A How To, and How P&G is doing it

Tuesday’s blog post has created a number of questions around Austin saying essentially

O.K., but how are loosely organized workers going to replace and compete with companies like Dell? Can hundreds of I-build/support-PCs-in-my-bedroom companies make it in Austin? What other things are these people going to do?”

This is a good question, and there is no simple answer. No, I am not recommending that a number of loosely connected entrepreneurs try to go head to head in the computer assembly business with Dell. What is needed, is creating whole new types of connections and organizations of companies, to create and release whole new levels of value through innovation. A very timely article just came in from Fast Company, called The World’s Most Innovative Companies:

[P&G created the] Connect Develop program, which allows outside developers to get their concepts and designs into P&G’s product pipeline. An applicator developed by Cardinal Health (now Catalent), for example, helped P&G launch Olay Regenerist Eye Derma-Pods, now its top-selling skin-care item. Today, 42% of P&G products have an externally sourced component. And this giant is growing: Revenues rose 8%, to $78 billion, last fiscal year, while profits climbed 14%, to $11 billion.

P&G is showing that it has learned the need for leveraging a knowledge ecology around its business- they are leveraging the brains outside of their corporate walls…. with profits climbing.

The opportunity for entrepreneurs in the future is not just in “sourcing of components” but also the sourcing of new ideas, and creating even higher value add activities than what they might have previously done at former employers. Over this past weekend, I had the opportunity to talk with a P&G executive- who is actively exploring how to enhance P&G’s marketing programs- by identifying companies that are (1) sourcing of ideas, (2) placements of advertising or (3) media outlets… with one unique strategy: engage companies that are one or two of these types, but not companies that are trying to be all three (which by the way, allows smaller companies to play a part in P&G’s go-forward marketing strategies).  For the sake of this blog post, the key thing to glean from this article is that what I am talking about- moving to ecology strategies of organizing work- is already happening. This article about P&G confirms that this is already happening.
As a community (whether that community is Austin, or Texas, or the US, or the world), we need to support the timely transition from employee/former employee to entrepreneur, and supporting companies like Dell transition from command-and-control strategies to “ecology” strategies as quickly and smoothly as possible.  No, this won’t be easy, but the reality of massive layoffs are not creating many other choices…. but in the end, it is my belief that this transition will lead to healthier workplaces, with more direct control over one’s own work, resulting in people actually doing what they love.

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  1. The P&G story is a great example of what’s coming down the road. As you were writing this, I was re-reading a short piece in HBR titled P&G’s New Innovation Model. Lafley, CEO of P&G, realized that P&G simply wasn’t going to be able to continue to grow if it relied on its own ability to innovate. So it opened the doors to collaboration with innovators on the outside.

    Two years isn’t enough time to tell if this is going to work out for P&G on the financial side, so keep an eye on their Connect and Develop site.

    Todd (AKA Bandit@NotAnMBA)

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