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Clorox Confidential Information Focusing Open Innovation Efforts to Drive Superior Business Results Navin Kunde, Ph.D. Open Innovation Networks 13 January 2014
Clorox Confidential Information
Focusing Open Innovation Efforts to
Drive Superior Business Results
Navin Kunde, Ph.D.
Open Innovation Networks
13 January 2014
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
Top 3 Takeaways
3
Clorox is a 100-year old US-based CPG company
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
4
International : 22%
2/3 emerging markets
1/3 developed markets
Cleaning : 32%
Household : 30% Lifestyle : 16%
Clorox has a Portfolio of Global Leading Brands (FY13 Sales: $5.6B)
Nearly 90% of the Portfolio has #1 or #2 Share
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Clorox RB SCJ P&G Clorox
PartnersPatents since 1990
Open Innovation ~Y2K: Technology Brokerage
Partnering offers access to broader universe of new ideas & technologies
Pate
nts
5
Today: “We build cutting edge networks and partnerships that
drive technical innovation and accelerate growth”
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.
Co-
Packers
Customers
Consumers
Experts Consultants
Government
Agencies
Universities
& Research
Labs
Suppliers
Inventors
Internal
Partners
Advisory
Boards
VC’s &
Start-Ups
6
Organize Network Partners for Competitive Advantage!
7
BU Network Map by Brand (Higher number = more activity)
0
1
2
3
4
5
PackagingSuppliers
MaterialsSuppliers
Co-Packers
Experts
ConsumersCustomers
Inventors
Universities
Other
Brand 1
Brand 2
8
1. Focus on Fewer Partners who can Deliver Deeper, More
Effective Relationships that Drive Business Results
0
1
2
3
4
5
PackagingSuppliers
MaterialsSuppliers
Co-Packers
Experts
ConsumersCustomers
Inventors
Universities
Other
Brand 1
Brand 2
9
CASE STUDY ONE:
MATERIALS SUPPLIERS
The Supply Base is Segmented into 3 Levels
Level 1
Transactional
Relationship
Level 2
Preferred
Partnership
Level 3
Strategic
Partnership
Increasing
scale, value &
engagement;
decreasing
number of
partners
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
10
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
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
11
R&D Level 3 Supply Chain Level 3
Level 3 for Both
Clorox Benefits from:
Strategic Clarity, Deeper Collaboration, Supply Base Consolidation
Win Balance Benefits to Suppliers, by Level Benefit Level 3 Level 2 Level 1 Definition
Executive access Limited By
Exception
Annual Conference, mid-year calls
and other connection points with VPs
Strategic Context &
Needs Shareout
Mutual exposure to strategic growth
and innovation plans
Steering team 6/yr 2/yr max Multi-functional steering team to
drive relationship
CloroxConnects
Portal Project
Specific
Private discussion forum between
parties
At-bats (R&D,
Supply) By
Exception
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
A jointly developed & agreed
Business Plan
Go
vern
an
ce
B
usin
ess
12
Case in Point – Mutual Business Planning in Cleaning BU
Cleaning is a mature business, so we must Innovate to drive growth
We do Mutual Business Planning with Win Balance Partners, as we believe that
transparency, commitment and shared goals will enable mutual profitable growth
1. examine existing business spend pools and new product pipelines
2. brainstorm new opportunities together
3. agree on a mutual business plan with clear targets, actions and potential value
Desired Outcomes:
- A sustainable path to growth for win-balance partners
- A balanced portfolio of close-in cost savings, NPI, etc.
- Identify Risks to existing supplier business due to Innovation
- Reminder that Success requires excellent execution from both parties
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2. Innovate with Partners who are Not the Usual Suspects
0
1
2
3
4
5
PackagingSuppliers
MaterialsSuppliers
Co-Packers
Experts
ConsumersCustomers
Inventors
Universities
Other
Brand 1
Brand 2
Creative
Coalition
CASE STUDY TWO:
CONSUMERS
Employees
14
!NNOVENT. It’s like…
15
But not as scary! And a lot of fun!
!NNOVENT
5 weeks – Post your idea for
growth (product, business model, etc.)
