In the late 1990s, P&G’s innovation program had lost its way. Successful product innovation was at the center of its competitive strategy, but the company’s performance had been slipping. P&G had reviewed its R&D strategy and increased their budget for the five years leading up to 1999, even though they already had one of the largest R&D budgets in the world. The problem was that the increased R&D spend didn’t improve their performance – a classic case of innovation commitment increasing without an equivalent increase in innovation competence.
P&G’s response to this state of affairs is well documented now – it initiated the Connect & Develop program, which was designed to use open innovation to improve its innovation outcomes.
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