Hello Class,
2 agenda items for this week’s blog.
(1) If you have not yet commented on Day 11’s blog, please do so. We value your input and would like to continue to see the rich dialogue.
(2) For Day 12, please comment on the following:
- Open Business Model and Lesson’s from P&G’s Open innovation process
Look forward to reading responses!
The key takeaway of this class for me was the need to create an ecosystem if you want your company to grow consistently and sustainably .Old ways of making business are dead. Companies cannot be closed anymore; they have to borrow and share ideas with people outside.
The 10 lesson learned by P&G are very useful and can be applied to the rest of firms. My favorite points were that an elephant, a big company, and a mouse, a local company, can be partners and both be beneficiary of the cooperation,it´s a win-win situation. But the big company has to let the partner to use his creative and not try to control it .I also think that being aware of not all the smart people works for you is important as A.G Lafley said “For every P&G researcher there are 200 scientists or engineers elsewhere in the world =1.5 million whose talents we could use”.
The key takeaway of this class for me was the need to create an ecosystem if you want your company to grow consistently and sustainably .Old ways of making business are dead. Companies cannot be closed anymore; they have to borrow and share ideas with people outside.
The 10 lesson learned by P&G are very useful and can be applied to the rest of firms. My favorite points o were that an elephant, a big company, and a mouse, a local company, can be partners and both be beneficiary of the cooperation,it is a win-win situation. But the big company has to let the partner to use his creative and not control it .I also think that being aware of not all the smart people works for is important as A.G Lafley said “For every P&G researcher there are 200 scientists or engineers elsewhere in the world =1.5 million whose talents we could use”.
The lecture today is really interesting and useful. Open business model part of the lecture speaks about the importance of partnership, joint venture and platform sharing. As the theme keeps on recurring over the semester, open culture, exchange of ideas and benefiting advantages through cooperative effort, is really important in order to create and capture a great value and take advantage of technological development. Earlier today as I was reading my assignment regarding Corporate Social Responsibility (CSR) for another class, the idea of open innovation came up to my mind. I recognized that open innovation allows sharing of great ideas to be captured by the whole industry and the society as a whole, which endorses social responsibility.
From P&G Case, I feel that focusing on win-win is really important. It is a great reminder that in order for value capture to be maximized, every party’s interest and goal should be realized.
I am really enjoying these last two classes because I am starting to see the huge impact that open innovation has. The era of open innovation has just begun and the impact will be amazing.
Open innovation is a rich concept, that can be implemented in many different ways. The context dependency of open innovation is one of the least understood topics; more research is needed on the internal and external environment characteristics affecting performance. Companies as we have seen in the presentation of today are still experimenting with the right approach and the mix of internal and external resources, but they are on track to make this work. As P&G companies are being everyday more connected and see each other in a different way, less competitive and more collaborative.
The medtech companies (which in general is lagging with their open innovation efforts) that crack the approach to open innovation success in this industry would be positioned to create some interesting competitive advantages in the coming years. I can’t wait to see how GE will be approaching Open innovation.
Today was interesting in understanding the breath of collaborative business models that exist. From Clorox + P&G to Boeing + AA I became aware the role partnerships for conducting business are growing as more industries find value is maximized for their businesses in that way. The example of VEC also proved the value in specialization for individual companies to bring strength to a team of collaborators whose combined efforts can over throw the “big elephants” within industries.
At the same time, it was also interesting to see how companies like Xerox and UPS fill the role of added costs for companies to increase the efficiency for the entire distribution channel. It was particularly interesting to see these companies collaborating with their competitors to increase revenue for everyone involved, despite being competition. I believe these practices of open innovation have been leading to more efficient, business & consumer friendly developments, and will continue to be the trend for conducting business in the future.
One major takeaway regarding open business models would be the importance of breaking down silos, both internal and external. I found the “coopetition model” to be particularly interesting: it was eye-opening to realize that a joint venture between Clorox & P&G enabled both companies to be better off than they were on their own. Their openness enabled greater value creation and capture for both parties.
