Procter and Gamble case study; Harvard Business Review

It is a case study of P&G which produces fast moving consumer goods.

1. Procter & Gamble Members Dristi Acharya Kabina Maharjan Priyanka Sah Shikha Sapkota

2. Heart of P&G’s Business Model Innovation Culture

3. What sets P&G apart? Common Focus: Consumer Practice of Open Innovation Example: Osaka Connection

4. Reasons for Open Innovation To broaden capabilities 2 ) For realizing the essential growth 3) Fostering Team

5. The Consumer Is Boss Put the consumer at the center of everything they do People using P&G products provided P & G with rich sources of information Linked the concept directly to innovation Build better connection Acquired the Max Factor and Ellen Betrix cosmetic and fragrance lines from Revlon Inc. But slow growth and low margin hit Measures to open innovation culture

6. What they did? Define target consumer for each fragrance brand Identify subgroups of consumers for some brands Maintained partnerships with established fashion houses, such as Dolce & Gabbana, Gucci, and Lacoste. Focused on a few big launches and on innovation Digital and direct interaction with consumers

7. 2. Integrating Innovation Refining product launch model Scaling innovation- the what, why and how? Not considered innovation to be scalable in past Focus was only on R&D Business development group was small Maintained open work system to build social innovation opportunities a. Open office spaces for executives b. An open and round conference room

8. 3. The Talent Component P&G encouraged curiosity, collaboration and connectedness Collaborative employees Connect outside sources for emotional intelligence Soft skills creating a product

9. 4. Integrative Thinking Thinking about an idea or concept while keeping the customer at the center Example: Febreze, odor-control product got rejected in Japan Changed the viscosity of the product: a. Fragrance from high profile to a very low profile scent b. Bottle to a much more delicate design c. The spray pattern to a mist Became a phenomenal success in Japan Better innovation process can expand their personal and leadership skills

10. Market Capital was dropped by Half Only about 15% of the new brands and product that they brought to market were successful commercially. Nowadays, R&D isn't enough Classical optimization measures were inefficient. What Was Happening?

11. Open innovation is the practice of businesses and organizations sourcing ideas from external sources as well as internal ones. The Solution: Open Innovation So P&G introduced open innovation called C&D( Connect and Develop) model of innovation

12. P&g launched a new line of pringles potato crisps with pictures and words on each crisp. 2 years—----------------------------------->>less than a year First Product to be developed Using C&D

13. 2000(R&D) 2005(C&D) Was it Innovative? Invent-it-ourselves mode l - Not capable of sustaining high levels of top-line growth. Important Innovations -Done at small and midsized entrepreneurial companies,individuals, University and government Innovation Success rate 35% 60% R&D investment as percentage of sales 4.8% 3.4% Stock $118>$52 -Double Share price -Portfolio of 22 billion dollar brands R&D To C&D

14. What to look For? Seek id eas that had some degree of success. Ideas for success. Ideas and products that will benefit from P&G competencies. How to look for? Products or concepts that can solve customer needs. Look for products that can take advantages of existing brand equity. Evaluate the technology moves. P&G is best known for its personal hygiene and household cleaning products like: crest, chaimin,pampers , tide and Downy. C&D for Open Innovation

15. 1.Top Ten Consumer Needs Products that reduce wrinkles, improves skin texture and tone. Products that clean effectively using cold water. 2. Adjancencies New products or concepts that can help us take advantages of existing brand equity . 3. Technology Game Boards To evaluate how technology acquisition moves in one area might might affect products in other categories. For example: Which is our key technologies do we want to strengthen? Of those that we already own, which do we want to licence , sell or develop further? Surveillance to 3 Environments :

16. Network

17. Technology entrepreneurs - 70 technology entrepreneurs - lead development and technological briefs - external connection - collects data sources by exploring market - For example Mr. Clean Magic Eraser. Suppliers -15 top suppliers consist 50,000 R&D staff - secure IT platform - solution with suppliers - 30% increase - co creation Proprietary networks

18. Open Network NineSigma InnoCentive

19. YourEncore connects about 800 high-performing retired scientists and engineers Low cost, deep experience people Yet2.com  

20. Connect or not?

21. Selection process

22. Push the culture Nurture an internal culture change New mechanism - finding if related work is done by others - external sources has a solution or no - invent solution from start - rewards given to who are involved in development of product - two goals ; rise idea to surface and not invented here syndrome

23. Domination of connect and develop Alternate invent-it-yourself model going down Driven by top leaders Accept or die