Open innovation involves sharing risks and rewards of the innovation process with external partners. This document discusses Procter & Gamble's adoption of open innovation. P&G found that in-house R&D success rates were low and external ideas were underutilized. They launched external connections programs to source ideas from entrepreneurs. P&G evaluates ideas for alignment with business goals and technical feasibility before collaborating on cocreation. Key factors in P&G's open innovation success include culture change to accept external ideas and leadership support for external connections programs.

1. Connect And Develop
Mohammad ABBASI
GGSB MBA FT12
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2. Open Innovation
What 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. 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
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4. C&D For Open Innovation
What 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.
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5. How P&G Finds Solution?
Need list
E.g. Wash clothes in cold water
Placed at 6
Create C&D hubs.
external Each hub
connection Technology Entrepreneurs
focusing on
s regional
specialty
Convert need list into a
problem set
Combine data search with
physical surveying
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6. Evaluation Of The Idea
Once a product or idea is selected evaluation is done by asking certain
questions:
– 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.
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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 examples
NineSigma
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.
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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.
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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
company's culture.
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10. THANK YOU!!
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