– Crowd votes on favorites – Top 30+ move to Round 2
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)
16 Clorox Confidential Information
3 weeks – Top 30+ ideas
from Round 1 are built into business cases
– Crowd/Business panel votes on favorites – Top ~8 move into Round 3
Successes – Ideas launched from !NNOVENT
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Why did we develop the Creative Coalition?
To Save Time and $$$
Need to quickly come up with new ideas, product concepts; functional & emotional needs
Articulate & creative consumers can generate many rich and unique ideas, but at high cost
Creative Coalition allows Clorox to generate new ideas “on demand”
High- quality ideas fast and cheap
Creative
Coalition
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Who are they?
Creative “thought partners,” who generate unique and rich
ideas that would help to meet our product innovation goals.
Screened for
creativity,
teamwork &
articulateness;
trained on
ideation
Wide range
of creative
fields
represented
Creative
Coalition
How do they do that?
Help drive innovation across the 3 D’s
• Ideating with speed and agility
• Co-creating with Clorox teams
• Providing empathetic lens
The Buzz among
Business Partners
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“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.”
EMPATHY
Creative
Coalition
3. Invest in Tools and Processes which Build a Culture of
Innovation throughout your Company
0
1
2
3
4
5
PackagingSuppliers
MaterialsSuppliers
Co-Packers
Experts
ConsumersCustomers
Inventors
Universities
Other
Brand 1
Brand 2
CASE STUDY THREE:
EXPERTS
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Tool
#
Name Type Strategy A: On
demand
Database
B: Expert
Sourcing
C:
Consulting
Services
D: Service
Provider
1 Database 1 Self service Grow X X
2 Database 2 Supported by Open
Innovation Team
Scale
Down
X
3 Expert
Service 1
Supported by Open
Innovation Team
Grow X X X
4 Expert
Service 2
Supported by Open
Innovation Team
Cancel X
5 Primary
Research
Org 1
Supported by Open
Innovation Team
Grow 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
Segment the Expert Network and invest in those
that create the most value
In 2013 we extensively analyzed our portfolio and usage of Databases & Experts
and created a roadmap to increase overall value and impact to our Businesses
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Use Scorecards to improve the impact and value of our
Network Tools
23
Overall Health User base Activity Cost
Limited usage No growth
in active
users
Good usage
by the existing
user base
Will increase
by 5% next
Fiscal Year
0
500
1000
1500
2011 2012 2013
Example Metric : No. of searches
Mr. GGG, OIN
Mr. JJJ, Corporate
Ms. DDD, BU-X
Super-users
• 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
Create BU specific Plans by Network Vector Analysis
Overall Scale: 0 = No Usage, 1 = Weak or new, 2 = Opportunity to improve, 3 = Good usage, 4 = Best in class
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Expert Network
Vector
(Illustrative)
Overall Score = 2
Expert Service
1
1
4 3
0 Database 1
Database 2
Internal Community
2
Partner or Service FY14 Goal Actions
Expert Service 1 Grow Deliver relevant external
experts to Discovery
Projects
Database 1 Grow
Double Number of Active
Users & Usage Frequency
Internal Community
1
Benchmark: Our other Growth
BUs are running 5-10x expert
consults vs. this BU
Benchmark: Our other Growth BUs have 3x
usage and 5-10x active users vs. this BU
2
Listen to your clients and let them guide your strategy
0
10
20
30
40
50
60
70
80
90
100
1 2 3 4
Daily or once a week
Extremely Valuable
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0
10
20
30
40
50
60
70
80
90
100
1 2 3 4
Daily or once a week
Extremely Valuable
1. Get new information/guidance
2. Generate new ideas / solutions?
3. Get new perspectives?
4. Move projects forward
1. Get new information/guidance
2. Generate new ideas/solutions
3. Current Clorox partners (e.g. suppliers)
4. Not Clorox partners (e.g. service
providers)?
Internal
Collaboration External
Networking
% R
esp
on
den
ts
% R
esp
on
den
ts
Goal for FY14 – Improve External Networking by 50%
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
26
Top 3 Takeaways
Navin Kunde Ph.D.
Business Networks Leader
Open Innovation Networks
The Clorox Company
W:925.368.9139 M:925.523.1525
