Wednesday, April 26, 2006

Innovation - The P&G way

It is mind-boggling to see the variations in color, design, texture forms in edible products these days. Now rather than asking for salt or sweet, you should't be surprised if you are asked whether you want emborsed wafers or oil painted wafers. And mind you, everything confirms to the laws of Food Industry. And why just food products, look around and you will see Markets are full of consumer products that are so unconventional, and yet best sellers.

Have you ever thought how this is achieved? Have you ever thought how Pringle gets that fine images in each of their chips? And can you imagine the amount of investment in cost and time is involved. And most importantly how does one create and manage such Innovation? In this article, I will discuss how P&G manages innovation. Read ahead....

P&G practices and has achieved considerable success by a strategy they call "CONNECT & DEVELOP" (C&D).

The stratgy is to innovate by going to external connections rather than entirely relying on internal R&d experts with a goal to acquire 50% of innovation outside the company.

The most interesting part is how they have implemented this through different programs, some of which are worth studying and pursuing. A brief summary of their programs is as below-

Proprietary Network
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1. Technology Entrepreneurs - these are senior P&G people who are located around 9 C&D hubs across the globe sniffing through stores, exhibitions, literature etc to come up with ideas.
2. Suppliers - Created IT platforms to share technology briefs with suppliers and co-created new products. (P&G realized that within their suppliers they had 50000 researchers)

Open Network
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3. NineSigma - A network to connect companies in need of technological innovations with universities, labs, government agencies, companies that have solutions. So, send technology brief across the network and get proposal of solution confidentially. The network has 700000 users who are highly specialized and gain mutually.

4. InnoCentive - A community of contract scientists, who crack the problem and provide an easy solution. So, if a process gets done in 5 steps, and has to be done in 3, the question is put in the network.

5. YourEncore - Connects retired Scientists and helps bring deep experience to solve problems on case basis. So a retired boeing aircraft engineer can be used to do the prototype for their next skin care box.

6. Yet2.com - This is a market place for Intellectual Property Exchange. This was built by a group of fortune 100 companies.

The best i like is firstly, they have 6 different approaches to solve the same problem - each connecting to a different resource segment AND secondly, they had a clear goal - get 50% of innovation from community. However, when you are P&G building a community is not as difficult as it is for some small starters. But, if the goal is set and agenda is clear, then you will build a community around people who would want to be a part of it.

To achieve a sustained and steady top-line growth, innovation is required.

Well..... "How to" is the key !

[Inspired by an HBR published article.]

1 comment:

vs said...

Hi amita
a juicy article that only gives the main meat. Also send the link for the original HBR article that inspired you. It is no surprise that P&G achieves these things with effortless ease. In the top end the competition is like the 100 metre dash. the race is on the 1/100th second scale. You can be sub-10sec but still be a foot note in the olympic history. The same goes for the top end companies also.
It only goes to show that you continue to be in, in to your business and your profession. You will never be out.
the network of old scientists and engineers jus goes to prove this point.
cheers!!