Going Open in an Already Innovative Company: Reckitt Benckiser
Reckitt Benckiser (RB), a leading global household, personal care and OTC pharmaceuticals company has launched RB-Idealink. This is a microsite designed as a highly interactive gathering place wherein all site visitors are invited to “pitch” their inventions and innovations to company leadership.
It looks good although there is not much new compared to what we have already seen in the arena.
I did spent some time checking up on RB as they seem to have a healthy innovation culture that has made RB the fastest growing company within household cleaning, health and personal care. Nearly 40% of their sales come from products launched in the past 3 years. Quite impressive…
On the corporate RB website, I found an interview with Rakesh Kapoor, Executive VP, Category Development from the Economist Intelligence Unit, (end 2008). Here Kapoor shares some good insights on how to create an innovation culture and I have inserted some snippets below.
RB is relatively large – what are the benefits and drawbacks for innovation? Do better resources compensate for being perhaps less flexible than smaller companies?
This is a key issue. Talented people don’t want to work in bureaucracies. They want to work in companies where can get things done. They want an environment where their ideas will be accepted. They want to be given real ownership for their business. This is why we focus so much on our culture. You have to act like a small company. This is why we are a ‘principle’ oriented company, not a process oriented one. Size can give you scale, but for innovation speed is more critical. This is why our culture is absolutely critical to our success.
What is key in creating a culture of innovation? Is it pay and processes or something more? Do reward structures encourage innovation – and if so, what works best?
At RB, it’s all about letting people have ownership of the idea and delivery and not putting too many decision layers in their way. It’s attitude, not process, that drives our innovation. You can’t remunerate for innovation in particular, but you can reward for overall success – in other words the outcome of great innovation. It’s just like entrepreneurs, who make their money by the success of the innovation in the market, not by the number of times they have a go at it. We are very much about pay for performance.
This is a company that impresses me with their approaches to innovation. They seem to have a more conscious approach to 'win-win' relationships than others in the same competing space.
We launched RB-Idealink in 2006 with three key objectives in mind. First, to help make people aware that RB was already "open". Second, to highlight the areas of technology and product that we wanted. Third, to introduce a system to organise and harness all the ad hoc approaches that a large company receives every day. To the unaware, RB is surprisingly big (£7,8bn sales) so awareness is key.
Like all companies who believe they do Open Innovation well, the RB-Idealink portal is only part of the story. RB couldn't deliver the innovation performance it does, at the same time as having the most efficient R&D organisation in its industry, without an excellent approach to Open Innovation.
Kevin, thanks for the additional information. Can you shed some light on why RB has an excellent approach on open innovation besides the RB-Idealink initiative?
Hi Stefan,
The main reasons for RB's success with Open Innovation can be grouped into
- culture
- leadership
- organisation
The culture is very driven and highly focused on results. This means that what you achieve is much more important than how you achieve it. The stated values of the company are – achievement, entrepreneurship, ownership and teamwork. Notice the "entrepreneurship" one; it's unusual for a £8bn company to be so entrepreneurial. People are encouraged to take risks and get the fastest route to a solution, which inevitably brings Open Innovation into the mix. Culturally, people will go to the solution wherever it is and judge it on its merits, not whether it's internal or external.
On leadership, here's a direct quote from CEO Bart Becht – "We’ll look at ideas from anywhere. Some come from our competitors; we see if they are doing something new and see if we can do it better. We’re not proud." That same principle extends to a very low level of NIH. There are very high financial rewards for senior managers for the achievement of results, which again drives people to a result not a method.
RB has a very flat structure, which means fast decisions (not consensus), it's highly networked internally, and has minimal silo attitude. R&D is a corporate resource, so there is no regional or business fragmentation, and scouting is done very well. The R&D people network very well with the marketing teams, both formally and informally, so the technical people are very commercially aware.
RB-Idealink neatly pulls this together for the outside world, and acts like "the cover on the book".
In addition to the results on innovation, analyst reports have shown that RB has the lowest spend as a ratio to sales, but the highest output in sales per R&D dollar in its industry, better than P&G, Unilever et al. This is also an influential factor – resource is valuable, if it isn't enough you will look outside.
Finally, nobody has Open Innovation in their job title – the company doesn't need it, it's everybody's job.
As background I worked at RB (and its predecessor Reckitt & Colman) for 17 years. My last position was Global Director, Strategic Alliances, reporting to Rakesh Kapoor, and I led the development and introduction of RB-Idealink.
Best regards
Kevin
Hi Kevin, I've got a few questions (I'm helping a professor do research on RB):
1. Are there any specific examples of ideas that came from outside RB, through Idealink or otherwise, that became successful innovations for RB?
2. Lots of companies ask for input or ideas from customers. Is there anything about how RB does it that you think is unique?
3. Why are outsiders willing to provide suggestions and ideas? What is the motivation? That is, other than licensing fees, since everybody offers that. Are there reasons other than the "sticker price" offer that motivates outsiders to approach RB with their ideas?
Thanks, very interesting stuff so far on the topic of innovation.