Firms test new R&D models

03 January 2012

NEW YORK: Brand owners like Procter & Gamble, Unilever and General Mills are making enhanced use of open innovation as they seek to drive growth.

Procter & Gamble, the consumer goods giant which spends $3bn a year on R&D, has been a particular advocate of this model, using programmes such as the online Connect+Develop platform, enabling individuals and firms to submit ideas relating to new and existing products.

Steve David, a senior adviser at The Boston Consulting Group, estimated P&G has 8,000 staff dedicated to research and development, measured against a global total of 1.5m researchers working in fields tied to its core fields of business.

"So the numbers are pretty simple: by a ratio of nearly 200:1, there are more people on the outside," David told the Financial Times.

As an example of open innovation in practice, P&G allied with the Viridis Strategy Group and the Wharton Business School in July 2011 to hold a two-day "innovation tournament" where staff and external specialists identified ways to make its plants more eco-friendly.

"It probably would have taken us at least a year to gather input from this number of outside experts," Stefano Zenezini, P&G's family care product supply vice president, said. "Overall, it was a more resource efficient process and produced more robust options."

Another leading instance of this kind of approach was Apple's iPod MP3 player, a concept conceived by Tony Fadell, once of Philips, who could not source enough capital as an individual to support the idea, so pitched it to big electronics firms.

"The key in generating ideas is to have the right problem and to define that problem," said Roger Leech, Unilever's open innovation portfolio and scouting director at Unilever, the FMCG company.

Along with Kraft, Philips, L'Oréal and Suntory, Unilever has utilised the services of NineSigma, an organisation linking manufacturers and individuals or groups that can help them find R&D solutions.

"You would be surprised how much R&D goes on in labs that never sees the light of day," said George Vincent, a vice president at NineSingma. "A lot of innovation ideas are sat on a shelf and not being exploited. And that's our job."

General Mills, the packaged food firm, has also recently launched G-WIN Digital, asking the public to provide suggestions about leveraging marketing tools including mobile, social media and online video.

Mark Addicks, CMO of General Mills, said: "We call it 'market while we research, research while we market.' Those used to be discreet functions. Today, it's finding partners, trying something on the brand and really watching and learning as we go and continuing to iterate."

Data sourced from Financial Times, Fast Company, Knowledge @ Wharton; additional content by Warc staff