved technology: Nonwovens Results: Dramatic sales, new category2003: Clorox Bleach Pen New delivery system – package, formula Results: Strong sales, multiple design awards2004: Clorox Teflon Bath Cleaners Du Pont partnership on non-stick, polymers Results: 8 pts share gain, #3 to #1 in category
Successes Continue2005: Glad Force Flex Trash Bags P&G Joint Venture; core polymer technology Results: Market share & category grew 5 pts2007: Armor All Wheel Protectant Technology “push” from Win-Balancing partner Results: New product category in auto market 2008: Green Works natural cleaners Deep supplier partnerships to build new brand Results: In 6 months grew market 300%
Case Study: Clorox Disinfecting WipesProject borne from consumer insights leaving thecanister out leads to increased usage How do we get consumers to leave this package out?
Case Study: CDWConsumer insightdrives better business ?results TechnicalBusiness caseadvantages clearNeed technology to √ √ Consumer Businessencourage consumerbehavior withoutruining productfinancials the technology/suite of technologies What is which deliver the consumer/business needs?
Apply the 4-S Process Scouting: Who has design and SCOUTING technology expertise? Selecting: Strategic Development SUPPLIER Partner – Union StreetRELATIONSHIP SELECTINGMANAGEMENT Securing: Deal is a Project Appendix in MAA SECURING SRM: How do we integrate with the entire development team – all the way through the supply chain?
Design Replaceable face and poly-bag insert Reusable body Weighted base helps hold container in placeConcept design exploration
DesignKitchen and bathroom environment Aesthetic exploration (environment of use)
Design Crisp edge design looksIntegrated lip design for contemporary in the homestacking on store shelfEasy to grip,modern shape Final container design selected
Materials - No dissimilar materials - All components Polypropylene -100% recyclableSustainability
Materials .04” label gap strategically located in rear corner of packageSTM label design artwork Label text: Usage info and UPC on wrapped label Full wrap IML (In-Mold Label)
Applying Open Innovation to Packaging… Clorox Disinfecting Wipes Canister: Launched Jan-09
Union Street/Clorox Open Innovation Keys to SuccessRobust application of Innovation Mental Modeland 4-S ProcessQuick alignment and decisions on partnerstrategy Build the internal alliance/consensus before the externalDetermine key development success criteria Must vs. Want What enables the business case?Supplier integration – it’s all about the network!
ConclusionsOpen Innovation impacts all aspects of product creation Determine where you want to innovate – focus on biggest gaps in overall system (technical-consumer-business) Build capability specific to your needs – no prescribed templatesRecognize the change management needed to systematize OI Develop change processes and work processes to support OI Start with changing the mindset and culture Identify Innovation Models that resonate with your company Build the supporting needs and gaps analysis Deliver work systems and networks to deliver against those needs