Innovation UK talks to Jeff Weedman, Vice President of External Business Development at P&G about how the company is on a quest to spread the word about the power of open innovation
WHAT IS YOUR ROLE WITHIN PROCTER & GAMBLE?
The group I run within Procter & Gamble (P&G) focuses on accelerating innovation. We look really, really hard to find solutions to problems. We look for capabilities that outside companies might have, products small companies might have, or even inventions by individual inventors, where they don?t have the capabilities to find a global platform and would fit nicely within P&G?s capabilities to take them around the world. Finding those solutions and finding ways to have mutually beneficial relationships with these companies is all part of my role. In addition, P&G also has around 9,000 scientists and 36,000 patents and capabilities, and we try and find other uses for those outside the company. If we can help other people grow their business and capabilities, that is not only good for them, it?s also good for us. We try and facilitate inbound and outbound movement.
HOW WOULD YOU EXPLAIN THE CONCEPT OF OPEN INNOVATION? HOW DO YOU SEE THIS AS PROGRESSIVE FOR P&G?S DEVELOPMENT?
Open innovation is really the opposite of the general view of how you create new products, whereby you do it all yourself and you build your own internal capabilities. At P&G, we don?t care where good ideas originate; what we care about is finding them ? or they find us ? and we do something with them. The open innovation network is much more powerful than anything we can do ourselves. If I looked at the demographics of our 9,000 scientists, where they studied, their specialisms, and so on, I think of how many scientists of similar demographics must exist around the globe ? probably close to two million. Isn?t it a much more powerful idea to tap into that couple of million rather than just our 9,000? Historically, that would have been a complete dream because we didn?t have the ability to communicate as we do now ? the Internet didn?t exist until not that long ago, and the ability to utilise it and have a truly global reach in terms of searching for new ideas is something that has happened in just the past decade.
It?s all been a cultural change for P&G. The company is over 170 years old, so moving from an internally focused, very do-it-yourself mentality to be very open and valuing adoption and adaption equally with innovation has been a huge cultural change. It?s very exciting because we have people who really do care and who have solutions for us. Big companies can find it hard to change their culture, but P&G now has over half of its new products with some element of external capability in them. The percentage that comes from outside doesn?t matter ? what does matter is that we become a preferred destination for people who have innovations.
WHAT LESSONS HAS P&G LEARNED ABOUT OPEN INNOVATION OVER THE YEARS AND HOW ARE YOU ADAPTING THIS KNOWLEDGE FOR PROGRESSION?
The biggest lesson is it?s not about the negotiations or who gets what; it?s about finding real value-creation opportunities by two companies or a company and sole inventor working together. When we sit down with someone who we think has something of interest to us ? or we have something of interest to them ? we make sure that our first interactions involve looking at what we all have to better satisfy consumers. You learn a lot in that process. Historically, companies look at what it?s all going to cost, but that tends to diminish opportunity. I find it is better to build a ?big pie? of value as it is better to split a big pie than fight over a small piece.
We also get a good feel for whether we will be able to work together ? some companies would be totally frustrated working with P&G! We have also had to learn to be really flexible on IP rights and ownership ? it?s all about access to IP and not necessarily about ownership. It?s a real change ? lots of companies work on a competitive advantage defined as is: ?I?ve got it, you haven?t.? We?ve learned that being flexible with IP and being flexible with the deal structure is absolutely essential ? if you try and do a one-size-fits-all, it doesn?t fit anybody.
WHAT IS THE PURPOSE AND VISION OF CONNECT + DEVELOP?
Simply, Connect + Develop is for P&G to effectively, efficiently and proactively find better products, better technology and better solutions that we can bring into the company and create better products that consumers are willing to buy.
IT WAS SAID BY PAUL O?CONNER, BRAND MANAGER FOR SWIFFER NORTH AMERICA, THAT CONNECT + DEVELOP ?CREATED AN ENTIRE NEW CATEGORY?. HOW DO YOU SEE THIS AFFECTING THE PROGRESS OF INNOVATION AS A WHOLE?
Swiffer is a wonderful example of being able to take ideas that might be landlocked in a small geography and giving them a global play, taking them far beyond where they were. In the Swiffer product line up, there is a Swiffer duster, which is very proficient at picking up dust. We had spent a lot of time working out a way to have a good dusting product. The president of our Home Care Business at the time said: ?Well, I like what we?ve done, but I like this better,? and he held up a Swiffer duster. This was made by a company called Unicharm in Japan ? it is actually a competitor of ours in the nappy market in Japan ? but the Home Care team went to Japan and we negotiated the rights to take the Swiffer duster global. So Unicharm, our competitor in Japan, became our collaborator outside Japan. We even used their introductory advertising around the globe because it was so good. To have the world?s largest advertiser say we used somebody else?s advertising to introduce a product ? well, that?s a big deal! Unicharm was also very happy with the return it got from partnering up with P&G ? it couldn?t have gone global as quickly, efficiently and effectively without working with us. The bigger story is that P&G has hopefully become a lot more humble and realistic and we realise we don?t have a corner on all good new ideas. So it?s great when we find people who do have those ideas and find a way to work to our mutual benefit.
