Procurement Leaders Forum Part 2: Procurement's Role in Open Innovation

Steve Baggott, the leader of Procter and Gamble’s Connect+Develop open innovation program spoke at Procurement Leaders this morning, and shared the importance of changing views of working with suppliers.

Steve emphasized that it is about connectedness – identifying ecosystems outside the enterprise with whom you can connect to accelerate.  This might include retirees from P&G and alumni, who have a vested interest,  universities, research institutions, two guys in a garage, etc.  But what is important about this connectedness is the importance of strategy.  He notes that 80% of the time C+D is seeking out specific innovation needs that are strategic – and looking for solutions to those innovation needs.

However, Steve also noted that “But 20% of the time  look for what we don’t know.  People come up and say we are working on X that could be of use to your battery business.  We didn’t know it existed and I never knew about this.  A great deal of what we do is strategic and rooted in the business – but a lot that should be left open for serendipity.  We have practice leaders in this space  and they are designed to help us support the training on how to do open innovation.”

John Klein from Avery Dennison also spoke on the subject:  “We developed an advance procurement team noted that they were skeptical at first, but eventually his team liked having people who could do random brainstorming and make us more effective.  They are all R&D people – and if only 2% of a suppliers’ sales is R&D – and you should be getting some of their knowledge if they are your suppliers.”

Steve also noted that P&G had to get their legal team to change their mindset around IP, which required top level a support from the CEO to drive this.  “Historically we would say we own everything!  But the reality is we don’t.  If I have exclusive access and a supplier has the ability to exploit the technology in areas I don’t compete in, then there are ways to sort through it.

One of the best statements made by John Avery in the last minute:  “How many of us ask our suppliers:  what else can you do?  This is an open invitation to a discussion on innovation.”