Presentation made by Jason Husk to Brand Packaging conference, October 22, 2009.

1. Application of Open
Innovation in a Collaborative
Supply Chain
Packaging That Sells!
2009 Conference
Jason Husk
Group Manager, Open Innovation Networks
The Clorox Company
October 22, 2009

2. Overview
This is not WHY OI, but HOW OI
What are the key framing questions?
What are the mental models I need?
What are the work processes to support
our move to Open Innovation?
How does this work in the supply chain?

3. Clorox’s Decision to Pursue
Open Innovation
Clorox: Founded in 1913
95 year history: leading brands in mid-size categories
$5B in sales, 8000+ employees
20 yrs acquisition-driven growth & “fast follower” strategy
Clorox Strategy Change in 2000:
Lead in Innovation
Enormous competitors; can’t spend way to success
Innovation identifies new opportunities beyond
current capabilities

4. Clorox Reality
Annual R&D Spending… …broader investment with Partners
P&G 3M Unilever Colgate Clorox Clorox Colgate Unilever 3M P&G Partners
U.S. Patents in CLX Categories… …broader protection with Partners
Clorox RB SCJ P&G Clorox RB SCJ P&G Clorox
Partners

5. Change is needed!
Key areas to focus on:
Culture & Mindset
Innovation Approach/Models
Work Processes

6. Changing the Culture
Must make a commitment to going outside for
ideas and opportunities
This is not just an R&D mindset change, but an
enterprise-wide mindset change
R&D has the bulk of the effort
Must enroll Procurement, Marketing, Product Supply
Need to implement the appropriate
(collaborative) and effective work systems to
reinforce this strategic change

7. Changing the Culture
in CLX Packaging Development
THE OLD WAY THE OPEN INNOVATION WAY
Packaging is a key piece of the
Packaging just holds the product
consumer experience
Development ideas created internally Development ideas come from
by R&D everywhere, even outside the company
Innovation systems reinvented at the
Innovation systems created and cross-BU level to access and focus
managed by the business unit external product and technology
solutions
Networks managed ad hoc, Strategic relationships identified,
on a project-by-project basis grown, and managed over time
External partners not actively engaged External partners rewarded for
in strategic product planning, nor delivering innovation via Win Balancing
rewarded for delivering innovation program

8. Changing the Mental Model
New Busines
Tech or Consumer s
Product Results

9. Changing the Mental Model
Busines
Technical Consumer
s

10. New Model Drives Progress
Critical to
understand that
Technical progress (read:
change) does not
happen in a
vacuum!
Consumer Business Power is in
synchronizing and
integrating all three
How does this
change the way we
work…

11. Work Process in OI
SCOUTING
SUPPLIER
RELATIONSHIP SELECTING
MANAGEMENT
SECURING

12. Work Process in OI
What do you want?
Use all three lenses
SCOUTING
Business
Consumer
Technical
SUPPLIER
RELATIONSHIP
MANAGEMENT
SELECTING Well-defined problem
statement/hypothesis
Set initial metrics on
SECURING how to evaluate ideas
Tools:
Think Tank
Idea Tracker

13. Identifying Needs & Gaps
• Holistic Design Thinking
• Build Emotional Connections
Design • Design for Manufacture/Cost
• Sensory Engagement
• Active/Intelligent Decoration
• Sustainable
Materials • Stronger + Lighter
• Sensory Engagement
• Performance
Forming • Unique Structures
• Cost Advantage
• Convenience + Ergonomics
Dispensing • Control of Product
• Consistent Delivery

14. Work Process in OI
How will you find it?
SCOUTING What is your search
strategy?
Networks
SUPPLIER
RELATIONSHIP SELECTING Internal – what do we
MANAGEMENT already know?
External – who else is
looking at this?
SECURING
Tools:
Oval Ideas
Netbase – Accelovation,
illumin8

15. Work Process in OI
How will you know
when you have found
SCOUTING it?
Importance of setting initial
metrics on idea evaluation
Cull list of potential
SUPPLIER
RELATIONSHIP SELECTING
partners from hundreds to
MANAGEMENT the feasible few
Evaluate external
solutions vs. initial metrics
SECURING Does this solution deliver
the business case?
If not, determine where to
change:
Metrics for evaluation
Feasibility of business
case

16. Work Process in OI
How do you get
SCOUTING
access to the
solution?
What type of
SUPPLIER
RELATIONSHIP SELECTING agreement do you
MANAGEMENT
need to put in place?
What enables and
SECURING fulfills the business
case?
What deal enables this
idea…and the next
three after it?

