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• Finding #7: Very few companies have any principles, policies, programs, processes, or practices to foster innovation across boundaries
Paradoxically, while Innovation is top of mind for senior executives, few companies actively engaged in creating a set of Best Practices (including key strategies, principles, policies, programs, or processes) for anything outside their own R&D or Engineering Departments.
Although a number of companies have actively engaged successfully in Strategic Alliances, (often using the Best Practices Guide for Alliances disseminated by the Association of Strategic Alliance Professionals) for the most part the alliance programs have not been supported and managed from the senior executive ranks. (Noteable exceptions are Lilly, Cisco Systems, IBM, Starbucks, and a handfull of others who have extraordinary alliance programs).
- Implications:
- Without a set of Best Practices, efforts to catalyze trans-field and trans-organizational innovation are not going to produce high impact results.
- Essentially “the emperor has no clothes.”
- Remarkably, with just a set of alliance best practices, a reasonable level of success can be achieved. Yet, those companies that had focused on innovation outside their boundaries produced an even higher level of success.
- Evidence:
- P&G is one company that has made great progress creating an Engine of Innovation.
- According to Larry Houston, VP of R&D, P&G’s goal is to have 50% of our innovation from outside. P&G currently has 7500 people in R&D on inside.
- This goal means there are now thousands more creating R&D on the outside.
- P&G expects to have a multitude of trans-corporate and trans-field Sources of Innovation
- Alliances with Suppliers
- Innovation Networks
- P&G consistently delivers higher shareholder returns than its competitors by leveraging external assets of all types.
- Source 50% of its technologies and products from outside P&G.
- The “Connect & Develop” program touches everything in P&G and focuses on extracting maximum value from internal and external innovations and capabilities.
- C&D helped double its speed and enabled P&G to create bigger and newer innovations than it would otherwise create.
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