Edison in the Boardroom Revisited: How Leading Companies Realize Value from Their Intellectual Property, Second Edition

Looking Externally

The fourth chapter of the P&G Open Innovation story is probably the most well told. It started in early 2000, when A.G. Lafley had just been named the company’s new Chief Executive. He inherited a difficult business situation. P&G’s stock price had suffered over the preceding few quarters after the company missed some of its targets. Lafley knew that there were a number of areas that needed sharper focus for the company to get back on track.

One notion was that the Company needed to be much more externally facing. He set the tone immediately when he did something no other P&G leader had done. He visited the P&G Alumni Association, a group of former employees who had either retired or left the company, with many going on to leadership roles in other companies and organizations. Historically, once someone left P&G, they were considered “out of the family.” A.G. had a different point of view.

To him, everyone was a possible asset in helping grow the P&G business. And that included all employees—current or past. P&Gers, he said, are deeply loyal to the company, even after they’ve left. Who better to partner with? From those first days as CEO, Lafley began redirecting the company to become much more externally friendly.

He really made that vision take root when he announced that P&G would source 50 percent of its innovations from external partnerships. At the time, it was estimated that less than 10 percent of the company’s innovation was fueled by external collaboration. ...