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Innovation Blog

Co-Innovation: Version 2.0 of Coopetition –

How P&G Innovated with a Fierce Competitor

By Shlomo Maital

  Bloomberg Business Week has an interesting article in its latest edition by  G. Michael Maddock and Raphael Louis Vitón, about co-innovation, or co-creating innovation.  In this model, one company joins with, say, a fierce competitor, to create a new innovative product that neither alone could succeed in bringing to market.  It is a new version of an old idea, co-opetition, cooperating and collaborating with a competitor.

   In 2002, Procter & Gamble (PG) and Clorox (CLX) decided to co-create. Although they are traditionally fierce competitors in the cleaning category, they created a joint venture. Because of a discovery made during a diaper project, P&G was sitting on some technology that could enhance the performance of trash bags—but it didn’t sell trash bags. Meanwhile, Clorox owned Glad, a leading bag brand. The two got together and peanut butter met chocolate, so to speak.

[That reference to peanut butter meeting chocolate, of course, is a reference to Reese’s Pieces, one of my favorites, and they do NOT contain any chocolate, even though they are made by Hershey’s.  The inventor proposed them first to MARS (M&M’s) but was turned down.] 

  How well did the joint venture between P&G and Clorox go?  According to the authors:

“Both companies have since been rewarded richly for the decision. How richly? Well, two years later, P&G paid Clorox $133 million to increase its investment in the joint venture from 10 percent to 20 percent. Here’s what P&G Chairman A.G. Lafley said at the time: “The Clorox-P&G joint venture will be a win for consumers—and for both companies. We expect that the combination of Clorox’s well-established Glad business and P&G’s R&D expertise will provide consumers with important new products and outstanding value. We look forward to the opportunity to work with the Glad team to bring new innovations to the market.”

 What are the advantages of co-creating innovations?  You often gain “channels” you do not have yourself.  Each partner brings half the solution; you do not need to develop all of it on your own.  You get two energized teams, rather than just one.  

  Find a locomotive already steaming down the track, say the authors (an idea raring to go, looking for an implementor), rather than build one and then try to create a head of steam.  Partner with it, hitch your railroad car to it, and then watch your top and bottom lines go.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
November 2010
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