175 Years of Innovation Lessons

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Suffice it to say I was honored my friend Chris Thoen would agree to talk about P&G’s Open Innovation history at the 3rd Open Innovation (OI) Summit at BW’s Center for Innovation & Growth: Practical Challenges of Global Open Innovation.  Chris has been interviewed, quoted, written about extensively as a leader in OI, and for good reason.

He opened with P&G’s 175yr old history OI.  Two brother-in-laws, William Procter (candle maker) and James Gamble (soap maker), using the same raw material, fats, were encouraged by their father-in-law to collaborate to get better ‘fat’ pricing! This was the start of P&G in 1837.  They grew the company with their own innovations and through (un-named at the time) open innovation with other technology makers and companies.  These partnerships were the foundation of P&G’s growth into 300 brands in over 180 countries, 24 billion dollar brands and most importantly, one of the most trusted names in the world.

About 10 years ago, CEO A. G. Lafley transformed P&G’s open innovation heritage into a key cultural component of the company –Connect+Develop (C+D).   This wasn’t just a way to come up with new products, but a fundamentally new way to do business.  Lafley challenged P&G to source at least 50% of their innovation from outside its hallowed R&D halls.

Chris clearly described OI as an ongoing journey requiring recognition and investment in top talent and external synergies.  When done well, OI is all about value creation for both partners, with both sets of interests in mind.  It’s about sharing your expertise and strategic needs of your brands, businesses, even corporately.  To do this, P&G has developed and put 70+ C+D leaders around the globe with 11 regional hubs (e.g., NA, LA, Europe, Israel, China, India, Japan), 100s of networks and academic partnerships.

Several products you may know are a result of OI: Swiffer, Tide, Mr. Clean eraser (1 of my faves).   Clorox’s Glad ForceFlex™product is based on a P&G licensed technology.  Sometimes, you can even collaborate with your competitors! P&G’s technology and IP have created $3B in sales for their OI partners.

So what has P&G learned on this 10+ year journey?

  1. Drive from the Top:  Without Lafley’s challenge, commitment and leadership as CEO, it couldn’t have taken hold corporate-wide.
  2. Build an OI culture: You have to support and learn from failure, communicate openly (and often) to build trust, help your people understand the innovation process and consistently reward partnerships and results, not just patents.
  3. Focus the Hunt: Keep your eyes on the strategy at all times!  It’s what guides you; build internal relationships by sharing needs and goals; manage leadership’s expectations for reality, not for fantasy; create and communicate clear innovation selection and filtering criteria.
  4. Be Where the Action Is: get out of Cincinnati (or wherever)! You need to be where the innovation is happening and the markets exist – like developing markets, areas of VC activity, Social Media, SMEs, Academia/Universities and places with diverse expertise, cultures, ideas.
  5. Build Efficient and Effective Knowledge Management Systems: Track connections among your own people, capturing their knowledge and experience partnership nuances, deals so they are not repeated, saving time and money.  Include your partners, networks, and competitors while protecting your IP and create a way to visualize and analyze these intertwined relationships.
  6. Obey the Law of the Land: Take what you need, only what you need, and leave the rest.  Share what you’re not using because it may find a great application in another home
  7. Staff for Success: Hire and train a unique blend of Hunter-Gatherer.  This is not a typical person, but you may already have them – people who have expertise in a technology with business acumen with the ability to develop relationships, influence people, inside and outside your company.  Deliberately hire for this.  And, keep investing in R&D – doing OI doesn’t mean closing down your own R&D.
  8. Be the Partner You’re Looking For: The Golden Rule!  Celebrate your partners, look beyond the first deal with them, facilitate more connections for you and them, keep that Win:Win mindset front and center and be transparent because a second (third, fourth…) deal with the same partner takes about half the time while creating twice the value.  Remember, strong partners make you stronger as well.

