CINCINNATI (TheStreet) -- At the turn of the century, looking to bolster innovation without breaking the bank, Procter & Gamble (PG) - Get Procter & Gamble Company Report shifted from its old-school R&D business model toward a model of C&D: "connect and develop."
The idea was to increase the amount of product ideas that originate from outside the company from 15% to 50%. The move came as the company's stock was declining in 2000 and its success rate for product development was limping along at 35%. "It was a mindset change from 'do it yourself' to 'proudly found elsewhere,'" says Mary Ralles, a spokeswoman for the Cincinnati-based company, which is home to products such as Swiffer sweepers, Tide detergent and Bounty paper towels.
Today, half of P&G's products and services came from contributions from outside the company, says Ralles. While there are about 9,000 full-time researchers at P&G, there are some 2 million scientists around the world who might have something to offer the company, she says.
To that end, P&G maintains relationships with more than 100 universities across the country, and not just with their science labs. For example, the company works with the design school at the University of Cincinnati to develop products specifically for consumers over 50. P&G also employs 70 "technology entrepreneurs" whose job it is to scour the globe for new ideas. The technology behind Olay Regenerist wrinkle cream came from a small company in France.
The company also welcomes cold calls. P&G receives about 300 unsolicited pitches each month, via the company's
, half of which come from individuals. Recent unsolicited pitches included a home embalming kit, a body wash called "Knees and Toes" (meant to be packaged with "Head and Shoulders" shampoo) and the "Swiffer Cat Duster" -- a means of attaching dusting cloths to a cat's paws, so the animal inadvertently cleans the floor.
These pitches were rejected, but there are success stories. The topical microbial company
recently signed a technology development agreement with P&G, a deal that started as an unsolicited proposal to the Connect+Develop Web site.
That said, only 8% of unsolicited pitches pique the company's interest, Ralles says, so entrepreneurs need to do their homework. The company won't consider submissions that aren't protected by a trademark or patent. Once either of those is secured, pitchers can bolster their chances of a licensing deal by responding directly to P&G's specific needs, which the company posts
. These are as general as "Novel approaches that deliver a visible impact on product shelf" and as daunting as "determining whether pluripotent or multipotent adult stem cells can be employed to address critical gaps of the state-of-the-art in vitro tissue models for use in technology ID pipelines of skin and hair R&D."
Beyond relationships with individual entrepreneurs, the company seeks fledgling businesses looking to serve the masses, via its FutureWorks division. This division looks for products already in the market or close to hitting the market, as well as products and services with the potential of reaching sales in excess of $100 million.
Those looking to catch P&G's attention should think not just in terms of new ideas, but also in terms of adjacencies -- product ideas that could bolster the sale of existing P&G brands. A good example is the Mr. Clean Car Wash franchise, which took a brand associated with housecleaning and expanded it to car cleaning.
The company says it may take up to two months for it to respond, but promises that somebody reviews every pitch. The company doesn't disclose the financial terms of pitches that make it to the top. "We approach every prospective partnership as a win-win, working to ensure that the result is a winning proposition for each of us, and thus potentially the first step in an ongoing relationship," Ralles says.
-- Reported by Carmen Nobel in Boston.