by: John Caddell
My most recent work experience involved a smaller company that, with limited resources, relied significantly on partners for technology innovation and software product development.
Our company focused on the service wrappers around the software, as well as sales, marketing and customer support. Software development, maintenance, etc., were all outsourced.
This worked well for us, and I felt this kind of partnering/outsourcing was a good option for smaller companies wanting to tackle bigger products and bigger opportunities.
So, imagine my surprise when I read the March 2006 issue of the Harvard Business Review, and featured was an article on how Procter & Gamble was using external resources to improve their innovation yield. The authors, Larry Huston and Nabil Sakkab, are two of the top innovation executives at P&G.
Huston and Sakkab write, "By 2000, it was clear to us that our invent-it-ourselves model was not capable of sustaining high levels of top-line growth." CEO A.G. Lafley made it a goal to source 50% of innovations outside the company. From invent-it-ourselves, P&G has shifted to "connect and develop" as their innovation mantra--a lot like our small company had shifted.
A question for companies looking to increase their new-product-development performance: if this approach works for P&G, might you want to consider it as well?