Innovation Strategy In Procter And Gamble Company

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Innovation Strategy In Procter And Gamble Company

Innovation Strategy In Procter And Gamble Company


In a world of widely distributed knowledge, companies can no longer afford to rely entirely on their own internal R&D efforts to create a pipeline of internally commercialized new products and services, but should instead leverage external sources of technology and innovation to drive internal growth. This is one of the central ideas of Open Innovation - a term coined by Henry Chesbrough in his 2003 book by the same name.

“Incremental innovation leads to small improvements to existing products and business processes” Radical innovation results in new products or services delivered in entirely new ways.In the past five years, Best Snacks has instituted incremental innovations that have simply built on previously successful marketing methods such as new packaging sizes. Elizabeth Fairchild is convinced that in order to continue to succeed, more innovative products need to be developed. These new products could fall under semi-radical or radical innovations. While managing I have not had the option of introducing radical changes. So in order to improve business I introduced incremental innovations. I improved inventory procedures, created a new spreadsheet that streamlined the scheduling and budget process, improved the training program, and introduced improved incentive programs. A lot of these changes were presented to other plants in our company and most were implemented at those plants.

Open Innovation should not be confused with outsourcing a firm's research and Product Development functions, and using an external source to supply this business function. Open Innovation is the process of looking for new sources of technology and innovation among the global research and innovation community, and so reaching beyond a specific industry, discipline, or type of collaborative partner. The ultimate aim being to lower risk and speed up the research and innovation process by connecting with someone who has already developed the technology or who is further along on the development path.

In the recent “Management Tools and Trends Survey”, from Bain & Company, “open-market innovation” was included for the first time among twenty-five management tools studied. The executive survey showed that open-market innovation methods are currently being employed by more than 24 percent of respondents.

New challenges

Naturally new models of innovation create new challenges, and the challenge of operationalizing Open Innovation is multifaceted. There are people issues, competitive issues, intellectual property issues, and connection or reach issues that must be identified and addressed.

According to Skip Davis, a director with NineSigma, organizational change of any kind is a difficult process to undertake. People issues often can be the most challenging. Within Product Development and R&D organizations this can be especially difficult due to the “Not Invented Here” syndrome. Competitive issues may also slow the move to open innovation. The idea of putting requests for innovation “out there” globally creates competitive advantage issues. Will I tip off my competitor to my strategic thinking? Will I give away valuable information on new product direction? These are key questions that must be addressed and answered ...