When we think of the great innovations that come our way, we might instinctively think of them as the product of a sudden brainstorm from an individual—a light bulb moment, if you will. But in reality, good ideas can come from anywhere and leading companies are finding that innovation is often produced over time with a lot of collective sweat equity by many people.
Most organizations assert they want to be innovative and collaborative. But they approach these concepts as separate efforts or skill sets.
Research at the University of Tennessee has found innovation and collaboration are not mutually exclusive; they feed and build upon each other. It’s not “either-or.” Innovation happens through collaboration. And the best organizations are not only harnessing innovation from their employees, but also from outsiders such as suppliers or competitors.P&G’s Collaborative Innovation in Action
Using a highly collaborative approach to drive innovation is exactly what Procter & Gamble used in 2000 when A.G. Lafley took the helm as CEO. Lafley took a huge leap forward, and made a strategic bet by turning to a collaborative approach for driving innovation. This concept came to be known as “Connect & Develop” and his goal was, “Half of our new products [would] come from our own labs, and half would come through them.”
Lafley’s bet paid off, and spurred a huge wave of innovations that came from collaborations with “outsiders.” A good example was the Swiffer, a highly successful brand of cleaning supplies. Looking for opportunities to expand the line, the P&G team had worked on a handheld dusting tool, but without much success. On a trip to Japan, the R&D leader for Home Care found the answer in the cubicle of a P&G employee: a sleek, user-friendly handheld duster that was better than the products P&G was testing. Its curly fiber captured dust, dirt, and hair far better than anything P&G had come up with, but it was owned by Japan’s UniCharm.
The problem turned into a collaborative opportunity when P&G bought the rights to UniCharm’s duster outside of Japan. A win for P&G and a win for UniCharm. The Swiffer Duster was an instant success: in the first four months, it cleaned up $100 million in sales.
P&G took the concept to a new dimension when it developed a highly collaborative outsourcing relationship for real estate and facilities management with Jones Lang LaSalle (JLL) in 2003. The companies established a precedent-setting commercial agreement that flipped the conventional outsourcing approach on its head by contracting for outcome-based results instead of simply for transactional, day-to-day work. A key objective was to drive innovation in facilities and real estate management to unprecedented levels.
Many could have easily criticized P&G at the time. After all, benchmarking had shown that P&G’s facilities and real estate management processes were already world class. Such a gamble could be risky, but it could also pay big dividends. After signing the deal with JLL, William Reeves, P&G’s director of Global Workplace Services at the time, commented on its significance. “We know that you [JLL] and the other suppliers we evaluated have never done this before; and neither have we,” he said. “But JLL has the culture that is much like P&G’s. We think we have the best chance of being successful with you because you are so much like us.”
P&Gs bet that innovation could be driven through a highly collaborative supplier relationship has paid dividends. The success of the relationship was profiled in Vested: How P&G, McDonald’s and Microsoft are Redefining Winning in Business Relationships, which discusses real-life examples of companies such as P&G that are successful applying a highly collaborative Vested “What’s-in-it-for-We” business model.
Last year, P&G’s received the International Association of Outsourcing Professionals’ 2014 Global Excellence in Outsourcing Award for Innovation. The IAOP’s case study describes how P&G has established a culture of innovation both internally and with its suppliers. It shows the power of innovation in action, profiling how P&G and JLL collaborates to drive success as they innovate on key concepts such as environmentally “smart buildings.”
A key component of driving supplier collaboration is understanding the importance of creating a win-win environment with your collaborators. Larry Bridge, the P&G leader in charge of contract governance for the JLL contract, said, “As much as we give credit to relationships, we have a really good contract. It is simple and drives the right behaviors. The transparency, cost pass through, and incentives features allow us to be aligned versus being on opposites sides of the table negotiating.”
The bottom line is that today’s business models are more dependent than ever on complex, cross-company collaboration for business innovation. The future will likely be won by those who don’t wait for light-bulb moments from a single genius, but rather develop highly collaborative win-win relationships that leverage the collective power of many. The future will be won by those who leverage the collective power of many.
If you find your organization is “stuck” with regards to developing true innovations, maybe it’s time to rethink your business relationships so that collaboration and innovation are not an “either-or” proposition, but rather are intimately linked.
This article was written by Kate Vitasek from Forbes and was legally licensed through the NewsCred publisher network.