What was the biggest challenge P&G faced when they started the open innovation initiative? And how did they overcome it? Let’s explore answers to these two questions in this article.
In his interview Chris Thoen, Director Innovation and Knowledge Management at P&G says: the biggest challenge was changing the culture: shifting the mindset from “only invented in P&G” to “proudly found elsewhere”.
What were some of the anxieties in P&Gers mind?
A G Lafley explains in Game-Changer – Initially, many people at P&G thought this was the fad du jour. Some were defensive about what C&D could mean to their positions. Some were fearful – was this outsourcing in disguise? Some were worried – does my technical expertise still matter?
How did P&G overcome the mindset challenge?
1. Setting concrete goal: As AG says in Game-changer, “I knew the only way we would dramatically step up our approach to innovation was to establish a measurable target.” The goal was to partner 50 percent of innovations with outsiders. Why 50 percent? AG says – It seemed like an ambitious but possible goal; it was specific and easy to remember (At that time the figure was around 15 percent).
2. Training: P&G introduced new training programs in order to build ambidextrous leaders – those who operate and innovate. For example, a program helps people focus on running an open architecture operation where you need to be truly open-minded in order to be connect and develop. In another program people learn how to build innovation strategy where you create a program that stretches over five, six, seven years. There are innovation specific assignments such as Future Works (funds new game-changing ideas) and corporate innovation fund.
“Clay Street” an idea borrowed from Toy industry creates 6 to 12 week experience where participants work on the fragile front-end (ideation) and any business can send a team in. At “Beckett Ridge” innovation center participants work on the commercialization side (fuzzy back-end).
3. Incentivization: In 2001, two thousand current & former P&Gers were interviewed to isolate leadership behaviours that result in success. In 2003, a new performance evaluation was introduced to all employees. Innovation project teams were evaluated on depth of customer understanding in each step of innovation development, qualification process to improve odds of commercial success, collaboration with a diverse team etc. Success stories were identified and marketed. Those who were passionate and on-board were spotted and made heroes for the rest of the business.
4. Respect for failure: AG says in Game-changer – companies that really want to show their commitment to innovation, and fearlessness when it comes to failure, can promote someone whose project failed – and make the promotion totally transparent. The only reason to punish someone because an innovation project failed is carelessness or laziness. P&G’s feminine care introduced Presidents Fail Forward Award to the “team or individual that enabled the organization to significantly learn from a failure”. In Game-changer there is a page (109) containing “A G Lafley’s 11 biggest innovation failures”. You can see the table here.
Open innovation insights from P&G Connect + Develop
Saying, “We need a culture of innovation” is mostly correct and useless
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