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A leading innovation and marketing blog from Braden Kelley of Business Strategy Innovation

Thursday, August 27, 2009

Making the Change to "Proudly Found Elsewhere"

Interview - Chris Thoen - P&G

I had the opportunity to interview Chris Thoen, Director Innovation & Knowledge Management at P&G about the challenges of shifting an organization as big as P&G from closed innovation to open innovation, and the P&G Connect + Develop program. Dr. Thoen is a twenty year P&G veteran who started his career as a research scientist in the Fabric & Home Care division and now heads up the Global Open Innovation Office, also known as Connect + Develop.

Here is the text from the interview:

1. When it comes to open innovation, what is the biggest challenge that you see organizations facing?

For P&G specifically, changing the culture was a big challenge. Shifting from inventing everything internally, and owning all the IP to an open culture, with shared risks and rewards was a huge leap. You find that not everyone embraces open innovation at the same speed, or to the same degree. It's a journey, and while P&G has come a long way, there is still a lot to do.

2. What was the biggest barrier P&G had to overcome in the move from closed innovation to open innovation?

It's aligned with that same theme - the internal culture change. P&G has incredibly talented employees - employees who are proud of the work they do. Moving from "only invented at P&G" to "proudly found elsewhere" required a change in mindset. It was important that employees realized that Connect + Develop was not another name for downsizing and outsourcing jobs but instead, a strategy to ensure sustained business growth for the Company. Leveraging open innovation as a way to increase capacity for our internal researchers makes sense. We recognized that we should concentrate on what we do really well and look to partner externally in instances where others can either do better or faster to bring products to market more quickly. And always, always, we have the end in mind...to continue to bring new and improved products to delight consumers.

3. From your experience, what are some of the keys to successfully engaging employees in an open innovation effort?

This is a challenging one, mainly because of the culture change employees will face. When P&G started our journey we didn't have all the answers. But we've learned a lot, and here's a few things I'd share. First and foremost, building rewards and recognition into P&G's career development related to Connect + Develop. Including Connect + Develop in work plans helps to ensure continued adoption of this approach and helps to change the mindset of open innovation as a 'threat' to open innovation as an 'productivity enabler'. Success stories are the best way to highlight the value of open innovation, with increased capacity and capability through collaboration with external innovators and experts. A great example of this is the Sonic toothbrush. P&G was looking at entering sonic toothbrush market. We considered doing it ourselves, but projected 3-5 years before going to market. Instead, we partnered with one of the largest home electric product companies in Japan (cannot name partner due to confidentiality) and went to market in fraction of the time (18 months) and cost. Finally, I'd add that you have to champion the early adopters. Whether it's an individual or a business, you take those who are on-board, passionate, and have embraced open innovation and you make heroes of them to the rest of the business. The more you can publicize success, the more you'll see that others want to be a part of it.

4. Was it difficult to convince partners and suppliers to participate in P&G's open innovation efforts?

Not at all. I think it's important to recognize that this isn't something you communicate like a marketing plan - we don't advertise that we are looking for participants in open innovation. It's a process that begins with networking and building relationships, and grows into productive business transactions that benefit both participants as well as consumers, who get products in market faster at better value. With respect to P&G, the company enjoys a solid reputation and has an internal culture with a purpose and principles to improve consumer lives now and for generations to come. What P&G was not well known for initially was being an open innovation partner. We've worked hard over the past decade to change that perception. We've made great progress and were voted Preferred Innovation Partner this year by marcus evans group (sic), a peer innovation community. But we know we need to do more and we will continue to look for new opportunities to collaborate externally and to become the preferred innovation partner.

5. What are some of the keys to successfully engaging partners and suppliers in an open innovation effort?

Approaching 'partner understanding' in a similar way to consumer understanding. To become the 'partner of choice' requires being outwardly focused to understand partner's needs, concerns, expectations, goals, etc. and finding ways to delight them at the first moment of truth (their initial contact with P&G as a potential partner) and the second moment of truth (during the collaboration). And at the monetary level, ensuring that partnerships are truly a win/win for both sides. We often coach internally and ask the question "Would you sign for either side?" In doing so, we increase the likelihood of repeat partnerships. And we build a solid reputation as a true partner of choice.

6. What skills do you believe that managers need to acquire to succeed in an innovation-led organization?

Adaptability to change, entrepreneurial skills, sensible risk taking behaviors. Being able to identify and remove organizational roadblocks to open innovation. Continual questioning of status quo and looking ahead to find new solutions. Actively working internally to drive culture change, while remaining laser focused externally at consumer needs. At the end of the day, the consumer is still the boss.

7. If you were to change one thing about our educational system to better prepare students to contribute in the innovation workforce of tomorrow, what would it be?

More active involvement in real life work settings vs. in the lab. A great example of how we've been working to drive more interaction locally is the Live Well Collaborative with University of Cincinnati. The Collaborative is a non-profit independent structure, with a number of companies and the university, who collaborate on a "fee for service" basis and provide strategic leadership/management. The focus area is Baby Boomer population 50+. Participating companies pose a challenge for a new product/service and the university researchers, professors, and co-op students work against that for a 10 - 14 week period. This give real life business experience, and provides jobs to students and faculty. This is a great example of how university collaboration works really well.

Tell Me More

If you'd like to hear more of what Chris Thoen has to say about the challenges of open innovation, he will be speaking at the Open Innovation Summit, taking place December 2-4, 2009 in Orlando, Florida along with several other open innovation leaders, authors, and consultants. Dr. Thoen's talk is currently titled:

"How To Brand Yourself As A Partner Of Choice And Turn Ideas Into Profits"

September 18, 2009 is the last day for the $400 early bird discount.

Blogging Innovation readers can save an extra $300 by registering using the discount code - NXB458. More than enough to add Workshop B to your innovation experience.

See you there!

Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

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Blogger Vinay Dabholkar said...

Braden, thanks for posting this interview. What I liked most was the focus on the "biggest challenge" and how it was dealt with by P&G.

I feel all the 4 learnings Chris mentioned (Q3): (1) building rewards & recognition (2)including initiative in the work plans (3) Highlighting the success stories and (4) champion early adopters, are applicable to any change initiative (not just "open innovation").

IMO Chris missed out on one important learning (and A G Lafley brings it out forcefully in Game-Changer) is: Power of setting simple, concrete and challenging goal. In this case, AG set a goal of 50% innovations to come through collaborations *outside* P&G.

For some more insights on P&G C+D initiative check out: http://cataligninnovation.blogspot.com/2009/05/open-innovation-insights-from-p-connect.html


3:12 AM  
Anonymous pcw said...

I was interested in your take on P&G's rather revolutionary approach to change and specifically its move to 'open innovation'.

P&G, long a closed-mouthed corporation, and I don't mean to be negative about that aspect, has through its recent publications and interviews opened itself up to outside comment. There is much to learn from this organization.

With the new openess I was sufficiently motivated to do a review of P&G's culture for innovation, both past and present.

You might be interested in having a look; www.corporateinnovationonline.com

6:57 AM  

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