The Idea: To stay competitive, your company must drive top-line growth. And innovation is the engine for that growth. But if you’re relying solely on internal innovation—new products and services developed by your own R&D team—your engine may be sputtering. Why? For many firms, R&D productivity is flattening while innovation budgets are climbing faster than revenues.

A better approach to innovation? The connect and develop method. Through this radical alternative, you connect with external sources of new ideas: university and government labs, Web-based talent markets, suppliers, even competitors. Then you develop those ideas into profitable new or refined products—swiftly and cheaply—using your firm’s R&D, manufacturing, and marketing prowess.

Procter & Gamble used connect and develop to launch Pringles Prints—a line of potato crisps printed with entertaining pictures and words—in record time and at a fraction of the normal cost. Instead of looking inside for solutions to the problem of how to print images on crisps, P&G searched its global networks of individuals and institutions. It discovered a small bakery in Italy, run by a university professor who had invented an ink-jet method for printing edible images on cakes and cookies. P&G adapted the method—and its North American Pringles business scored double-digit growth.

The Idea in Practice - To use connect and develop:

Know Where to Look
Before scouring the world for ideas you might develop into profitable products, clarify what you’re looking for:

• Identify consumer needs. Ask business unit leaders which consumer needs, when satisfied, will drive their brands’ growth. Translate needs into briefs describing problems to solve. Consider where you might seek solutions.

Example: P&G unit managers identified a need for laundry detergent that cleans effectively in cold water. They decided to search for relevant innovations in chemistry and biotechnology solutions that enable products to work well at low temperatures. Possibilities included labs studying enzymatic reactions in microbes that thrive under polar caps.

• Identify adjacencies. Ask which new product categories, related to your current categories, can enhance your existing brand equity. Then seek innovative ideas in those categories.

Example: P&G expanded its Crest brand beyond toothpaste to include whitening strips, power toothbrushes, and flosses.

Leverage Your Networks
Cultivate both proprietary and open networks whose members may have promising ideas.

Example: P&G’s proprietary networks include its top 15 suppliers, who collectively have 50,000 R&D staff. It created a secure IT platform to share problem briefs with these suppliers—who can’t see others’ responses to briefs. One chemical supplier, for example, may have ideas for making detergent perfume last longer after clothes finish drying.

P&G’s open networks include NineSigma, a company that connects interested corporations with universities, government and private labs, and consultants that can develop solutions to science and technology problems. NineSigma creates briefs describing contracting companies’ problems and sends them to thousands of possible solution providers worldwide.

Distribute and Screen Ideas
You’ve identified ideas for refining and further commercializing existing products or for employing technology solutions to create new products. Now distribute these ideas internally—ensuring that managers screen them for potential.

Example: At P&G, product ideas are logged on P&G’s online “eureka catalog,” through a template documenting pertinent facts—such as current sales of existing products or patent availability for a new technology. The document goes to P&G general managers, brand managers, and R&D teams worldwide. Product ideas are also promoted to relevant business line managers, who gauge their business potential and identify possible obstacles to development.

Promote Openness to External Ideas
Encourage use of outside ideas. For example, P&G rewards employees for speed of product development. Incentives thus favor innovation developed from outside ideas, since these often move more quickly from concept to marketplace.