Note that the boundary between the company and its surrounding environment is porous, enabling innovations to move more easily between the two." (MIT Sloan Management Review: The era of open innovation, Henry W. Chesbrough) Having this in mind Procter and Gamble created their "Connect and Develop" innovation model.
In order for "Connect and Develop" to become what Procter and Gamble envisioned the company realized it was of the outmost important not to use time and valuable resources on ideas that may be interesting at first but later on prove to have no concrete, specific application. And it is what all companies should do when in search of a partnership or a collaboration, they must make sure the idea they agree to develop is a viable one and shall lead to the creation of a product that will meet the needs of a certain target market. Procter and Gamble had to decide early on what their target areas would be, for applying the "Connect and develop" concept. They have decide that the these closed innovation approaches: "If we are the first to commercialise an innovation we will win" and "If we create the most and best ideas in the industry we will win" are obsolete in comparison to "Building a better business model is better than getting to market first" and "If we make the best use of internal and external ideas we will win." (MIT Sloan Management Review: The era of open innovation, Henry W. Chesbrough). They thus took the decision not to limit themselves and their innovation within the company and within a certain industry. That is why even though Procter and Gamble was best known for its house-hold cleaning products and products used for personal hygiene they got involved in other industries too and currently produce more than 300 brands that include snacks and beverages, pet nutrition, prescription drugs, fragrances, cosmetics and various other categories. (Harvard Business Review: Connect and Develop, Larry Huston and Nabil Sakkab) This represents another important challenge for any company that aspires to become an open innovator, not to limit themselves to a single industry, to the area they had started with, but do their best to expand in order to include a large number of brands and products. In addition to that they should not be at all reluctant to "profit from other's use of our intellectual property and we should buy other's intellectual property whenever it advances our own business model." As that is the way, open innovators evolve and improve their quality products, in contrast with "We should control our intellectual property so that our competitors do not profit from our ideas.," representing the closed innovation model." (MIT Sloan Management Review: The era of open innovation, Henry W. Chesbrough).
Making all the necessary changes for a company to transform itself by deciding to use the six principles Open Innovation instead of the principles specific for Closed Innovation is the toughest challenge for organizations. It does not only imply a change in the actual way their business is led, but also a change in mentality. The latter is often difficult to achieve as not many CEO's and companies are willing to so easily discard the way they have done business for generations. Unfortunately there seem to be less and less opportunities for individualist companies to keep their leading positions as top players in today's and especially tomorrow's economic environment. To succeed in the new economy a company faces the difficult task of having to create a large and valuable network to insure that they are in constant connection with the best innovators around the world.
At Procter and Gamble widespread networking is highly valued: "Our global networks are the platform for the activities that, together constitute the connect -and -develop strategy." (Harvard Business Review: Connect and Develop, Larry Huston and Nabil Sakkab). Here are some examples of the networks that have proved to be most useful for Procter and Gamble. They have a network of 70 technology entrepreneurs around the world. These technology entrepreneurs work in six connect- and- develop hubs in China, India, Japan, Western Europe, Latin America and the United States.
Another type of networks they have implemented is Open networks. They include four types of networks. NineSigma mainly deals with connecting companies that have science and technology problems with companies, universities, government and private labs and consultants that can develop solutions to various problems.
The second type of Open Network is InnoCentive and quite similar to NineSigma, but for the fact that it deals with more narrowly defined technological problems.
The last Open Network is Yet2.com, which is basically an online marketplace for intellectual property exchange. (Harvard Business Review: Connect and Develop, Larry Huston and Nabil Sakkab).
Though networking is indeed an important aspect that should be considered for all companies that wish to become open innovators there is also an internal aspect to be considered. Companies that are now "deeply centralized and internally focused," as Procter and Gamble used to be, have to understand that the existence of an internal connection system is also equally valuable. At Procter and Gamble the research and development department knows that they should first find out if any of the other departments are faced with the same problem and if they have found a feasible solution, they should next see if an external source has been faced with a similar problem and only after having done those two inquires should they start and develop a product from scratch. As it can be understood companies should do their best to encourage efficient communication within their own departments.
Last but not least perhaps the most important element needed for connect and develop to be properly applied is the appropriate leader or CEO. He is the one who supervises and organizes the way connect -- and - develop is implemented in the company and understood and adopted by the employees. Each company should ensure itself of having a highly competent CEO, somewhat of a visionary, able to turn the open innovation process into a profitable company strategy, both for the company itself and also for the ones whom it "connects" with. The CEO is the one who establishes the amount of innovation the company should try to get from external sources. He is a key element, so companies should choose him wisely. In the case of Procter and Gamble, Lafley set the high goal of 50% and the company is not far from reach that amount of external innovation.
