More Innovation Lessons From P&G

We recently had a great event in my Danish network for innovation leaders. Joachim von Heimburg, who is one of the most experienced innovation practitioners in the European industry, came by for a two-hour session based on his 30 years of experience from P&G.

We touched on many issues and I have inserted a few snippets below.

• On intermediaries: Of the 10 companies present at the session, only two companies had experiences with intermediaries such as InnoCentive and they were only very brief. I was surprised by this low level of interaction. We discussed that employees often get into such experiments in order to prove such intermediaries do not work rather than trying to make it work. One reason for this is the “not invented here” syndrome which is still alive and well in many companies. There is a psychological hurdle to climb here.

• On changing the mindset: Around year 2001, R&D employees at P&G definitely suffered from the “not invented here” syndrome. Former CEO, A.G. Lafley decided this should change and he said that “we will acquire 50% of our innovations from outside P&G.” No date was given, but many R&D people at P&G did not like this direction as they felt their efforts were deemed as being insufficient.

One of the participants asked Von Heimburg whether the employees were given any additional incentives to change their mindset. This was not the case. What changed the mindset at P&G was the persistence of R&D Management in general and of Lafley in particular who used every occasion to ask for updates on the progress towards this goal. This CEO did not give up and bit by bit the new mindset was taking root in the company.

Today, I think many of these employees are very appreciative as P&G has embraced a “proudly found elsewhere” culture giving them many more opportunities to make innovation happen.

• On increasing innovation productivity: Since 2001 P&G’s innovation success rate has more than doubled, while the cost of innovation has fallen. Von Heimburg believes that many companies can get similar gains if they make open innovation a part of their overall innovation strategy. But here is the problem. Almost all companies have a marketing strategy or a sales strategy, but only very few companies have an innovation strategy.

When companies have an innovation strategy, it is also important that they do not just put open innovation on top of this. According to Von Heimburg, companies can only increase their innovation productivity if open innovation becomes an integrated part of such a strategy.

Among many great comments during the session, I really liked this one: “Embracing the outside requires that you really know the inside.” There is no reason to go outside corporate boundaries if the company does not know what is happening within the company. Internal and external resources need to work hand in hand in order to make open innovation happen.

I really enjoyed this session and I can definitely recommend that you get in touch with Von Heimburg if you are planning open innovation initiatives.

You can find a version of Joachim’s presentation on this link: Presentation On Open Innovation