It’s also incredible to consider that 45% of P&G’s product developments come from external sources. Co-development with strategic suppliers, research institutes, and other partners enabled P&G to “proudly find” innovation outside of the firm and bring it inside the company. Our team has similarly been brainstorming about how we can transform internal communication processes in this way: by transforming passive “technology needs lists” into involved co-creation processes, we hope to enable accelerated technology creation and adoption within the company.
While there were many interesting and relevant case examples during this class, I agree with Jacqui that the P&G case example was the most interesting. Particularly, it was intriguing to see how P&G had worked together with direct competitor to create a joint venture, to create greater value for both companies combined, than either could have individually. I’d be curious to learn other examples of companies that have followed a similar model as P&G and have “broken down silos” in order to achieve the greater goal of innovation.
Conversely, it would also be a good learning lesson to see where this type of a joint venture did not prove to be so successful, and understand where the difference was, in terms of characteristics that made the model fail. Combined together, we can get a better understanding of what companies SHOULD do in joint ventures with competitors, as well as what companies SHOULD NOT do.
P&G’s example of pairing up with competitors to make a joint venture was commendable. Previously known as the “Kremlin,” its switch to a more open innovation model was evident from a top down initiative by the CEO and top managers of the company. This really speaks to the point that open innovation involves breaking down barriers and social notions which is often only possible by top leadership within an operating entity.
In addition to P&G’s joint venture with a direct large competitor, it was interesting to see a contrast example in which Cisco partnered with two smaller and more narrowly focused competitors (EMC and VMware) to create a privately backed company called VCE.
This really made me realize that in business, making your enemy your friend is sometimes the best route to success. Collaboration CAN be mutually beneficial, in contrast to popular thought.
Hearing about what an open innovation business model does and seeing real world examples of the results are two completely different experiences. The ideas behind what make open innovation so adaptable and successful all make sense in theory. Without being able to continuously adapt to disruptive forces, a company will eventually fail and be overtaken. Without shifting from market places to market spaces, a company loses out of a world wide market that is open 24/7. Without breaking down silos internally and externally, innovation and development are slowed down.
P&G’s open innovation model was extraordinarily successful and demonstrates just how important it is to break down external silos. The case study that stood out to me the most was the study dealing with companies trying to get into the cloud services space. IBM and HP were huge players that tried to do everything. But it is next to impossible to do everything well. Just as certain people are better at certain things, companies have different strengths and weaknesses. Cisco, EMC, and VMWare all saw this and played into each other strengths. Each individual business was much better at its own part of the market than either IBM or HP was, and through mutual cooperation were able to build something greater than the sum of their individual parts. This is something I will definitely keep in mind as I research potential complimentary partners for Wipro.
I really enjoyed lecture today as it was really cool to listen on the numerous examples in which companies were able to adapt and thrive with open innovation. Some included companies such as GE creating a completely different business model to sell off the engines or UPS to redefine the structure of the shipping industry. Another instance that companies were able to thrive with partnerships in open innovation was Cisco, EMC, and VMWare. Because they were able create their own unique ecosytem, they were able to successfully start a privately funded company called VCE. That to me is a consummate example of what innovation is. I was really surprised that so many different companies in different industries were able to redefine business models using open innovation.
I feel like this class has given me a whole new perspective than I have found in any of my other business classes. The open balance sheet is much more adaptable and can change in a time where changes within companies are happening all the time. It is a new era for business. I also feel like a combination of the old way of balance sheets and an open balance sheet are needed. Different businesses need different things. I will be utilizing both models to draw.
The story of P&G was very helpful. I like all the takeaways from the 10 lessons learned. I found it most interesting that they implement a 75% rotation of people to offer new perspectives. I am curious how much time and energy it takes from the company to screen those individuals. I would like to know more about the process of the 75% rotation and how often that rotation occurs and what that means for the people who are being rotated.