Bottom line? P&G has created more value together with their OI partners than they ever could have alone.  It is a real ecosystem that creates value on a global scale to accomplish P&G’s mission: “…improve the lives of the world’s consumers, now and for generations to come.”

Ok, so maybe you’re not P&G, but you can still start the journey.   What do you need? What do you have to offer? Who could you partner with? Just start small, doesn’t have to be huge, just a step.  Give it a try.

The Paradox Of Open Innovation Intellectual Property

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Being involved in Open Innovation, one of the most cited stumbling blocks is, yes, lawyers - IP attorneys specifically.  To most business and R&D folks, IP counsel are viewed as deal killers. So I was anxious to hear Kelly McDow, associate general counsel for P&G’s Connect+Develop, speak at the 3rd Open Innovation Summit at BW's Center for Innovation & Growth*.

Kelly started out as a chemist, giving her a unique non-traditional-lawyer perspective of invention and innovation. Her experience exemplifies what is needed in a good Open Innovation (OI) IP (Intellectual Property) attorney – the ability to understand and see many sides.

Kelly posed two questions to the audience:

  • How can IP attorneys help foster an OI mindset?
  • How can you help both sides’ IP attorneys get there?

Great questions that turned the tables from just usually ‘blaming’ the IP folks for ‘not getting it’ to how do you help them get there. We usually view our IP counsel as either over-protective or adversarial. Kelly provided 10 actionable and effective answers to these questions:

  1. Find an IP attorney that is flexible and collaborate, able to see both sides. Wow, pretty basic huh? Some of us don’t have that luxury with our corporate or outside counsel. So, what can we do? Keep reading down the list to help engage and educate your counsel – if you don’t try, you can’t expect any progress.
  2. Help your OI partner find a flexible collaborative IP attorney if they don’t have one. If they already have one, work with them to engage and educate. This builds the relationship and trust, which only helps make a better deal if one is to be made.
  3. Enroll your IP attorney early and often. We all understand things better when we are involved early and see how the idea evolves, why it matters, how it makes an impact. IP attorneys are no different. Treat them like, and make them into, real partners.
  4. Be mindful of confidentiality.  You know the phrase “loose lips sink ships”? Treat confidentiality wit the highest regard and respect. Nothing slows down or kills a deal faster than breaking trust.
  5. Know what you, and your partner, need to be successful. Think about success broadly; there is the success of the initial collaboration and the success of an ongoing relationship. The initial collaboration may not work because the technology simply doesn’t work as everyone thought – that doesn’t mean the relationship has to end, just that specific collaboration. These are two separate views of success.
  6. You don’t need to own everything! Many companies think they have to own all the IP! Determine what you really need to strategically “own” vs. license. Don’t inhibit your partner’s ability to grow and provide more opportunities for collaboration because of your greed or need for control.
  7. Due your due diligence, let your partner do theirs and be nice to their IP attorney! Your partner has as much of a right to do due diligence as you do yours. Remember, while it may seem the business head has the ability to seal the deal, it’s really the IP attorney.
  8. Don’t lose your temper! This is easy to do – there are always times of frustration, even exasperation, so just huddle. Stop, take a break and discuss with your team. If you lose it, there may be no regaining!
  9. Plan for the marriage…and the divorce. With OI, you do need a pre-nuptial! Take care of divorce T&C’s when you are calm and rational instead of in the heat of the moment. Just like #5 above, the divorce can be over just a particular collaboration, not the entire relationship.
  10. Most importantly - Make sure you know what flavor latte your IP attorney likes

We tend to think of our IP counsel as adversaries or over-protectors.  Kelly’s advice and counsel works for P&G and it can work for each of us too.  As usual, it comes down to the soft skills – to people learning to trust each other and work together. At least try with your counsel and see.

*Disclosure - I'm a 'partner' at the Center for Innovation & Growth & help organize these events

Innovation Relies on Hope

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Friday, April 15th, was an amazing day for Cleveland, Ohio: the 2nd annual TEDxCLE.  Let’s put this in perspective. The theme was “Guardians of the Evolution: We are the guardians of Cleveland’s future; We are responsible for its evolution; Success is only possible through collaboration.”

