Innovation and New Product Development Case Study

Open Innovation | The Case of P and G

OR

Abstract:
By 2000, in the wake of rapidly increasing R&D expenditure, lackluster new product launches and nearly flat sales, P&G, one of the largest global consumer products companies, decided to revamp its innovation model. The company’s existing innovation model was heavily dependent on its internal R&D department. This model worked well for the company over the decades. However, the above setbacks urged the CEO A G Lafley to reinvent the innovation model to ensure consistent growth. Thus, the company initiated an open innovation model, ‘connect and develop’. The new model encouraged the company to collaborate with external organisations for innovation ideas. Connect and develop turned out to be a successful innovation model and helped P&G launch new innovative products.

The case starts with a short introduction of the problems that P&G was facing in 2000. The next section gives a brief history of the company underlining its innovative products over the period. The case then attempts to highlight the company’s new approach to innovation – shifting from R&D to C&D – and elaborates how it adopted and applied the new model. The subsequent sections present details of what is open innovation and how P&G benefited from it.

Pedagogical Objectives:

• To understand how P&G developed and implemented its open innovation model called connect and develop (C&D)
• To understand the culture of innovation at P&G
• To assess how P&G shifted its innovation approach from in-house R&D to C&D
• To discuss the benefits of open innovation model
• To analyse why open innovation model is important for companies that want to grow consistently
• To discuss how P&G benefited from its C&D innovation model.

Keywords : Proctor & Gamble (P&G); Open Innovation; Nine Sigma; Innocentive; YourEncore; Yet2.com; AG Lafley; Innovation Management Case Study; Closed innovation; Pringles; Connect and develop (C&D); Mr Clean Magic Eraser; Crest; Pampers; Tide

Contents:

• Introduction
• P&G: at a glance
• From R&D to C&D: a new approach to innovation
• Open innovation: driving growth
• Tool for consistent growth
• P&G: reaping benefits
• se It or Lose It