Collaboration has become a favourite word in sustainability circles. A quick Google search proves the point, throwing up more than 26m articles, ideas, and opinions all espousing the virtues of partnership and its essential role in tackling crises from waste and water to climate change and community cohesion.
But for businesses seeking to create greener, cleaner products faster and better, collaboration is also becoming seriously big business. And this is not only changing what companies make. It is also evolving the companies that make them, with significant implications for the pace and scale of sustainability innovation.
Leading this trend are two of the world’s biggest and most dynamic businesses: P&G and Unilever. In a bid to ‘out green’ each other, both now appear locked in a multibillion dollar sustainability space race to become the collaborative innovator of choice. Except in this battle, supremacy does not mean transcending our earthly limits but in developing products that help us to live within them. So what is driving this, what value does it deliver and how did it come about?
To answer these questions we need to skip back to 2000, when P&G’s newly appointed chief executive, A G Lafley, challenged the company to reinvent its innovation business model. This was a gauntlet set by impending crisis, not wanton curiosity. The old invent-it-yourself model of the 20th century could not sustain the high levels of growth needed to keep what had become a $70bn (£56bn) business competitive. The cost of R&D was rising while the success rate of new products was flat lining at 35%. With lacklustre product launches and stagnating sales, the company lost half its market cap, its shares sliding from $118 to $52.
R&D to C&D
To remain at the cutting edge, the P&G leadership knew they needed to embrace external sources of innovation, not work against them. The internet was opening the world up to new possibilities in knowledge sharing and it was estimated that for every P&G researcher, there were perhaps 200 scientists and engineers just as talented elsewhere. Their response was to shift from a model of research and develop to connect and develop’ (C&D), with an ambition for half its new innovations to come from outside the company.
“We reached that goal in just four years,” says Tom Cripe, P&Gs global business development director. “Today, more than 50% of our key innovations include a core element of C&D, with P&G working to be the partner of choice for any open innovation partner.”
Open innovation finds ‘higher purpose’ through sustainability
Recognising how collaboration could supercharge its own product development capabilities, Unilever created and launched Open Innovation in 2009 – increasing the number of research projects involving external collaboration from 25% to 60%.
While open innovation has been around for some time, sustainability has given it a higher purpose and a renewed focus. Outside expertise complements ongoing upstream research, such as developing alternative energy sources, new renewable materials, and boosting production efficiencies. It is also directed at technical challenges at the product level, such as reducing sugar and salt in foods and shortening shower times.
It is difficult to quantify the precise number of sustainability solutions for which open innovation is responsible but P&G estimates this to be in the region of “two dozen products” and many more applications on the supply chain side. Unilever says 30% of all new products now contain a “crucial element” of open innovation, according to scouting director Roger Leech.
How the internet is driving collaborative innovation
For P&G, the most successful collaborations still tend to be found offline among relatively traditional centres of knowledge such as academic institutions, thinktanks and NGOs. But the internet is shifting the profile of potential innovation partners. In March, Unilever launched Open Innovation online to widen the circle of would-be collaborators.
Its approach includes publishing an initial set of 10 technical “wants”, which range from technologies that reduce packaging waste and naturally preserve food for longer to others that increase the availability of safe drinking water.
After just six months, the first wave generated more than 1,000 responses, many from individual enterprises and entrepreneurs. Three new wants have since been added and 70 submissions are now under review.
“We are delighted with the quality of the response so far,” says Leech. “One unexpected outcome is the number of unsolicited solutions that we are now in the process of connecting up to the relevant business units.”
From harvesting ideas to developing products
Sorting wheat from chaff is resource intensive so Unilever works with technology scouting company Yet2.com to help harvest its crop. However, since single submissions rarely provide the complete solution, Leech says it is often necessary to think of proposals within the context of a network or cluster of partnerships.
One example of this is Unilever’s Pureit range of water purifying products, developed in collaboration with a “range of technology partners and scientific and public health institutions”, and rolled out across India, where it is providing safe drinking water to more than 30 million people.
P&G’s approach is broadly similar. I am told there are four basic steps in the journey from submitted idea to product innovation. Innovations are first reviewed based on non-confidential information – giving both parties a chance to understand the innovation and potential strategic fit without sharing proprietary intellectual property. The second stage is to evaluate the partner themselves.
“These are not simple projects, and thus the partnerships need to be rooted in a base of mutual trust, respect and similar cultural perspectives. We have opted not to pursue promising innovations when our company culture and the prospective partner did not closely align”, says Cripe.
The third stage is to have an “honest and deep evaluation” that asks the core question: “By working together, can we make this bigger than if either of us worked alone?” After which a licensing agreement, joint venture or collaboration, among others, could follow.
Identifying new opportunities
Such partnerships can inspire new, sustainable product ideas as well provide solutions to existing ones.
“We believe one of the most effective ways we can promote sustainable behaviour is to innovate products that enable people to live more sustainably. This means creating a product that can help lessen a person’s environmental impact without costing more or not performing as well … We’re not asking people to make a behaviour change that doesn’t deliver the results they want”, says Len Sauers, P&G’s vice president of global sustainability.
P&G’s Downy Single Rinse is a case in point. In the early noughties, sales of Downy fabric softener in Mexico had stagnated. Since many Mexican women hand-washed laundry, the company assumed this was due to lack of access to modern washing machines. Through close collaboration with consumers, they discovered it was in fact due to a lack of access to water. In partnership, P&G developed Downy Single Rinse, delivering the same performance, in only one rinse. Sales increased by 62% in the first six months with consumers saving 37-50% on water usage.
The future of open innovation
A recent project we did with Green Mondays saw Sainsbury’s apply the principle of open, expert collaboration to its entire sustainability strategy, not just its new product line. This involved putting its 20 by 20 Sustainability Plan through the toughest review panel of all: 200 of its FTSE peers and direct competitors, including Tesco and M&S.
But in a further, significant departure from P&G and Unilever’s model, where safeguarding IP is paramount, the process was designed to also create value for contributors, who earned access to the wisdom of the group in return for sharing some of their own. The strength and quality of the response was impressive. As we move towards a new era of open business, could there be scope for non-competing businesses to club together to solve strategic challenges common to all?
Originally published on Guardian.co.uk