The logo was based on the Hope Memorial Bridge’s “Guardians of Traffic” powerful historic sculptures. The metaphor of the Hope Bridge AND Guardians is real and happening now. Let me recap some of my favorites because they highlight the necessity of Hope for Innovation for any community and organization.

The theme was set with Ari Maron, driver of East 4th Street project, on the wonderful future for urban Cleveland. He is one of those that has great dreams and visions for Cleveland AND actually does something about them.

His challenge? The people in the community make a world-class city happen; put your ego aside and go for it. Since Ari has done what he advices, his words are powerfully real and hopeful.

One of my favorite talks was by Matt Hlavin of Thogus, ‘not your father’s injection molding company’, on the New Industrial Revolution.  He’s changed the rules of the game…they are an engineering company that also manufactures, and with some cool (very) rapid prototyping equipment for polymers and metal. As Matt said, “It’s no longer about mass production, it’s about mass customization.”

He wants the next generation to think manufacturing is cool, so he invests in coops and interns, providing housing (all they need is gas and food money). Taking care of his people--giving them the tools, training, and support to succeed--is critical.

One of the many benefits includes innovative health and wellness programs for employees and their families. For Matt, success is the day one of his employees tells him they’re leaving to start a company because of what they learned at Thogus. This ‘little manufacturing’ company in Avon Lake, OH, is so leading edge that internationally renown author Steve Denning cited Thogus in his recent book, Radical Management as leading the way in innovating management.

Next was a series of national to local talks on building community through historic preservation. The panelists (Hannah Belsito,Rhonda Sincavage, Jeff Siegler, and Thomas Starinsky) talked about the connectedness that history provides to community. A Knight Foundation study, The Soul of the Community, stated that aesthetics, openness, social offerings play a greater role in selection of community than just safety.

Historic preservation is an economic driver – it brings in people, art, nature, culture and business. It manifests itself emotionally – in the intangible, which is not easily measured. This is a great example of the difference between 20th century outputs and 21stcentury outcomes. While new businesses are a very important output, the outcome is a thriving community – a virtuous cycle of passionate people that collaborate to make a stronger community.

The Cleveland Art Museum’s new director, Dr. David Franklin, gave a magnificent talk about why museums still matter (not that he had to convince many of us in the audience). He started with a photo of a 5,000 year old sculpture, The Star Gazer, and then brought out this little 5” tall figure – right in his hand. Next, he brought out a 6,000 year old statue of a little woman.  11,000 years of history on stage.

Museums matter because they engage, they tell stories of the past, present and future. Museums provide a ‘place’ for people to engage with art, art with art, to reflect and ponder and see true authenticity – in real life, not virtually. Think about it – in a museum, it’s so easy to strike up a conversation with a total stranger about a piece of art.

Museums inherently connect us – to each other, to the past, present and future and create a sense of joy and wonder. David concluded his talk with, “We’ll be waiting for you; we’re in Cleveland, and we’re free.” And oh, by the way, in 2015, the museum will display ALL of Monet’s Water Lilies – all in one place – talk about utopia!

There were many other great talks, as you can see (and soon watch) on the TEDxCLE site. I don’t know if my friends, Hallie Bramand Eric Kogelschatz, realized the amazing connection between the Guardian statues as a metaphor for re-innovating Cleveland and the Hope in the Hope Memorial Bridge (even though it’s named after Bob Hope).

If it was deliberate or serendipitous, it doesn’t matter – it is the perfect metaphor for Cleveland…and for your city, your business, and your community. Hope looks to the future, rooted in facts, not fantasy, based on experience, learning and application.

So please take a few minutes to share your hopes are for your business, organization, community in the comments below. Think about the talents and treasures around you - I'd bet your hope is based on some real evidence...go for it. The more we share, the more Hope, the more we can make a difference and impact!