Tuesday’s lecture was really interesting and eye-opening. Open business model is about a change of perspective: rather than protecting everything it has and considering its competitors as rivals, a company should open up, share its ideas, and take advantage of the external resources. In an increasingly competitive world, it’s hard for a company to become the best. However, when different companies come together and contribute what they are good at, they can leverage the resources and create great value. The example of Coopetition Model of P&G and Clorox as well as partnership between Cisco, EMC, VMware and Intel prove the value and effectiveness of open business model. I think the 10 lessons learned from P&G can be applied any companies, especially large companies that seek a new round of growth. P&G case also tells us that a new company vision needs to be supported by corresponding change in culture, structure and perception.
The P&G case showed how successful P&G was by opening up their business model to external opportunities. It was interesting how P&G added a local franchise dry cleaning component to their business model. This allowed them to open up a new revenue stream for their Tide product. P&G further got creative when they partnered with and then acquired the Art of Shaving Boutiques to reach the upper scale male consumer market. These two examples focus on growing the reach of already successful products. When their unsuccessful Citrus Hill Juice product was failing, P&G saw an opportunity to share R&D with Tropicana’s distribution channel. This allowed for both parties to benefit: P&G used their technology and Tropicana used their channel to get more juice sales. Sometimes sharing company strengths is essential in gaining the big value from a product.
The main reason P&G was so successful is because they shifted their employees to ensure the right people were working on the right teams. This 75% rotational strategy makes sure teams are full of people who are multifunctional and experienced both internally and externally. The above listed partnerships would not be possible if the internal teams were not comfortable with building trustful relationships with external companies. Why work towards a market goal alone when you can leverage external resources? This goes back to the cooperation joint venture model with P&G and Clorox. P&G had the technology and Clorox had the intellectual property – together they got Clorox to market.
P&G used to be an example of closed innovation until this did not work out anymore. Even if they hired thousands of superb researchers they would still not even be close to all the knowledge out there in the world – “the global brain”. The new CEO realized this as he opened up the company’s innovation process. This actually made it possible to acquire even more knowledge while hiring less scientists that reduced costs. They also engaged in a joint venture with Clorox to leverage their combined different strenghts for mutual benefit. An interesting lesson from this is that it can be very beneficial to cooperative with the competitor, but partners are also to be chosen carefully.
I really enjoyed hearing about all the examples of successful open business model. In particular, the Car2Go car sharing model by Daimler was really interesting to me, as it demonstrate how innovation can improve the efficiency of the assets being used. In a time when resources are diminishing, the world is moving towards a more sharing-centric economy. These new business models are able to help the world become more sustainable. In particular, the idea that the car can save your settings and adjusts its seating positions and temperature, is a clear indications of how ideas from another industry, in this case personalization and syncing from cloud computing, can be shared and adapted into another, in this case the automobile industry.
I really enjoyed learning about the examples of open innovation at P&G. It was very helpful to see how a large corporation was able to successfully bring in new products and to bring them to market.
I was surprised to learn that Clorox and P&G partnered to create value. This was a classic example of the whole being greater than the sum of its parts. Clorox and P&G could only accomplish so much on their own, but by working together they brought benefits to both companies. It was eye-opening to see that, while some companies might identify each other as competitors, they are still able to collaborate.
My favorite part of the the presentation was the story of GE motors giving the indian airlines a free motor. It shows how much they value their customers and take the time out to understand their needs instead of solely being about profit. Only few companies can truly balance profit and customer service. When a company forfeits their profit to gain loyalty they know that the long term benefit will outweigh the cost the endure today. I believe that was a great choice for GE to rethink their business plan and to accommodate India and actually make a more effective business plan that benefits both companies and gives them a consistent and sustainable profit.
