Creating a climate in which Creating a climate in which Open Innovation worksOpen Innovation works

Some personal observationsSome personal observations……....

Prof. Roy Sandbach, P&G Research Fellow,Prof. Roy Sandbach, P&G Research Fellow,Cambridge, September 2008Cambridge, September 2008

P&G : A 70BN$ business withP&G : A 70BN$ business with 23 Billion23 Billion--Dollar BrandsDollar Brands

BUT, to satisfy Wall StreetBUT, to satisfy Wall Street……....

We need organic growth of 4BN$ per year, We need organic growth of 4BN$ per year, excluding acquisitions.excluding acquisitions.

A Starbucks business equivalentA Starbucks business equivalent……..…………. every year !!. every year !!

Historical Growth Through Internal Connections

Connect & DevelopConnect & Develop

Scope Acquire 50% of ideas externally <25% of Innovation Externally Sourced

Focus

Cooked Ready-to-Go TechnologyCooked Ready-to-Go ProductsDisruptive TechnologiesCommercial Connections

Mostly Technology Leads That We Reduce to Practice

Rewards Shared Risk/Reward Agreements P&G Pays and Owns Everything

P&G Intellectual Property

License, Sell, and Donate Where Appropriate Keep It Within P&G

Organization Manage Know-How and Know-Who Manage Know-How

PreviousPrevious

What’s New With Connect & DevelopVisionVision

A new approach canA new approach can’’t just happent just happen

ProcessProcess

Organisational ClimateOrganisational Climate

Individuals as Individuals as IntrapreneursIntrapreneurs

To build a CultureTo build a Culture…….where it.where it’’s in the DNA.s in the DNA.

Organisational Climate.Organisational Climate. Key Elements : Trust & OpennessKey Elements : Trust & Openness

Who gets the return ? Is the big multinational always the Who gets the return ? Is the big multinational always the bad guy ? bad guy ?

P&G management has defined for us the new culture of P&G management has defined for us the new culture of openness.openness.

We still use We still use ““fee for servicefee for service”” especially with new especially with new partners. Clarity on partners. Clarity on ““who owns whatwho owns what”” is vital.is vital.

We construct We construct CDAsCDAs & service agreements carefully. The & service agreements carefully. The trick is to maintain trick is to maintain momentum momentum while this is happeningwhile this is happening

IntrapreneurshipIntrapreneurship : Support & Space: Support & Space

Individuals working in Open Innovation need both of Individuals working in Open Innovation need both of thesethese…………and struggle with and struggle with ““innovation process controlinnovation process control””

Support in the often fruitless search for workable Support in the often fruitless search for workable solutions.solutions.

Space to work on leads.Space to work on leads.

And need to have a reward structure that recognises the And need to have a reward structure that recognises the ““distance from the coredistance from the core””

IntrapreneurshipIntrapreneurship : Conflict & Debate: Conflict & Debate

Skilled Skilled ““intrapreneursintrapreneurs”” must sell well, andmust sell well, and……..

They must cope with rejection, andThey must cope with rejection, and…………

They must be helped with conflict. Just They must be helped with conflict. Just remember Machiavelli.remember Machiavelli.

Note that external partners often donNote that external partners often don’’t see/feel t see/feel the trauma of bureaucracy impacting on the the trauma of bureaucracy impacting on the intrapreneursintrapreneurs..

Freedom to Connect & DevelopFreedom to Connect & DevelopIt has to be givenIt has to be given…………Who are your serial innovators ?Who are your serial innovators ?……....Do you know Do you know LotkaLotka’’ss Law ?Law ?

Are you giving your serial innovators special freedom ?Are you giving your serial innovators special freedom ?

Do you have Internal/External systems for knowledge/problem sharDo you have Internal/External systems for knowledge/problem sharing ?ing ?

P&G Communities of Practice, P&G Communities of Practice, ““Technology EntrepreneursTechnology Entrepreneurs””InnocentiveInnocentive, , NineSigmaNineSigma, NESTA/BDI, Research Councils, Your , NESTA/BDI, Research Councils, Your EncoreEncore……....etc,etcetc,etc

Knowing the complete operational landscape is vital to effectiveKnowing the complete operational landscape is vital to effectiveintrapreneurshipintrapreneurship. Cross. Cross--business unit (and geography) collaboration through business unit (and geography) collaboration through ““serial innovatorsserial innovators”” is important.is important.

We must keep the wideWe must keep the wide--angle lens on.angle lens on.

A Question of BalanceA Question of Balance

Open Innovation is exciting and satisfying. Being Open Innovation is exciting and satisfying. Being in a big organisation is not a negative.in a big organisation is not a negative.

Goes beyond the base organisational core Goes beyond the base organisational core competenciescompetencies…………but must fit with what webut must fit with what we’’re re good atgood at…….and complement internal programs .and complement internal programs

Is a culture, needs Is a culture, needs ““climate changeclimate change”” !!!!

But can build big revenuesBut can build big revenues………………

Invention, Invention, IntrapreneurshipIntrapreneurship and and Connect & DevelopConnect & Develop…………

A totally incremental 100MM$ businessA totally incremental 100MM$ business

Thank you for allowing me to Thank you for allowing me to share my thoughts.share my thoughts.