Clorox Undergoes an Innovation Evolution

Product innovation, especially as it relates to increasing consumer value of its products, is a primary focus for The Clorox Company (www.thecloroxcompany.com).

"Clorox has built a foundational leadership position in adopting open innovation that started in 2001," says Jim Mitchell, director of R&D, develop products process leader for Clorox. "This capability has expanded to partnering with many organizations around the globe."

In addition, Clorox has established open innovation teams within its businesses as well as within a core group to drive best-in-class innovation practices across the company.


Process Transformation

In early 2001, the company wanted to take the next competitive leap to sustain its leadership position. Given its range of product diversity, Clorox's product development process historically varied across different businesses. Clorox built fundamental processes in the areas of discovery, development/commercialization, product data and portfolio prior to 2001, but these processes had not been utilized company-wide nor were they managed together. This led to inefficiencies in resource allocation and speed to market.

"The decision was made to develop a single Clorox Product Development Process that would encompass all of our businesses," says Mitchell.

A comprehensive assessment of its innovation practices revealed that Clorox had a longer time-to-market for large, market-changing products than its competitors. In addition, process and effort levels for different types of projects were not clearly differentiated. Finally, executives had limited visibility into the future product pipeline, and they had no ability to validate the reasonableness and likelihood of future growth projections from new products.   

New business processes and technologies were defined and implemented across Clorox's innovation operations to improve results with the help of a consulting partner.

Best practices identified inside and outside of Clorox were adopted to create a single development process for the entire company. Its systems, which had operated independently, are now configured to work together.

Specifically, a tool was designed to use for portfolio analysis that automatically obtained data from the charters and contracts used by project teams, allowing for real-time analysis of product portfolios.

For product data management, Clorox recently moved from using legacy systems to using a new software solution. The company has completed data transfer, training as well as implementation across all of its domestic businesses. And Mitchell says that Clorox is in the final stages of bringing its international business online.

He adds, "Ultimately, product data management and portfolio tools have been delivered that have been viewed as best in class, as well as a product development database, which we were able to build relatively inexpensively from our legacy systems."

Gears in Motion

A "3-gear model" has also been fundamental to accelerating the company's ability to utilize portfolio thinking. While Clorox had always differentiated projects into "new" and "improved product" categories, defining gears allowed Clorox to think about projects across the corporation in a different way: "First by purpose [game changer, core growth, rapid response], second by size of the prize and third by resources required," explains Mitchell. "This has allowed us to take a disciplined look at the portfolio and make critical decisions on how to increase its value and return on investment."

Processes and functions downstream of product development, like product supply and sales, can also better plan for what's coming.

"Since the portfolio is driven from strategy, gearing also allows us the advantage of ensuring that each business unit is fulfilling not only its financial but also its strategic purpose within the corporation," says Mitchell.
       

Coming to Fruition

Once new processes and technologies were in place, the pipeline of projects shifted in composition to include higher value and more sustainable core growth and game-changing products. At the same time, the total number of projects was cut in half, freeing up resources. With this shift, the total value of the portfolio increased 30 percent. Clorox also realized a 25 percent increase on average in speed to market. In addition, Clorox's open innovation model has doubled the number of patent filings and significantly grown the value of its intellectual property.

"All combined, this has built our confidence to double our target for growth from new and improved products as well as significantly increase our cost savings targets," says Mitchell.

Clorox's transformed internal and external innovation processes came together for the January 2008 launch of Green Works, a breakthrough line of natural cleaning products. By targeting the right strategic partners through its extended open network, Clorox was able to quickly capture a more than 50 percent share of the natural cleaning category.

"We hope to deliver even stronger growth and greater value for our customers through new and improved product development," concludes Mitchell. "In addition, given the pressures of the rising costs in commodities, we are utilizing our innovation processes more and more to deliver value in cost effective ways."

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Innovation Advice from Clorox

Clorox's Director of R&D Jim Mitchell shares best practice tips for polishing innovation processes:
>    While some argue that innovation is constrained by process, the right business processes, designed correctly, can accelerate it and increase your return on investment.
>    Base resource allocation and investment decisions on a portfolio view of all projects. Use project definitions that are meaningful to your specific business strategy and customer.
>    Get the fundamentals right. Processes and tools to deliver accurate data are required to find the real value of innovation and deliver cost savings.
>    Change management is critical. The implementation of new processes and tools inevitably require individuals to change roles and learn new skills.