How Customers Drive Innovation at P&G

3
5,014 views

Share on LinkedIn

Stefan Lindegaard has an interesting post on P&G: How Open Innovation is Done over at his Stefan Lindegaard blog. The post shows how despite having over 9,000 researchers in-house, P&G reaches out to some of the almost 2 million external researchers that it thinks it needs access to to keep the flow of successful new products going. It does this through an open innovation programme called Connect & Develop that reaches out to independent researchers, suppliers and other industrial companies to solve problems it cannot solve by itself.

P&G is not only active with its network of suppliers and industrial customers through its Connect & Develop open innovation programme. It is also active with its consumer customers through its Vocalpoint programme for mothers, its Tremor programme for adolescents and its Living It programme for lead-customers. All three programmes use different ways to harness customers as sources of ideas and to test new products before they hit the market.

Of these, potentially the most interesting is the Living It programme. Rather than just use suppliers or customers as sources of ideas, or as testers of new products, Living It allows P&G’s ethnographers to live with lead-customers, to observe how they live their everyday lives and to identify customers’ needs first hand. In other words, Living it allows P&G to understand the everyday jobs lead-customers are trying to do, the outcomes they are looking to achieve by doing them, and to use these insights to identify potential new products that would make customers’ everyday lives easier. This focus on understanding customers’ needs through jobs and desired outcomes is a missing link in much of what passes for innovation today (and of which far too much is costly invention rather than valuable innovation).

It is refreshing to see that even with the enormous resources of one of the biggest companies in the world at their disposal, P&G recognises that it cannot do all its innovation in-house. And that it needs to understand customers needs much better than it did in the past to drive successful innovation in the future.

P&G’s innovating of innovation contains many lessons for all of us involved in the risky business of innovation. And who isn’t involved in innovating their way into the future today?

What do you think? Is P&G right to open innovation to outsiders? Or is it too risky for P&G?

Post a comment, blog, re-blog or tweet about this post to get the conversation going.

Graham Hill
Customer-driven Innovator
Follow me on Twitter

Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

Further Reading:

Stefan Lindegaard, P&G: How Open Innovation is Done

P&G, Connect & Develop

P&G, Vocalpoint

P&G,Tremor

Business Week, How P&G Pambers New Thinking

3 COMMENTS

  1. Tapping the power of your consumer customers is a great innovation strategy. Intuit used an approach similar to P&G’s Living it program, hiring ethnographers to observe users in action (http://workingknowledge.com/blog/?s=intuit) Intuit’s software QuickBooks succeeded because its developers had watched users struggle with traditional accounting software and solved the difficulties they were having. In another example, The McKinsey Quarterly (Aug 2008) reported that Missha, a cosmetics brand in South Korea, captured 40% market share in its segment by co-creating with customers.

  2. Hi Andrea

    Thanks for your comment. It is much appreciated.

    As you point out there are many other examples of successful companies who innovate together with their customers. The key is trying to understand what customers are trying to do in their everyday lives, what they want to achieve and using these insights to innovate around the best solutions to customers problems.

    It sounds so easy, yet so many companies still persist in inside-out invention that doesn’t meet any customers’needs and that fails miserably in the market. Prof Frank Piller (@masscustom) confirmed this on a recent Building Customer Centric Organistaions course at the IE Business School in Madrid; he said that 80% of inventions fail in the market place, a figure that varies from 55% for B2B products, all the way to over 90% for cosmetics! Quite a difference from the 80% success rate to be expected from customer-driven innovation.

    Graham Hill
    Customer-driven Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  3. Graham,

    Great post as usual. Don Tapscott highlights Proctor & Gamble’s crowdsourcing and internal innovation efforts in the well known and must read book, “Wikinomics”.

    At first take, I wouldn’t think you can become much more customer centric than asking the customer what they want and learning what they’d be willing to pay and then giving it to them.

    P&G perhaps takes it a step further by intently studying their customers through the “Living It” program, and using their expertise to anticipate and offer solutions that exceed their current expectations and potentially their wildest dreams.

    A great example, and thank you for sharing.

    Best regards,
    Brian
    http://freecrmstrategies.wordpress.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here