Avoiding Procter&Gamble and all of its products in everyday life might be almost impossible. Trademarks as Ariel, Gillette, Pampers or Pringles and many others belong to P&G. In 2000 however, the company, understanding itself as very innovative, went into a deep crisis. The success of new products went enormously down and the stock price was halved in consequence of this. An increase in R&D expenditures was not further possible, but sales increases had to be reached nevertheless. New CEO Alan G. Lafley showed the way out of the crisis by fundamentally changing the company’s culture. The strategy “Connect & Develop” implemented by him had the goal to develop about 50 percent of all innovations outside the company’s own research department. The following restructuring made the company one of the most impressive examples for the enormous potential within the concept of Open Innovation.

Today, more than 35 percent of P&G’s new products in market contain elements originally developed outside of P&G. 45 percent of all initiatives within the product development portfolio possess key elements discovered externally. Through „Connect and Develop“ in combination with other improvements in production costs, design and marketing, the R&D productivity of P&G has been increased by almost 60 percent. The success rate of innovations has been doubled, while the costs of innovations declined. Investments in R&D relative to sales have been reduced from 4.8 percent in 2000 to 3.4 percent today.

Principally it is very easy to summarize P&G’s line of action: building and exploiting innovation networks of all kinds. Today, these networks reach from supplier networks being encouraged to send in new ideas right up to web platforms like NineSigma or Innocentive on which P&G is actively searching for solutions to special problems. This way, P&G does not only fall back upon its 7500 own researchers, but on millions of experts situated all around the world. Furthermore a staff of innovation scouts was installed, searching internationally for new ideas and improvements to existing products.

The model is filled with life by many of P&G’s employees today. They have understood that is not very useful to renounce external help. Even when the company already employs many of the best and most talented researchers, there are because of widespread knowledge in the world still a huge amount of equally talented developers on whose competencies the company cannot forego. However, therefore necessary is an open culture that is able to deal with the so called NIH-syndrome („not invented here“) and to create a positive climate within the company for the acceptance of external developments out of which innovations could possibly arise.

Avoiding Procter&Gamble and all of its products in everyday life might be almost impossible. Trademarks as Ariel, Gillette, Pampers or Pringles and many others belong to P&G. In 2000 however, the company, understanding itself as very innovative, went into a deep crisis. The success of new products went enormously down and the stock price was halved in consequence of this. An increase in R&D expenditures was not further possible, but sales increases had to be reached nevertheless. New CEO Alan G. Lafley showed the way out of the crisis by fundamentally changing the company’s culture. The strategy “Connect & Develop” implemented by him had the goal to develop about 50 percent of all innovations outside the company’s own research department. The following restructuring made the company one of the most impressive examples for the enormous potential within the concept of Open Innovation.

Today, more than 35 percent of P&G’s new products in market contain elements originally developed outside of P&G. 45 percent of all initiatives within the product development portfolio possess key elements discovered externally. Through „Connect and Develop“ in combination with other improvements in production costs, design and marketing, the R&D productivity of P&G has been increased by almost 60 percent. The success rate of innovations has been doubled, while the costs of innovations declined. Investments in R&D relative to sales have been reduced from 4.8 percent in 2000 to 3.4 percent today.

Principally it is very easy to summarize P&G’s line of action: building and exploiting innovation networks of all kinds. Today, these networks reach from supplier networks being encouraged to send in new ideas right up to web platforms like NineSigma or Innocentive on which P&G is actively searching for solutions to special problems. This way, P&G does not only fall back upon its 7500 own researchers, but on millions of experts situated all around the world. Furthermore a staff of innovation scouts was installed, searching internationally for new ideas and improvements to existing products.

The model is filled with life by many of P&G’s employees today. They have understood that is not very useful to renounce external help. Even when the company already employs many of the best and most talented researchers, there are because of widespread knowledge in the world still a huge amount of equally talented developers on whose competencies the company cannot forego. However, therefore necessary is an open culture that is able to deal with the so called NIH-syndrome („not invented here“) and to create a positive climate within the company for the acceptance of external developments out of which innovations could possibly arise.