An Example of Open Innovation: P&G

Abstract

Open innovation, also known as crowdsourcing or co-creation, is a way for companies to utilize the ideas and strength of the people outside their organization to make improvements in the internal processes or products. Many companies seek input from those people outside their organization for solving some of their trickiest problems. Open innovation help them to drive employee productivity, customer loyalty and better innovation. Open innovation process consists of three main steps. These are concept phase, development phase and implementation phase. In the concept phase, research activities are carried out. In the development phase, skills are defined and projects are developed. In the implementation phase projects are implemented and exchange of information is accelerated.P&G leads the companies who applied concept of open innovation successfully in the world. Procter & Gamble Co. as the world's 40th biggest and 84th innovative company created the web site for this propose which is known Connect + Develop to encourage open innovation to help them to drive employee productivity. P&G's open innovation strategy has enabled to establish more than 2,000 successful agreements with innovation partners around the world. C+D already has delivered strategic value all across the company, and a series of game-changing consumer innovations. In 2012, P&G invested more than $2 billion in innovation. As a result, P&G was this year's big winner for the 2013 New Product Pacesetters list, launching seven of the top 10 most successful none-food products of the year. This paper firstly aims to describe the open innovation concept and innovation process in the example of P&G and reasons for the necessity of innovation.