Fueling Core Innovation from Inside and Outside

The recent experience of Procter & Gamble provides a clear example of the trend toward a more complex, but simultaneously more focused and better grounded, new model for innovation. By the late 1990s, Procter & Gamble hungered for growth and renewal. Judgments from inside and outside the company agreed that something needed to be done. Sales stalled. New product introductions were sparse and slow.

Procter & Gamble had fallen victim to what had been for decades a strong and effective internal R&D culture that had simply gone stale over time. It now was perceived as a slothful, conservative, over-engineering, and inward-focused organization. It had become a dated exemplar of the formerly well-honed, but now sputtering, model of internal R&D and organic new business development. A new management team under the leadership of CEO Durk Jager began implementing a broad-ranging global restructuring designed to power more innovation to market faster and more broadly. Simultaneously, like so many of its blue-chip colleagues, Procter & Gamble embarked on numerous experiments in corporate venturing: skunkworks, venture capital, Internet incubators, and more.