entrepreneurship and innovation
Post on 16-Jul-2015
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Corporate Entrepreneurship in Successful Organizations
Most mature companies have to produce organic growth year in, year
out.
In the past when companies were smaller and the world was less
competitive, firms could rely on internal R&D to drive the growth.
Procter & Gamble
• Realized current R & D not sustaining high levels of growth.
• Innovation success rate started to stagnate.
• Around the year 2000, share prices slid from $118 to $52.
• New technologies started to put a strain on innovation budgets.
Pressure form small and nimble competitorsPressure form small and nimble competitors
Procter & Gamble
• Mr. Lafley set
a target of
acquiring a 50%
growth level outside
the company.
CEO A.G. CEO A.G. Lafley challenged Lafley challenged
his employees his employees
to reinvent the company’s to reinvent the company’s
innovation business model.innovation business model.
Procter & Gamble
• After this ambitious target was set by the CEO, P & G created the connect and develop innovation model.
• Consumer needs were kept at the front when developing the model.
Procter & Gamble
• Connect and Develop method
• RADICAL THINKING WAS NEEDED TO SURVIVE…..
• For generations P & G created most of its phenomenal growth from within by building global research facilities and hiring and holding onto the best talent in the world.
Connect and Develop Model
• In this radical model you connect with external sources of new ideas (such as universities, government labs, suppliers and even competitors).
• You then develop these ideas into profitable new or refined products.
• This is done swiftly and cheaply using your own firms R&D, manufacturing and marketing power.
Connect and Develop ModelTo use C&D:
• Identify consumer needs.Identify consumer needs.
•Identify adjacencies: How can you enhance existing brand equity?
e.g P & G introduced Crest whitening strips to expand on toothpaste.
Connect and Develop ModelTo use C&D:
• Leverage your networks: Benefit from both proprietary and open networks.
• Distribute & screen ideas: Lets internal managers
screen ideas for potential.
Promote openness to external ideas.
Procter & Gamble
• Procter & Gamble showed that the model was successful.
• 5 years after the company’s stock collapse in 2000, the share price doubled.
• P & G now has a portfolio of $22 billion worth of brands.
Source: pg.com
Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:
Stain removing sponge discovered by P&G connections in Osaka, Japan. The resultant product was the Mr. Clean Magic Eraser which achieved double its projected revenues.
Stain removing sponge discovered by P&G connections in Osaka, Japan. The resultant product was the Mr. Clean Magic Eraser which achieved double its projected revenues.
Connect and Develop Model
Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:Example of use: The Osaka Connection:
C&D Stages:2001 – Discover: P&G Japanese entrepreneur discoversproduct in Japanese store. Checks potential &establishes fit with P&G home-care products.
2002 – Evaluate: Entrepreneur sends samples to researchers inCincinnati for performance checks.
2003 – Launch: Product packaged as-is and launched nationally.Researchers join to improve product.
2004 – CoCreate: Then co created Magic Eraser Wheel & Tire andlaunched in the US.
C&D Stages:2001 – Discover: P&G Japanese entrepreneur discoversproduct in Japanese store. Checks potential &establishes fit with P&G home-care products.
2002 – Evaluate: Entrepreneur sends samples to researchers inCincinnati for performance checks.
2003 – Launch: Product packaged as-is and launched nationally.Researchers join to improve product.
2004 – CoCreate: Then co created Magic Eraser Wheel & Tire andlaunched in the US.
Connect and Develop Model
Procter & GambleProcter & Gamble• C & D more about finding good
ideas and bringing them in, to enhance and capitalize on internal capabilities.
• To do this P & G collaborated with other organizations and individuals worldwide.
• Always searching for proven technologies.
Procter & Gamble
Top ten consumer needs:
Once a year P & G ask what consumer needs would increase growth by increased communication.
• These needs lists are then developed into science problems to be solved.
Procter & Gamble
• Proprietary networks: P & G rely on several of these to facilitate connect and develop activities. The two largest ones are:
• Technology entrepreneurs • Suppliers (P & G’s top 15 suppliers have
combined R & D staff of 50,000 that was capitalized upon.)
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