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OPEN BUSINESS MODELS Procter & Gamble:

Connect & Develop

112 Outside-In

PATTERNS In June of 2000, amid a continuing slide in company's ip internal r&d
other
Procter & Gamble’s share price, longtime P&G
executive A.G. Lafl ey got the call to become the
technology
consumer product giant’s new CEO. To rejuve- entrepreneurs
nate P&G, Lafl ey resolved to put innovation back 1 Technology entrepreneurs are senior scien- internet platforms
at the company’s core. But instead of boosting tists from P&G business units who systemati- your-encore
external
R&D spending, he focused on structuring a cally develop relationships with researchers scientists
at universities and other companies. They also
new innovation culture: one that moved from retired internal r&d
act as “hunters” who scan the outside world scientists
an internally focused R&D approach to an open for solutions to internal P&G challenges.
R&D process. A key element was a “Connect &
Develop” strategy aimed at exploiting internal 2 Through Internet platforms, P&G connects
research through outside partnerships. Lafl ey with expert problem-solvers around the world. leveraging internal r&d
set an ambitious goal: create 50 percent of P&G’s Platforms such as InnoCentives (see p. 114)
allow P&G to expose some of its research prob-
innovations with outside partners at a time when
lems to non-P&G scientists around the globe.
that fi gure was closer to 15 percent. The com- Respondents earn cash prizes for developing
pany surpassed that goal in 2007. Meanwhile, successful solutions.
R&D productivity had soared 85 percent, even
though R&D spending was only modestly higher 3 P&G solicits knowledge from retirees
compared to when Lafl ey took over as CEO. through YourEncore.com, a platform the com-
pany launched specifi cally to serve as an open
In order to link its internal resources and
innovation “bridge” to the outside world.
R&D activities with the outside world, Procter
& Gamble built three “bridges” into its busi-
ness model: technology entrepreneurs, Internet
platforms, and retirees.

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