Transcript
Productivity Alberta: What are some examples of effective collaborative innovation? Robert Porter Lynch: Let me give you a good example with a company that everybody is familiar with, Proctor and Gamble. Funnily enough, like Westjet, they’re an employee owned company and there is a correlation between employee owned companies and these kinds of innovation streams. But Proctor and Gamble wanted to increase its innovation but without a large capital investment. The answer was actually pretty simple, why don’t we go out the suppliers and ask what kind of innovation they can bring. We started with a metric at Proctor and Gamble - how much innovation do suppliers bring to your company? That’s related to another parallel question which is how much of your total corporate spend goes to outside suppliers.
65 per cent of all of its corporate spend went to its supply chain, which is not unusual. This raises a fundamental question. If 65 per cent of your corporate spend goes to your supply chain does that make your suppliers a strategic asset? Or do you think of them as vendors? In the past Proctor and Gamble had been thinking of them as vendors not as a strategic asset. We said let’s turn that around, let’s look at all of those suppliers and ask them if they can become a strategic asset. A strategic asset would provide us with innovation flow. Proctor and Gamble set a goal that within five years it would increase the innovation that came from its supply base and other outside sources from 2.5 per cent to 50 per cent. We then started to bring suppliers into a room together and we did it with baby care, we did it with tooth paste and we did it with consumer products.
The Mister Clean Magic Eraser came from a supplier just by asking for it. They had most of the technology worked out but the Proctor and Gamble R&D team did the rest and you got an innovative new product. Another very good example is the Swiffer. Lots of people use the Swiffer today and that’s technology that was sitting inside a supplier. You’d be astounded at the ideas you can generate just by bringing your suppliers together and talking to them and then sharing the rewards with them. They should be rewarded for the innovation flow that they bring to your company because everyone reaps the rewards.
