However, companies have to adjust to the times, and DEC being unable to was, gradually overcome by its rivals.
DEC can teach us various lessons but one such lesson is that of Trialability - namely, that new ideas that are broken up in installments will more readily be realized. DEC was successful, precisely because it split its program into two phases. Doing so made it trialable which represented less uncertainty to clients and to the company itself.
Opening up innovation at P&G
Tags: Diffusion; external technology; marketing; compatability; mergers; licensing; spin-offs.
Proctor and Gamble devised an innovative way to spin-off or diffuse its innovations.
After having slipped and plunged in the late 1990s and in the early years of the millennium, to some of the biggest declines ever, P&G introduced a new CEO, A.G. Lafley, to modify their direction and to change their forecast. Lafley and Gil Cloyd, P&G's chief technology officer, opened their innovation process to external sources of technology, i.e. receiving half of their ideas from the outside, and, in order to do so, they developed a special research and development team.
Their research team focused on compatibility of external technology and that too can explain their success, for compatibility, as Rogers (1995) explains, is one of the key components of successful innovation. Innovations have to be perceived as being consistent with existing values, past experiences, and needs of potential clients. Approximately, 35% of P&G's most successful...
Examples include Olay Regenrist, an anti-wrinkle cream as well as Swiffer Dusters, a household cleaning product, and the Crest Spin Brush, a battery-operate toothbrush that alone generated $200 million in sales during its first year.
The research team, devised by P&G, structured itself in the following way: one part scouted for new ideas, whilst another part actively marketed that idea. In this way, they circumvented two of innovations' most significant problems which are (a) rising development costs, and (b) increasingly shorter product life cycles.
Relying on outside ideas saves the company time and money, also allowing the company to extend and expand itself and to participate in other segments through licensing feeds, mergers, and spin-offs. These diverse streams of income broaden P&G's equity, making innovation all the more accessible and attractive to the company.
References
Lefler, P. When DEC was the king of innovation. Customer Think.
http://www.customerthink.com/blog/when_dec_was_the_king_of_innovation
Plantes, K. A compelling example of business model innovation: Finfrock Industries
http://www.innovationtools.com/Articles/EnterpriseDetails.asp?a=640
Rogers, E. (1995) Diffusion of innovations. Simon & Schuster: USA.
Sopheon. Opening up innovation at P&G
http://www.sopheon.com/NEWSEVENTS/inKNOWvationsNewsletter/ReadFullArticle/tabid/414/ArticleID/91/CBModuleId/1926/Default.aspx
