Consumer Products Companies Best Practices -- A Team Effort

Dec. 15, 2006
Consumer products companies embrace collaboration to speed innovation and product development efforts.

There's no doubting the importance Procter & Gamble Co. places on innovation. The Cincinnati producer of consumer brands, including Pampers, Pringles and Tide, delivers that message frequently in multiple venues. Indeed, while announcing first-quarter earnings results in October, A.G. Lafley, P&G's president and CEO, stated, "The company delivered broad-based growth behind strong innovation on both the base business and Gillette."

P&G's method -- or at least one of its methods -- for finding the next big idea in products, packaging and new technologies is to seek assistance from around the world with an open innovation model it calls Connect+Develop. "P&G seeks to build a global innovation network by identifying and connecting with the talents and technologies of today's most innovative minds," the company states.

Indeed, Paul Stupay, vice president of business development for NineSigma, a Cleveland-based company that helps create innovation networks, suggests that companies can't continue growing simply by increasing their internal research-and-development efforts. It takes too long to hire people, develop their skills and the necessary infrastructures to make that the sole mechanism for growth, he says, adding that growth via acquisitions also has it limits.

Most significant impact on reducing product development time-to-market
Collaboration with customers/suppliers 40%
Formal product/service development process 29%
Reallocation of resources to key products 24%
Shift toward platform products/services 3%
Other 5%
Source IBM Institute for Business Value 2006 Value Chain Study
Companies from industries as diverse as food and beverage, pharmaceuticals, consumer packaged goods, automotive, chemicals, and aerospace and defense are all looking beyond their four walls into the wider universe of scientists and researchers and saying, "Why don't I tap into some of their good ideas, some of their innovations?" Stupay says. "As a facilitator of open innovation, we found there are a lot of people working on adjacent areas of technology that are non-competitive."

While open innovation models of spurring innovation may not be the answer for all consumer goods makers, some form of collaboration is clearly part of the answer for many when it comes to launching new products.

According to a value chain survey conducted by IBM and IndustryWeek, some 40% of respondents identified collaborating with their customers and suppliers as having the most significant impact on product development time-to-market performance, well ahead of the 29% who cited having a formal product/service development process. And nearly 100% of the survey respondents say they collaborate with their customers, a response rate one might expect given that 58% said that launching products that best fit their customer requirements was their site's primary new product development effort.

"The participants in a new product launch can be members of centralized or decentralized organizations," IBM's Institute for Business Value notes. "They can be employees of multinational corporations; tier one, two or three suppliers, university departments or independents contractors. And it all begins, as it should, with the customer."

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