Open Innovation with an example from P&G

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Open Innovation with an example from P&G

  1. 1. Connect And DevelopMohammad ABBASIGGSB MBA FT12 1
  2. 2. Open InnovationWhat is Open Innovation? Innovating in partnership with those outside your company by sharing the risks and rewards of the outcome and process.Why Companies need Open Innovation?• In-house R&D not capable of sustaining high levels of growth• Leverage from competencies available outside.• Stiff competition and short product life cycle has put more focus on bringing “different” products quickly.• Saves cost.• Less time to bring concept to market. 2
  3. 3. Why P&G Needed Open Innovation?• R&D innovation success rate stagnated at 35%• Lack of innovative product resulted in share price dropping from $118 to $52.• Return on R&D investment was declining.• Study done by P&G found availability of 1.5 million people whose talent can be used.• Past success from products acquired from outside. E.g. Spin Brush 3
  4. 4. C&D For Open InnovationWhat to look for? – Seek ideas that had some degree of success – Ideas and products that will benefit from P&G competencies.How to look for? – Products or concepts that can solve customer needs. – Look for products that can take advantage of existing brand equity. – Evaluate the technology acquisition moves. 4
  5. 5. How P&G Finds Solution? Need list E.g. Wash clothes in cold water Placed at 6 Create C&D hubs. external Each hubconnection Technology Entrepreneurs focusing on s regional specialty Convert need list into a problem set Combine data search with physical surveying 5
  6. 6. Evaluation Of The IdeaOnce a product or idea is selected evaluation is done by asking certainquestions: – Is this product aligned with our business goals? – Does P&G have technical expertise to develop the product? – Does this product have business potential?• Same evaluation process for both in-house and outside products. 6
  7. 7. Cocreation• Open innovation is not only about using external ideas for your benefit.• It is also about sharing your ideas to help others.How P&G is helping others? Some examplesNineSigma Connecting companies with external network to solve science and technology problem.YourEncore Help companies contract employees with specific experience for short term.Yet2.com Helps technology transfer both into and out of companies. 7
  8. 8. Key Success Factors• Push the culture to accept external ideas.• Technology Entrepreneurs across globe to leverage from external ideas.• Open innovation part of explicit company strategy.• C&D driven by top leadership rather than isolated in one corner – VP of Innovation and knowledge looking over C&D. 8
  9. 9. Conclusion• Lot of ideas is available outside that companies can use inside.• Balance of external and internal ideas is best for companies progress.• Accept ideas that are aligned to company’s business plan.• Open innovation needs to be put as companywide strategy.• Accepting open innovation may also need change in companys culture. 9
  10. 10. THANK YOU!! 10

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