How Procter & Gamble Uses External Ideas For Internal Innovation

Using its own version of open innovation called Connect + Develop, Procter & Gamble is now accessing externally developed intellectual property to accelerate internal innovation.

Is there a better way to approach new product development?

Traditionally, companies analyze their internal capabilities and target customer markets to identify new opportunities. But when pursuing initiatives that aim to create both business value and societal value, companies need a different starting point. That starting point brings together constituencies with different interests, perceptions and capabilities.

That’s according to Alexander Zimmermann, Peter Gomez, Gilbert Probst and Sebastian Raisch, authors of “Creating Societal Benefits and Corporate Profits,” in the Spring 2014 issue of MIT Sloan Management Review . The authors looked at how companies have found a way to build ventures that yield not just important public benefits but also make money.

One example: Procter & Gamble’s Connect + Develop open innovation program. The program was established to ensure that the company’s business innovation leaders consider external expertise and multiple stakeholders’ perspectives.

Proctor & Gamble says on its website that “Through Connect + Develop as well as our crowdsourcing platform Co-Create, P&G is collaborating with individuals and companies around the world to develop innovative ideas and products.”

One recent Connect + Develop initiative is the Live Well Collaborative, which was founded by Procter & Gamble and the University of Cincinnati. Its goal is to specialize in research and development of products and services for the 50+ market.

Some details about the Collaborative from the MIT SMR article:

  • Live Well united a variety of societal actors, including Citigroup, the University of Cincinnati’s design school and the Singapore government.
  • By designing products and services to assist an aging population with its health and mobility needs, Live Well responds to critical demographic changes.
  • In three years, Live Well generated ideas that led to eight new business projects and 20 unique product and service concepts, all designed to make life easier for older people.

“The use of biomechanical virtual modeling to design products and packaging that are aligned with arthritis sufferers’ special needs is a good example” of what has come out of the Collaborative, write the authors.

“Engaging in a process of synergistic public-private value creation has many benefits,” the authors write. “It can stimulate new growth and increase the company’s profits. It can also be a great way of improving customers’, partners’, and other societal groups’ perceptions of the company. Our favorite outcome, however, is the sense of purpose and fulfillment these synergistic value creation initiatives give to employees. In all of the companies we studied, employees’ eyes lit up when we asked about their involvement in these projects.”

For other examples of how companies are teaming up with external players for richer R&D ideas, read the full article.