Whether connect and develop shall be a successful open innovation strategy, only time will tell, but it is my belief that Larry Huston and Nabil Sakkab were quite right when saying "We believe that connect and develop will become the dominant innovation model in the 21st century" (Harvard Business Review: Connect and Develop, Larry Huston and Nabil Sakkab).
Even though it has become more than obvious to everyone that the innovation landscape has significantly changed and that the same obsolete ways of managing and creating innovation are not nearly enough for gaining a competitive advantage in the business world today, there still are many companies reluctant and unwilling to change and transform themselves from closed innovators into adepts of open innovation. If such companies shall fail to understand the vital role that open innovation has nowadays, there future shall be a grim one, as they will find themselves unable to compete with companies such as Procter and Gamble.
To conclude, I emphasize once again what the proper way of thinking in the new economy, with regard to innovation and its implementation should be: "I want P&G to be a magnet for the best-in-class. The company you most want to work with because you know a partnership with P&G will be more rewarding than any other option available to you." (Lafley, P&G Connect+Develop Homepage).
Bibliography
MIT Sloan Management Review: The era of open innovation, Author: Henry W. Chesbrough (undated) Available. Online. HTTP://sloanreview.mit.edu/wsj/insight/pdfs/4435.pdf (accessed 6th May 2007)
Harvard Business Review: Connect and Develop, Authors: Larry Huston and Nabil Sakkab (undated) Available Online HTTP: http://custom.hbsp.com/custom/INNOCR0603C2006032833.pdf;jsessionid=YVENOB4MC1EKCAKRGWDSELQBKE0YIISW (accessed 6th May 2007)
P&G Connect+Develop Homepage Available Online HTTP:
http://pg.t2h.yet2.com/t2h/page/homepage (accessed 6th of May 2007)
Technology Management Journal: "What's mine is mine...What if yours could be mine too?" (December 2004) Available Online HTTP: http://www.tiaxllc.com/aboutus/pdfs/ip_management_tmj_120104.pdf (accessed 6th May 2007)
Connect and develop: Bricks and mortar R&D cracks under pressure (updated 13th August 2006) Available Online HTTP: http://www.w2forum.com/i/Connect_Develop:_Bricks_Mortor_R_D_cracks_under_pressure (accessed 6th May 2007)
Communications Innovation at L3 Communications Company Background Innovation Strategy Planning for Innovation Management Systems and Innovation Metrics Rewards and Incentives Organizational Learning Leadership's Commitment to Innovation Leadership's Innovation Strategy Involvement Ethics in Innovation Company Background L-3 is a prime contractor in Command, Control, Communications, Intelligence, Surveillance and Reconnaissance (C3ISR) systems, platform and logistics solutions, and national security solutions; L-3 is also a leading provider of a broad range of electronic systems used on military and commercial platforms (L-3, N.d.). The company's
L3HarrisIntroductionL3Harris Technologies, Inc. is a global aerospace and defense technology innovator, delivering end-to-end solutions that meet customers\\\' mission-critical needs. The company provides advanced defense and commercial technologies across air, land, sea, space, and cyber domains; and it focuses on offering solutions that disrupt the industry standards (L3Harris, 2023). Thus, L3Harris is known for its innovative solutions, but as a publicly traded company with headquarters located in Melbourne, Florida, it is
Innovation & Creativity FedEx was founded as an innovator in a logistics field that had never seen overnight delivery before. The company has always positioned itself as a premium provider in the business, based on its sophisticated technology, superior network size and quality of service. However, as the company has matured, its ability to be an innovation leader is being threatened. There are a few different issues at play. The first
Corporate Social Responsibility Literature Review a topic-Corporate Social Responsibility The term 'corporate social responsibility' is a social word that has often taken the world by a storm at its mention. Noya and Clarence (2007) in their book "The social economy: building inclusive economies" offers a succinct description and understanding of what normally takes place and get exemplified at the mention of this term in the business world. Many writers of business journals
Corporate Social Responsibility in Indian Pharmaceutical Industry An Exploratory Study Outlook of CSR in India History of CSR in India Philanthropy in Indian Society Modern Form of CSR in Indian Society Profile of Indian Pharmaceutical Industry Rationale for Selection CSR Activities by Indian Pharmaceutical Companies Major Influences Over CSR Activities Scope of CSR Activities Comparison of Indian & Western Pharmaceutical Companies This research paper is concerned with the recent practices of Indian pharmaceutical companies in the field of corporate social responsibility. For
" The process feature revolves around "the general business process and practices that enable functional groups to operate effectively and collaborate toward a common goal - as well as a robust set of innovation methodologies and tools." Finally, the structure component has refers to the "organizational structures and supporting technologies that enable collaboration across functional lines" (Innovation Point, 2004). Otherwise put, the ophthalmologic clinic has to focus on implementing a
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now