Learning about the Open Innovation model and seeing its applications in real examples through the case studies have been fascinating to learn about these past two lectures. I think what struck me the most was that to have an open innovation model, businesses have to allow themselves to be vulnerable. We saw this with the literal example of Philips Research breaking down their “fortress.” P&G also found tremendous success by allowing ideas to flow in and out– as Jacqueline mentioned above, 45% of P&G’s product developments came from external sources. I think one of the ten lessons that we can apply from P&G to GE’s telehealth challenge is number 6: get the right people on the bus. For GE, no matter how great their machines may be, they will be able to create little to no value for people in rural India or underserved communities in the US without having the connections to the right people such as broadband service providers or hospitals. I think our conference call today really highlighted the need to interview specific people in order to understand the current relationships that GE has and the partnerships that they need to build in order to ensure success in their target markets.
It was refreshing to see P&G change its closed off path to one that incorporates partners from all ends of the spectrum. What really caught my eye was P&G being open to local businesses. The collaboration between Tide and the laundry mats allowed P&G to really hone in on staffing, direct sales, and business ownership (key areas they needed help with). Although this would appear one-sided, the laundry mats were able to receive a lot of benefits from P&G – brand equity, product concept, R&D, etc. Both brands were able to benefit from one another in ways that were unimaginable if tackled independently. Continuing off this concept of collaborating with new businesses and being open to new business models, P&G’s partnership with a NYC shaving boutique allowed P&G to expand into a market without consuming all of the fixed costs associated with founding a boutique. It is truly amazing to see how much an established powerhouse can benefit from small establishments.
I enjoyed seeing the side by side comparisons of old and new business models. One takeaway from the lecture was this understanding that if your business is not making a profit it’s important to reassess your business model and figure out if there is another area where you could be making money. The story GE Aviation and Air India is a great example of this. Instead of selling engines to make money they realized that it was more profitable and sustainable to receive revenue from flight hours. Another large takeaway was that there is an important balance required for a successful business model – between “more is better” and “sometimes more is NOT better”. In terms of creating an ecosystem and collaborating with others it’s important to realize that more partnerships does not necessarily mean a better profit model; it’s about making smart partnerships. Our Fujitsu team is in the process of listing companies we can work with and narrowing it down to ones that will create a successful ecosystem.
An amazing realization I’ve obtained throughout my academic path as an undergraduate in the Haas School of Business is that, in business, is there no such thing as a “hard competitor” because who you consider your competitor may become one of your most powerful allies – even customer! And also, there is no such thing as “unrelatable business models” because your product very well may be useful in a business you never thought of. Granted, all what I stated above is possible only with an open business model.
Professor Darwin touched on several key concept of open business models: Open Balance Sheet, Platform BM (more on these two in class 11’s post), Coopetition, Long Tail Model and Utilization Differential.
My takeaway from Coopetition is that it demonstrates that open BMs allow competiting and/or seemingly unrelated business cooperate to reduce costs, increase revenues or open new revenue avenues. Clorox and P&G are an example of the first, Cisco, EMC2 and VMWare are an example of the second. Coopetition goes much further and can involve marrying product lines across different companies, reengineering the business ecosystem, changing processes, etc.
Tuesdays lecture gave us a chance to listen to several example of successful open business model and was something I think all of us enjoyed. The P&G cased showed an example of closed innovation and after a CEO change turned things around. What Lafley realized was that most of their new products didn’t come from their huge R&D department. He decided to open up the company and tap into the global brain. To take advantages of external recourse and spend less money on their own R&D. Their partnership with Clorox showed how successful this has been for both P&G and Clorox, even though they were competitors.
I am sorry to post the blog so late. From P&G’s open innovation process, I respect by the fact that P&G never stops rethinking and innovating. From history, the company has been prone to introduce new products and increase its lines of products. More importantly, the way P&G have established its open innovation model. The corporation is forged as an umbrella and it has team to look for disruptive technology and business model. The way P&G is able to find new ideas, new technologies is by having external R&D outside of the company, and possibly having venture arms to invest in related startups. As a VC major, I am fascinated about the function of strategic ventures and how they are part of the important role of bigger corporation’s process of open innovation.