Open Innovation with Procter & Gamble

Today we were allowed into the once ‘super-secretive’ headquarters of Procter & Gamble to learn about their famous and much lauded Connect & Develop programme.

So what did we learn? They had a major crisis at the start of the millennium – the business wasn’t growing, innovation success rate was down and, the most painful one for the employees, (many of whom are ‘lifers’ and are heavily invested in the company) was the stock price plummeted. (“I said to my wife, ‘Honey, I just worked the whole of the 90s for nothing!” shared one of our presenters while admitting ”I’m still angry about it.”) Suffice to say that CEO lasted the shortest time in the office.

The new CEO, AG Lafley set the target of growing the business by the equivalent of “2 Starbucks” ($5bn) each year and realized that the business needed to change dramatically. They threw of the cloak of secrecy and became ‘Open for Business’ with customers, competitors and pretty much anyone who they could do a deal with. They set up the connect and develop team to make money from the 20-25,000 patents they had and weren’t using, they started to post problems / innovation challenges publicly on websites and other medium (“we have 9000 scientists in P&G. Now we have access to over 2 million globally to solve our challenges), and they formed a Futureworks division to work on new spaces, and business model innovation.

All of which has been bloody successful for them.

What are some of the secrets of success?

  • AG Lafley set them a goal that was focused on behaviour change not the end result – “over 50% of our initiatives need to involve at least 1 significant external partner within 5 years.” This was so different to how they were working previously (“The kremlin on the Ohio” was their internal nickname).
  • Early on AG (as we now all like to call him), stepped in to support the iconic action of doing a deal with Chlorox, (“one of our most aggressive competitors”) to show that this was for real.
  • They created new structures that augmented and dovetailed with what was already working in the business units and not disrupting business as usual.
  • The goals of the connect and develop team are the same as those of the business units they are entirely aligned.
  • They created ‘poster children’ of early successes and then went and ‘sold them internally’ to get people on board.
  • They were really clear about what P&G brought to any deal and what weren’t core strengths (“only do what only you can do”)
  • Capture your learning – you only fail if you fail to learn.

Article Posted on 18th November 2008

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