In 2000 it became clear that P&Gs internally focused approach to innovation and new product development was incapable

of delivering the growth targets that the company had set itself. Despite a research staff numbering 7500, P&G estimated that for every one of its on research scientists there were probably 200 outside the company with the potential to contribute to P&Gs development efforts. When CEO A. G. Laffey challenged the company to obtain 50% of its innovations from outside the company, the quest for a new innovation model began. P&Gs Connect and Develop innovation model seeks to identify promising ideas throughout the world and apply our own R&D, manufacturing, marketing and purchasing capabilities to them to create better and cheaper products, faster. The starting point is to identify what P&G is looking for. The approach was to avoid blue sky innovation and seek ideas that had already been successfully embodied in a product, a prototype or a technology. To focus the search each business was asked to identify its top ten customer needs. These included: reduce wrinkles, improve skin texture and tonesofter paper products with higher wet strength. These needs were then translated into specific technical requirements: for example, biotechnology solutions that permit detergents to perform well at low temperatures. Priorities are then reordered by identifying initiatives which fit with existing areas of brand strength (adjacencies) and those which have permit strengthening of P&Gs strategically important areas of technology (technology game boards). P&Gs innovation network comprises a number of organizations:

Within P&G, 70 technology entrepreneurs are responsible for developing external contacts and exploring for innovation in particular localities and with a focus around particular product or technology area. Suppliers. P&G has an IT platform that allows it to share technology briefs with its suppliers. This is complemented by regular meetings between senior P&G executives and senior executives at individual suppliers which explore mutual development opportunities. Technology brokers. P&G is a member (in some cases a founder member) of several prominent technology brokering networks. These include NineSigma which links companies with universities, private labs, government bodies, consultants and other potential solutions providers; Innocentive, which brokers solutions to science-based problems; YourEncore, a network of retired scientists and engineers; and Yet2.com, an online marketplace for intellectual capital.

These networks generate an enormous flow of suggestions and proposals that are initially screened and disseminated through P&Gs Eureka online catalog. It is then up to executives within the business groups to identify interesting proposals, to pursue these with the external provider through P&Gs External Business Development group, and to then to take move the initiative into their own product development process. By 2005, 35% of P&Gs new product launches had their origins outside the company. Some of P&Gs most successful new productsincluding Swiffer cleaning cloths, Olay Regeneration, and Crest Spinbrushhad been initiated by outsiders.

Source: L. Huston and N. Sakkab, Connect and Develop: Inside Procter & Gambles New Model for Innovation Harvard Business Review (March 2006): 5866. Reproduced with permission.