112 patterns open business Models In June of 2000, amid a continuing slide in Procter & Gamble’s share price, longtime P&G executive A.G. Lafl ey got the call to become the consumer product giant’s new CEO. To rejuve- nate P&G, Lafl ey resolved to put innovation back at the company’s core. But instead of boosting R&D spending, he focused on structuring a new innovation culture: one that moved from an internally focused R&D approach to an open R&D process. A key element was a “Connect & Develop” strategy aimed at exploiting internal research through outside partnerships. Lafl ey set an ambitious goal: create 50 percent of P&G’s innovations with outside partners at a time when that fi gure was closer to 15 percent. The com- pany surpassed that goal in 2007. Meanwhile, R&D productivity had soared 85 percent, even though R&D spending was only modestly higher compared to when Lafl ey took over as CEO. In order to link its internal resources and R&D activities with the outside world, Procter & Gamble built three “bridges” into its busi- ness model: technology entrepreneurs, Internet platforms, and retirees. Procter & Gamble: Connect & Develop other company's ip external scientists retired scientists internal r&d internal r&d leveraging internal r&d technology entrepreneurs internet platforms your-encore 1 Technology entrepreneurs are senior scien- tists from P&G business units who systemati- cally develop relationships with researchers at universities and other companies. They also act as “hunters” who scan the outside world for solutions to internal P&G challenges. 2 Through Internet platforms, P&G connects with expert problem-solvers around the world. Platforms such as InnoCentives (see p. 114) allow P&G to expose some of its research prob- lems to non-P&G scientists around the globe. Respondents earn cash prizes for developing successful solutions. 3 P&G solicits knowledge from retirees through YourEncore.com, a platform the com- pany launched specifi cally to serve as an open innovation “bridge” to the outside world. Outside-In bmgen_final.indd 112 6/15/10 5:38 PM