INNOVATION

What can Smaller companies learn from the Big Corporations?

Corporate Entrepreneurship in Successful Organizations

Most mature companies have to produce organic growth year in, year

out.

In the past when companies were smaller and the world was less

competitive, firms could rely on internal R&D to drive the growth.

Procter & Gamble

• Realized current R & D not sustaining high levels of growth.

• Innovation success rate started to stagnate.

• Around the year 2000, share prices slid from $118 to $52.

• New technologies started to put a strain on innovation budgets.

Pressure form small and nimble competitorsPressure form small and nimble competitors

Procter & Gamble

• Mr. Lafley set

a target of

acquiring a 50%

growth level outside

the company.

CEO A.G. CEO A.G. Lafley challenged Lafley challenged

his employees his employees

to reinvent the company’s to reinvent the company’s

innovation business model.innovation business model.

Procter & Gamble

• After this ambitious target was set by the CEO, P & G created the connect and develop innovation model.

• Consumer needs were kept at the front when developing the model.

Procter & Gamble

• Connect and Develop method

• RADICAL THINKING WAS NEEDED TO SURVIVE…..

• For generations P & G created most of its phenomenal growth from within by building global research facilities and hiring and holding onto the best talent in the world.

Connect and Develop Model

• In this radical model you connect with external sources of new ideas (such as universities, government labs, suppliers and even competitors).

• You then develop these ideas into profitable new or refined products.

• This is done swiftly and cheaply using your own firms R&D, manufacturing and marketing power.

Connect and Develop ModelTo use C&D:

• Identify consumer needs.Identify consumer needs.

•Identify adjacencies: How can you enhance existing brand equity?

e.g P & G introduced Crest whitening strips to expand on toothpaste.

Connect and Develop ModelTo use C&D:

• Leverage your networks: Benefit from both proprietary and open networks.

• Distribute & screen ideas: Lets internal managers

screen ideas for potential.

Promote openness to external ideas.

Procter & Gamble

• Procter & Gamble showed that the model was successful.

• 5 years after the company’s stock collapse in 2000, the share price doubled.

• P & G now has a portfolio of $22 billion worth of brands.

Source: pg.com

Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:

Stain removing sponge discovered by P&G connections in Osaka, Japan. The resultant product was the Mr. Clean Magic Eraser which achieved double its projected revenues.

Stain removing sponge discovered by P&G connections in Osaka, Japan. The resultant product was the Mr. Clean Magic Eraser which achieved double its projected revenues.

Connect and Develop Model

Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:

C&D Stages:2001 – Discover: P&G Japanese entrepreneur discoversproduct in Japanese store. Checks potential &establishes fit with P&G home-care products.

2002 – Evaluate: Entrepreneur sends samples to researchers inCincinnati for performance checks.

2003 – Launch: Product packaged as-is and launched nationally.Researchers join to improve product.

2004 – CoCreate: Then co created Magic Eraser Wheel & Tire andlaunched in the US.

C&D Stages:2001 – Discover: P&G Japanese entrepreneur discoversproduct in Japanese store. Checks potential &establishes fit with P&G home-care products.

2002 – Evaluate: Entrepreneur sends samples to researchers inCincinnati for performance checks.

2003 – Launch: Product packaged as-is and launched nationally.Researchers join to improve product.

2004 – CoCreate: Then co created Magic Eraser Wheel & Tire andlaunched in the US.

Connect and Develop Model

Procter & GambleProcter & Gamble• C & D more about finding good

ideas and bringing them in, to enhance and capitalize on internal capabilities.

• To do this P & G collaborated with other organizations and individuals worldwide.

• Always searching for proven technologies.

Procter & Gamble

Top ten consumer needs:

Once a year P & G ask what consumer needs would increase growth by increased communication.

• These needs lists are then developed into science problems to be solved.

Procter & Gamble

• Proprietary networks: P & G rely on several of these to facilitate connect and develop activities. The two largest ones are:

• Technology entrepreneurs • Suppliers (P & G’s top 15 suppliers have

combined R & D staff of 50,000 that was capitalized upon.)

Inspirational QuoteInspirational Quote

• Don't say you don't have enough time. You have exactly the same number of hours per day that were given to Helen Keller, Pasteur, Michaelangelo, Mother Teresa, Leonardo da Vinci, Thomas Jefferson, and Albert Einstein.

H. Jackson Brown