Open Innovation

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UNIVERSITY OF BATH, MSC IN INNOVATION AND TECHNOLOGY MANAGEMENT

Connect and Develop
P&G's big stake in open innovation

Limali Panduwawala Suvidha Venkatesh Pedro Parraguez Xiajing Zhang

27/11/2009

Abstract: This report explores P&G's "Connect and Develop" open innovation initiative. Its focus is to analyse this innovation strategy in the context of the formal academic theory, other P&G's programmes and the company situation. Its objective is to understand the impacts, challenges and problems of implementing a large open innovation initiative inside a corporate giant such as P&G. Keywords: Procter & Gamble, P&G, Open Innovation, Connect and Develop, Innovation Networks

Connect and Develop, P&G's big stake in open innovation

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Introduction

Innovation is the main driver for economic growth and progress of companies. In the age of the internet, it assumes even greater importance as maintaining competitive advantage becomes tougher with technology that brings the world closer and collapses the concept of time and space. Procter & Gamble is a company that has been a pioneer in this field of innovation. They are global manufacturers and marketers of consumer products with complex operational networks. P&G have been able to maintain their position in the market by adopting various innovation techniques and strategies. This report looks at the innovation strategies adopted by P&G, particularly with a focus on Open Innovation. The report describes the theoretical framework of the innovation model the company has used along with its Innovation strategy and its management, followed by an analysis of the P&G Open Innovation model, its problems and challenges and our conclusions.

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2.1

Theoretical Framework
Innovation networks

One assumes that innovation is a stand-alone concept which works well independently. In reality this is not true. To convert a good idea into a profitable product/service a lot more input from different people and different perspectives is required. Making innovation happen is about bring people or teams together in a creative and productive manner. In the era of globalisation with access to high-speed infrastructure and with teams on the move all the time, building, maintaining and developing networks becomes the key issue in the process of innovation. Usually innovation is seen as core process with a defined architecture with external influences acting on it. However, in reality it is not such a simplified structure. It is far more complex than that. The path of knowledge around an innovation project is more complex and interactive, appearing like some kind of ‘social spaghetti’ where different people talk at different times about different issues. (Tidd and Bessant, 2008) A network can be defined as a complex interconnected system or structure, which is used to get work done. A network consists of nodes or points of action which are occupied by 2

Connect and Develop, P&G's big stake in open innovation

individuals, companies, research institutions, universities, governments, customers and so on. These networks are greatly affected by how economic activities are influenced by the social setup and the position that the nodes or points occupy in the network. Therefore, a network can be influenced in two ways, i.e. by the interaction within the network and through the differences in position of the nodal players, which can cause power and control imbalance. Networks work best when the advantages of Co-specialisation, sharing infrastructure and standards and other benefits outweigh the costs of network governance and maintenance. (Tidd and Bessant, 2008) The above mentioned innovation networks, are the conceptual grounds where the Open Innovation (OI) model emerges, thus they are a critical structure to understand P&G's Connect and Develop model. 2.2 Open innovation

In the traditional model of innovation, the focus was mainly on research and development laboratories,...
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