This interview provides more information on the topics discussed in our report Innovating for the next three billion: the rise of the global middle class — and how to capitalize on it.
Through its Connect + Develop program, Procter & Gamble (P&G) has been at the forefront of a more open approach to innovation. Here, Jeff Weedman, Vice-President for Global Business Development at Procter & Gamble, discusses the relevance of Connect + Develop to a lower-income customer base in rapid-growth markets.
What is the overall rationale for this more open approach to innovation, where you source ideas from outside the company and open up the R&D process to networks of external partners?
Our fundamental proposition is that P&G can’t do everything by ourselves and we can do an awful lot more with the right partners. Our approach is to put the consumer first. If you think about it, the people who buy our products don’t care about the origin of the innovations that are in those products. They just want to know that they are buying a good product that is good value and meets their needs. If you start with that premise, then you can derive a huge amount of value by opening up the innovation process and drawing in the expertise and knowledge of partners around the world.
How have you approached this process in rapid-growth markets?
Rapid-growth markets are a terrific source of innovation and, as a company, P&G has made significant investments in our innovation capabilities in these economies. We have a technology centre in Beijing and we have a group in India that is primarily focused on modelling and simulation. We have technical resources scattered throughout Latin America. Our basic premise is that innovation needs to happen close to the consumers and, for that reason, we need to be ramping up our capabilities in rapid-growth markets.
With so many local innovation centers in rapid-growth markets, does this not mean that you lose the benefits of scale?
It’s important to strike a balance between local relevance and scale. We want to have commonality in capabilities across the globe so that we can make best use of those resources but, at the same time, we need to develop products that uniquely meet local needs. So, for example, our Beijing centre is not just focused on innovation in China, it also owns innovation for developing markets all around the globe. So it offers a global perspective even though it is situated in a local rapid-growth market.
What are some of the issues that companies need to think about when innovating in rapid-growth markets?
It’s important to think about intellectual property. In the context of our Connect + Develop model, we need to make sure that if we gain access to a new idea or concept in rapid-growth markets that we’re not going to find that idea being copied by a competitor. That’s clearly not a viable economic model.
On the other hand, you do find that it is generally easier to work with universities and research centers in rapid-growth markets. There is a lot less bureaucracy and they are often more than happy to work on co-development projects with us. You don’t always get that willingness in some developed markets.
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