Focusing Open Innovation Efforts to
Drive Business Impact
Navin Kunde, Ph.D.
Open Innovation Networks
Clorox Growth Labs
30 October 2014
Clorox Confidential Information
Key Takeaways
1. Focus on Fewer Partners who can Deliver
Deeper, More Effective Relationships that Drive
Business Results
2. Innovate with Partners who are Not the Usual
Suspects
3. Invest in Tools and Processes which Build a
Culture of Innovation throughout your Company
2
Clorox Confidential
Clorox is a 100 year old US-based CPG company
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3
Founded as a bleach company in 1913
Went public in 1928
Acquired by Procter & Gamble in 1957
Independent again in 1969, making only liquid bleach
Portfolio expanded through innovation, brand building & acquisition
Clorox Confidential
Clorox has a Portfolio of Global Leading Brands (FY14 Sales: $5.6B)
Nearly 90% of the Portfolio has #1 or #2 Share
International : 22%
Cleaning : 32%
 2/3 emerging markets
 1/3 developed markets
Lifestyle : 16%
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Household : 30%
Clorox Confidential
Open Innovation ~Y2K: Technology Brokerage
Partnering offers access to broader universe of new ideas & technologies
14,000
12,000
Patents
10,000
8,000
6,000
4,000
2,000
0
Clorox
Patents since 1990
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Clorox Confidential
RB
SCJ
P&G
Clorox
Partners
Today: “We build cutting edge networks and partnerships that
drive technical innovation and accelerate growth”
Internal Partners
Suppliers
Co-Packers
Customers
Consumers
Inventors
A network is a collection of
people or entities, including
external and internal partners,
who have the knowledge,
experience and connections to
effectively educate and help
execute current and future
initiatives, while reducing risk.
Consultants
Experts
VC’s & Start-ups
Universities
Research Labs
Govt. Agencies
Organize Network Partners for
Competitive Advantage!
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Clorox Confidential
BU Network Map by Brand
(Higher number = more activity)
Packaging
Suppliers
5
Brand 1
Brand 2
Other
4
Materials
Suppliers
3
2
1
Universities
Co-Packers
0
Inventors
Experts
Customers
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Clorox Confidential
Consumers
KT#1. Focus on Fewer Partners who can Deliver Deeper, More
Effective Relationships that Drive Business Results
Packaging
Suppliers
5
Brand 1
Brand 2
Other
4
CASE STUDY ONE:
MATERIALS SUPPLIERS
Materials
Suppliers
3
2
1
Universities
Co-Packers
0
Inventors
Experts
Customers
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Clorox Confidential
Consumers
The Supply Base is Segmented into 3 Levels
Increasing
scale, value &
engagement;
decreasing
number of
partners
Level 3
Strategic
Partnership
Level 2
Preferred
Partnership
Level 1
Transactional
Relationship
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Clorox Confidential
Deeply integrated teams
(e.g. Glad JV), and
Core innovation suppliers (e.g.
win-balance, core fragrance)
Provides some innovation
value, with proportional
investment in relationship
Engage on innovation only
when they bring significantly
differentiated capabilities
Win-Balance Goals & Tactics, Benefits to Clorox
The Win-Balance program applies the segmentation principles to Level 3 relationships of
significant Innovation and Supply value
Level 3 for Both
R&D Level 3
Supply Chain Level 3
Tactics: Win-Balance is ultimately an exercise in strategic governance
• Share deeper strategic insight with Win-Balance partners
• Proactively engage at multiple levels of the Clorox organization, and across the
breadth of Clorox business units
• Promote business growth with Win-Balance partners through preferential
engagement relative to non-Win-Balance suppliers
Clorox Benefits from:
Strategic Clarity, Deeper Collaboration, Supply Base Consolidation
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Clorox Confidential
Win Balance Benefits to Suppliers, by Level
Governance
Benefit
Level 3
Executive access
Level 2
Level 1
Definition
Limited
By
Exception
Annual Conference, mid-year calls
and other connection points with VPs
Strategic Context &
Needs Shareout
Steering team
Mutual exposure to strategic growth
and innovation plans
6/yr
Business
CloroxConnects
Portal
At-bats (R&D,
Supply)
Project
Specific
By
Exception
Private discussion forum between
parties
Opportunities to compete for
innovation and sourcing wins
Develop Research
Platforms
Ongoing technology collaboration
expected to spawn multiple projects
Voice of
Collaboration
Relationship health Survey enabling
proactive/predictive management of
issues
Mutual Business
Planning
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Multi-functional steering team to
drive relationship
2/yr max
Clorox Confidential
A jointly developed & agreed
Business Plan
KT#2. Innovate with Partners who are Not the Usual Suspects
Packaging
Suppliers
5
Brand 1
Brand 2
Other
4
CASE STUDY TWO:
CONSUMERS
Materials
Suppliers
3
2
1
Universities
Co-Packers
0
Inventors
Experts
Employees
Customers
Consumers
Creative
Coalition
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Clorox Confidential
!NNOVENT. It’s like…
But not as scary!
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Clorox Confidential
And a lot of fun!
!NNOVENT
5 weeks
3 weeks
– Post your idea for
growth (product,
business model,
etc.)
