P&G takes flexible approach to innovation

06 January 2010

CINCINNATI: Procter & Gamble, the US consumer goods giant, is taking a flexible approach to innovation as it seeks to broaden its portfolio.

Accenture, the consultancy, stated in a recent report that a growing number of major corporations are looking to "open innovation", and pulling in ideas from outside sources.

AG Lafley, Procter's former ceo, set a target of increasing the proportion of new offerings produced in this way from 15% to around 45%.

When he was replaced in this role by Bob McDonald in July 2009, it was estimated that this figure actually stood at 50%.

In-keeping with this trend, the Swiffer, one of P&G's most successful recent launches, was made by Unicharm, a Japanese company, which then partnered with the Cincinnati-based firm.

The Mr Clean Magic Eraser, based on a sponge that was first available in Japan, and Olay Regenerist, which used a formula discovered by a small French firm, both emerged via this route.

Jeff Weedman, vp of external business development at Procter & Gamble, argued "we don't care where good ideas come from, as long as they come to us."

The reach and scale of the world's biggest advertiser, and its considerable marketing resources, were among the factors that made it an attractive organisation in this area, Weedman said.

"We're not going to use everything that shows up, but we want to be the preferred partner," he added.

The owner of Tide and Pampers has adopted a pragmatic strategy thus far, buying the rights to some products, taking others under licence, and forming joint ventures as appropriate.

Glad ForceFlex, for example, came to market through a partnership with Clorox in 2004, after P&G approached Ole-Bendt Rasmussen, a Danish inventor, to his technology in the bin bag range.

Jeff DeGraff, a professor at the Ross School of Business at the University of Michigan, regards the 172-year-old organisation as being a trailblazer in the field of innovation.

"P&G was the poster child for this movement, showing large companies with growth challenges that this is not just for Silicon Valley or Ann Arbor," he said.

Data sourced from Business Week; additional content by Warc staff