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Clorox Open Innovation
- 1. Application of Open Innovationin a Collaborative Supply Chain Packaging That Sells! 2009 Conference Jason Husk Group Manager, Open Innovation Networks The Clorox Company October 22, 2009
- 2. Overview This is notWHY OI, but HOW OI What are the key framing questions? What are the mental models I need? What are the work processes to support our move to Open Innovation? How does this work in the supply chain?
- 3. Clorox’s Decision toPursue Open Innovation Clorox: Founded in 1913 95 year history: leading brands in mid-size categories $5B in sales, 8000+ employees 20 yrs acquisition-driven growth & “fast follower” strategy Clorox Strategy Change in 2000: Lead in Innovation Enormous competitors; can’t spend way to success Innovation identifies new opportunities beyond current capabilities
- 4. Clorox Reality Annual R&D Spending… …broader investment with Partners P&G 3M Unilever Colgate Clorox Clorox Colgate Unilever 3M P&G Partners U.S. Patents in CLX Categories… …broader protection with Partners Clorox RB SCJ P&G Clorox RB SCJ P&G Clorox Partners
- 5. Change is needed! Keyareas to focus on: Culture & Mindset Innovation Approach/Models Work Processes
- 6. Changing the Culture Mustmake a commitment to going outside for ideas and opportunities This is not just an R&D mindset change, but an enterprise-wide mindset change R&D has the bulk of the effort Must enroll Procurement, Marketing, Product Supply Need to implement the appropriate (collaborative) and effective work systems to reinforce this strategic change
- 7. Changing the Culture inCLX 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 time External partners not actively engaged External partners rewarded for in strategic product planning, nor delivering innovation via Win Balancing rewarded for delivering innovation program
- 8. Changing the MentalModel New Busines Tech or Consumer s Product Results
- 9. Changing the MentalModel Busines Technical Consumer s
- 10. New Model DrivesProgress 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…
- 11. Work Process inOI SCOUTING SUPPLIER RELATIONSHIP SELECTING MANAGEMENT SECURING
- 12. Work Process inOI What do you want? Use all three lenses SCOUTING Business Consumer Technical SUPPLIER RELATIONSHIP MANAGEMENT SELECTING Well-defined problem statement/hypothesis Set initial metrics on SECURING how to evaluate ideas Tools: Think Tank Idea Tracker
- 13. Identifying Needs &Gaps • Holistic Design Thinking • Build Emotional Connections Design • Design for Manufacture/Cost • Sensory Engagement • Active/Intelligent Decoration • Sustainable Materials • Stronger + Lighter • Sensory Engagement • Performance Forming • Unique Structures • Cost Advantage • Convenience + Ergonomics Dispensing • Control of Product • Consistent Delivery
- 14. Work Process inOI How will you find it? SCOUTING What is your search strategy? Networks SUPPLIER RELATIONSHIP SELECTING Internal – what do we MANAGEMENT already know? External – who else is looking at this? SECURING Tools: Oval Ideas Netbase – Accelovation, illumin8
- 15. Work Process inOI How will you know when you have found SCOUTING it? Importance of setting initial metrics on idea evaluation Cull list of potential SUPPLIER RELATIONSHIP SELECTING partners from hundreds to MANAGEMENT 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
- 16. Work Process inOI How do you get SCOUTING access to the solution? What type of SUPPLIER RELATIONSHIP SELECTING agreement do you MANAGEMENT need to put in place? What enables and SECURING fulfills the business case? What deal enables this idea…and the next three after it?
- 17. Changes in WorkProcess Partnership Type One-time Focused Platform Need On-Going On-Going License Joint Alliance Development
- 18. Agreements – Doingthe Deal Take the long view Think through the whole process and future interactions while living the current deal Change in negotiating techniques – Collaborative vs. Confrontational What are the different “currencies” we can use? Financial IP
- 19. Work Process inOI 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 this MANAGEMENT partner’s portfolio vs. our enterprise’s? SECURING How sustainable is the competitive advantage? What is the next Scouting opportunity this partner can help?
- 20. Managing Open Innovation Collaboration Deep, strategic partnering yields impactful innovation Technology solutions enable defined opportunities developed through strong relationships & cooperative effort Manage 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
- 21. Initial ‘Product’ Successeswith Open Innovation 2000: Clorox Disinfecting Wipes New technology: Nonwovens conversion Results: Explosive sales, new category 2001: Armor All Wipes Improved technology: Nonwovens Results: Dramatic sales, new category 2003: Clorox Bleach Pen New delivery system – package, formula Results: Strong sales, multiple design awards 2004: Clorox Teflon Bath Cleaners Du Pont partnership on non-stick, polymers Results: 8 pts share gain, #3 to #1 in category
- 22. Successes Continue 2005: GladForce Flex Trash Bags P&G Joint Venture; core polymer technology Results: Market share & category grew 5 pts 2007: 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%
- 23. Case Study: Clorox Disinfecting Wipes Project borne from consumer insights leaving the canister out leads to increased usage How do we get consumers to leave this package out?
- 24. Case Study: CDW Consumerinsight drives better business ? results Technical Business case advantages clear Need technology to √ √ Consumer Business encourage consumer behavior without ruining product financials the technology/suite of technologies What is which deliver the consumer/business needs?
- 25. Apply the 4-SProcess Scouting: Who has design and SCOUTING technology expertise? Selecting: Strategic Development SUPPLIER Partner – Union Street RELATIONSHIP SELECTING MANAGEMENT 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?
- 26. Design Replaceable face and poly-bag insert Reusable body Weighted base helps hold container in place Concept design exploration
- 27. Design 3D aesthetic exploration:shape, opening
- 28. Design Kitchen and bathroomenvironment Aesthetic exploration (environment of use)
- 29. Design Crisp edge design looks Integrated lip design for contemporary in the home stacking on store shelf Easy to grip, modern shape Final container design selected
- 30. Materials - No dissimilar materials - All components Polypropylene -100% recyclable Sustainability
- 31. Materials .04” label gap strategically located in rear corner of package STM label design artwork Label text: Usage info and UPC on wrapped label Full wrap IML (In-Mold Label)
- 32. Applying Open Innovationto Packaging… Clorox Disinfecting Wipes Canister: Launched Jan-09
- 35. Union Street/Clorox OpenInnovation Keys to Success Robust application of Innovation Mental Model and 4-S Process Quick alignment and decisions on partner strategy Build the internal alliance/consensus before the external Determine key development success criteria Must vs. Want What enables the business case? Supplier integration – it’s all about the network!
- 36. Conclusions Open Innovation impactsall 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 templates Recognize 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
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