– Crowd votes on
favorites – Top
30+ move to
Round 2
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Clorox Confidential
– Top 30+ ideas
from Round 1
are built into
business cases
– Crowd/Business
panel votes on
favorites – Top
~8 move into
Round 3
3 months
– Teams form around top 8
ideas (“you choose up to 5
other people”)
– Teams are given: 10% time,
$3000 in funds, specialized
training, mentor access…
– Teams create business plans
– Teams pitch business plans to
Executive Committee
(including CEO)
Successes – Ideas launched from !NNOVENT
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Clorox Confidential
Why did we develop the Creative Coalition?
Creative
Coalition
The Creative Coalition allows Clorox to generate New High-Quality Ideas, Product
Concepts, Functional & Emotional Needs: “On-Demand”, Quickly & Inexpensively
WHO ARE THEY?
Creative “thought partners” who generate unique and
rich ideas to meet our product innovation goals.
Sourced from a wide range of fields and screened for
creativity, teamwork & articulation; trained on ideation
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Clorox Confidential
Creative
Coalition
How do they do that?
Help drive innovation across the 3 D’s
EMPATHY
• Ideating with speed and agility
• Co-creating with Clorox teams
• Providing empathetic lens
The Buzz among
Business Partners
“The Creative Coalition added emotional depth and
evoked the experience we were going for. This enriched
our hypotheses and insights to test and learn with.”
“The Creative Coalition looked at the
same problem we did - but through a
different lens. They generated unique
solutions we did not think of.”
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Clorox Confidential
KT#3. Invest in Tools and Processes which Build a Culture of
Innovation throughout your Company
Packaging
Suppliers
5
Brand 1
Brand 2
Other
4
CASE STUDY THREE:
EXPERTS
Materials
Suppliers
3
2
1
Universities
Co-Packers
0
Inventors
Experts
Customers
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Clorox Confidential
Consumers
Segment your Expert Network, then Optimize it
Tool
#
Name
Type
Strategy
A: On
demand
Database
B: Expert
Sourcing
1
Database 1
Self service
Grow
X
2
Database 2
Supported by Open
Innovation Team
Scale
Down
X
3
Expert
Service 1
Supported by Open
Innovation Team
Grow
X
4
Expert
Service 2
Supported by Open
Innovation Team
Cancel
X
5
Primary
Research
Org 1
Supported by Open
Innovation Team
Grow
C:
Consulting
Services
D: Service
Provider
X
X
X
X
Etc.
Current state
of category
Some areas
stronger
than others
Strong
Expensive
Inadequate
FY14
Strategy
Find gaps
& Fill
Consolidate
Reduce
Costs
Find more/
Improve
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Clorox Confidential
Use Scorecards to Increase Impact of Each Network Tool
Overall Health
User base
Limited usage
No growth
in active
users
Activity
Good usage
Will increase
by the existing by 5% next
user base
Fiscal Year
Example Metric : No.
of searches
1500
1000
500
0
2011
20
2012
Clorox Confidential
Cost
2013
Super-users
Mr. GGG, OIN
Mr. JJJ, Corporate
Ms. DDD, BU-X
• By taking the time to understand the power
of each tool and who can, should and is
using it, a clear engagement plan can be
developed and executed
• Scorecards are helping us check progress
on usage and value
Engage Middle Managers to Gain Traction on Initiatives
Response to: My Manager supports my external networking efforts….
100
90
80
Strongly Disagree
70
Somewhat Disagree
60
Neutral
50
Somewhat Agree
40
Strongly Agree
30
60%
20
10
0
2013
2014
KEY RESULT Over half of R&D managers now strongly
support external networking, up from one-third a year ago!
• More requests are now coming via manager recommendations
• Networking Tools training sponsored by Managers provides traction
• Manager support for Expert Panel Sessions leading to deeper engagement
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Clorox Confidential
Feb 2013 vs. May 2014 Survey Results
Find Ways to Measure Network Interactions
Response to: Reaching out to experts is….
Response to: Reaching out to suppliers is…
100
90
80
70
60
50
40
30
20
10
0
100
90
80
70
60
50
40
30
20
10
0
33
%
2013
2014
45
%
2013
2014
Extremely Valuable
Somewhat Valuable
Extremely Valuable
Somewhat Valuable
Little Value
No Value
Little Value
No Value
KEY RESULT Significant Increase in Value from Interactions with
External Experts and Suppliers (33% and 45% respectively)
• 200+ experts calls in the last 12 months, with ~30% repeat calls; 16 experts subsequently
invited for on-site panels to drive learnings, decisions & strategic shifts on BU’s & adjacencies.
• Organizational clarity on strategic suppliers and how to engage them led to better choices of
partners and better outcomes for users.
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Clorox Confidential
Feb 2013 vs. May 2014 Survey Results
Key Takeaways
1. Focus on Fewer Partners who can Deliver
Deeper, More Effective Relationships that Drive
Business Results
2. Innovate with Partners who are Not the Usual
Suspects
3. Invest in Tools and Processes which Build a
Culture of Innovation throughout your Company
23
Clorox Confidential
Navin Kunde Ph.D.
Business Networks Leader
Open Innovation Networks
Clorox Growth Labs
W:925.368.9139 M:925.523.1525
Navin.Kunde@Clorox.com