WHAT DOES P&G INTEND TO DO IN RESPECT OF BUILDING THE CONNECT + DEVELOP BRAND?
I don?t think we are doing an effective job as yet of networking around the globe. In the UK, for example, there is a wealth of innovation that goes on at universities, design consortiums, small businesses, and so on. I believe that we are not yet doing an effective job of reaching out to them and saying: ?These are the kinds of things we are looking for. Do you have solutions for them?? The UK has wonderful packaging capabilities, for example, so given the number of products we, as an $85 billion company, need packaging for, my guess is that there are a number of solutions in the UK that we are not getting to hear about. The same goes for the rest of Europe ? I don?t think we have yet tapped into its abilities nearly as effectively enough.
However, we?ve created the capability for people to send their ideas into P&G via a website ? www.pgconnectdevelop.com ? and anybody anywhere in the world can send their ideas into us. Last year, we had over 4,000 submissions come in, with 300 of those coming from the UK, which was the number-two country for submissions globally. It?s been up and running for just about a year, so we don?t have any success stories to discuss yet, but there are some great projects going on internally, where people have brought ideas in via the website that are now being funded for development and collaboration within P&G businesses.
Now, on the one hand, I?m kind of excited about this; on the other, I?m kind of depressed. If you go to the website, you can read it, I can read it and all English-speaking people can read it, but I think it?s really short sighted to assume that innovation can only be communicated in English, so we are getting a Japanese site and a Chinese site up and running soon.
So, I need to do a better job of communicating our needs ? and our needs are also listed at pgconnectdevelop.com ? but I know that there are people out there who will say: ?I had no idea that P&G would welcome ideas from outside the company.? There?s so much opportunity, there are so many companies we haven?t spoken to that, for me, we are still very much in a growth business.
WHAT TYPES OF PEOPLE AND BUSINESSES WOULD YOU LIKE TO BE APPROACHED BY?
We are looking for people who have ideas that can help drive our business and new products and capabilities that we can take to the market. In addition, we are looking for businesses that have the capabilities to help us work smarter and reduce our costs. On the product side, we tend to do better with goods that are closer to the market, which with further development could be in the marketplace within one to three years. The probability of success goes up the closer a product is to market. For that reason, we tend to collaborate less with companies or universities that have ideas that are more upstream because the odds of those making it to market are a lot lower and it?s a lot harder to predict their value. In terms of businesses, 70% plus of the work we do is with smes ? although when you are an $85 billion company, nearly everyone is smaller than you. However, it?s more the quality of the idea, not who?s bringing it.
One of the key things we?ve learned is that we like products that have a really robust IP and that are really unique. It?s hard for us to justify making huge investments in bringing products to market when competition will follow very quickly with just a few minor variations. We like to try and make the IP even stronger if we collaborate with companies ? it enhances our ability to protect it and also ensures we have lead time in the marketplace before we have competition following.
COLLABORATION IS KEY TO INNOVATION AND IMPROVEMENT. CAN YOU GIVE EXAMPLES OF SUCCESSFUL COLLABORATIVE VENTURES P&G HAS UNDERTAKEN?
We have a relationship with Astra Zeneca in the UK that uses beauty-imaging technology. The company was very focused in the healthcare field, being able to analyse skin and indentify medical conditions. But, by working with them, we found that that technology readily translates into being able to analyse skin to help consumers decide which beauty products best suit their needs. It?s fascinating to be able to take a techonology driven towards one application ? in this instance health ? and also use it for another ? beauty.
Another example of a company that we are collaborating with is Inverness Medical, with whom we have a 50/50 joint venture managing the Clearblue pregnancy diagnostic. Again, Inverness is focused on taking its products into the medical community, while P&G is focused on taking them into the consumer. In the US, we have a joint venture with a competitor of ours, Clorox, producing rubbish bags and food storage containers. P&G has a 20% share of the business. The point is that we are very flexible on deal structure, on what makes sense and on what is right. We have several indicators of the success of a venture: when all is said and done, the products that get to market that consumers like and buy are successful. We get pretty excited by these and they are what drives us.
HOW DO YOU THINK P&G CAN DEVELOP ITS ROLE IN UK INNOVATION?
The UK is a terrific hotbed of innovation, and I think we need to do a better job of tapping into it. We also need to find ways of making sure that people know the kind of things that are going to appeal to us. It?s a much better place to innovate in when you know there are intended targets that want the solution, as opposed to hoping your idea will find a home somewhere.
WHAT DOES THE FUTURE HOLD FOR P&G?
We really are open for business and we really do want people to call us. To be clear, we turn down around 95% of the things that come to us, but people shouldn?t be intimidated by that because if they are one that makes sense for us to do something with, then it can be a very big accelerator for value creation for both our partners and ourselves. We aspire to be responsive, so even if we aren?t interested, we aim to give a timely no thankyou if it doesn?t fit. What P&G is aspiring to for the future is earning the respect of people for being responsive and, ultimately, earning the right to be the partner of choice.
Added the 27 August 2009 in category Innovation UK Vol5-1