A2X Consulting

When it comes to new ideas for your organization: Does it usually come down to waiting and hoping for that one really creative guy in your office to come up with something novel, radically new? Well, it doesn’t necessarily have to be this way. 

Proctor & Gamble, one of the world’s most successful organizations, in 2002 decided that ‘waiting and hoping’ for all their innovative ideas to spring forth from P&G employees wasn’t the way they wanted to usher their company into the 21st century.

“It became clear to us that our invent-it-ourselves model was not capable of sustaining high-levels of top-line growth. We needed to move the company’s attitude from resistance to innovations ‘not invented here’ to enthusiasm for those ‘proudly found elsewhere’.”
(Larry Huston & Nabil Sakkab on P&G’s innovation model)

And that’s when P&G created the Connect & Develop program for innovation which integrates ideas and talents within and outside the company. With its R&D networks InnoCentive, NineSigma, and Yet2, today 35% of P&G products come from outside the company.

Innovation till recently was managed as per the traditional invention model ‘“ advanced R&D facility to develop and confine innovation for business. Answer to the speedy change in today’s global economy is open innovation.

‘Innovation used to be managed in a closed, internally focused manner. Innovation today must be managed as an open system, with a far greater external focus’ says Henry Chesbrough, author of the book Open Innovation.

This model focuses on collaborating diverse sets of people and institutions around the globe. These collaborations assimilate and share ideas inside and outside the company. Like P&G, IBM and Intel are successfully sourcing ideas from university projects, start-up companies, etc to turbo charge their businesses.

What are the advantages of this model of innovation? Apart from increasing the pool of ideas, this model triggers competition between internal and external groups which in turn results in faster learning. The flip side to this model is that distributed, diverse people and institutions create management issues like working toward a common goal, contribution evaluation, etc. The more diverse the group the more complex the problems can be.

Is collaborative innovation again a big-business topic or small businesses can also explore? Open innovation is open to everybody ‘“ big or small ‘“ size does not matter. The world is a big lab of creative, talented people ‘“ waiting in wings to develop and share ideas. Its time executives challenged their traditional ways of thinking within their own groups and networks. Rather than focusing on operational efficiency, capability to fight and win uncertainties with open innovation is the demand of the hour; the world is your innovation lab.