17. Changes in Work Process
Partnership Type
One-time Focused Platform
Need On-Going On-Going
License Joint Alliance
Development

18. Agreements – Doing the Deal
Take the long view
Think through the whole process and
future interactions while living the current
deal
Change in negotiating techniques –
Collaborative vs. Confrontational
What are the different “currencies” we can
use?
Financial
IP

19. Work Process in OI
How do you manage
the relationship?
SCOUTING
Is this a one-time deal,
or the start of a long-
SUPPLIER term relationship?
RELATIONSHIP SELECTING How applicable is this
MANAGEMENT
partner’s portfolio vs.
our enterprise’s?
SECURING How sustainable is the
competitive
advantage?
What is the next
Scouting opportunity
this partner can help?

20. Managing Open Innovation
Collaboration
Deep, strategic partnering yields impactful innovation
Technology solutions enable defined opportunities
developed through strong relationships & cooperative effort
Manage top-tier partners via “Win-Balancing”
Selected most strategically aligned suppliers to join program
Mutual investment in relationship
Annual partnership review
with quarterly check-ins
Meaningful rewards for
delivering innovation
Deep understanding of strategy
& development pipeline

21. Initial ‘Product’ Successes with
Open Innovation
2000: Clorox Disinfecting Wipes
New technology: Nonwovens conversion
Results: Explosive sales, new category
2001: Armor All Wipes
Improved technology: Nonwovens
Results: Dramatic sales, new category
2003: Clorox Bleach Pen
New delivery system – package, formula
Results: Strong sales, multiple design awards
2004: Clorox Teflon Bath Cleaners
Du Pont partnership on non-stick, polymers
Results: 8 pts share gain, #3 to #1 in category

22. Successes Continue
2005: Glad Force Flex Trash Bags
P&G Joint Venture; core polymer technology
Results: Market share & category grew 5 pts
2007: Armor All Wheel Protectant
Technology “push” from Win-Balancing partner
Results: New product category in auto market
2008: Green Works natural cleaners
Deep supplier partnerships to build new brand
Results: In 6 months grew market 300%

23. Case Study:
Clorox Disinfecting Wipes
Project borne from consumer insights leaving the
canister out leads to increased usage
How do we get
consumers to leave
this package out?

24. Case Study: CDW
Consumer insight
drives better business
?
results Technical
Business case
advantages clear
Need technology to √ √
Consumer Business
encourage consumer
behavior without
ruining product
financials the technology/suite of technologies
What is
which deliver the consumer/business needs?

25. Apply the 4-S Process
Scouting:
Who has design and
SCOUTING technology expertise?
Selecting:
Strategic Development
SUPPLIER Partner – Union Street
RELATIONSHIP SELECTING
MANAGEMENT Securing:
Deal is a Project
Appendix in MAA
SECURING
SRM:
How do we integrate with
the entire development
team – all the way
through the supply chain?

26. Design
Replaceable face and
poly-bag insert
Reusable body
Weighted base helps hold
container in place
Concept design exploration

27. Design
3D aesthetic exploration: shape, opening

28. Design
Kitchen and bathroom environment
Aesthetic exploration (environment of use)

29. Design
Crisp edge design looks
Integrated lip design for contemporary in the home
stacking on store shelf
Easy to grip,
modern shape
Final container design selected

30. Materials
- No dissimilar materials
- All components Polypropylene
-100% recyclable
Sustainability

31. Materials
.04” label gap strategically located
in rear corner of package
STM label design artwork
Label text:
Usage info and
UPC on wrapped label
Full wrap IML (In-Mold Label)

32. Applying Open Innovation to Packaging…
Clorox Disinfecting Wipes Canister: Launched Jan-09

35. Union Street/Clorox Open Innovation
Keys to Success
Robust application of Innovation Mental Model
and 4-S Process
Quick alignment and decisions on partner
strategy
Build the internal alliance/consensus before the
external
Determine key development success criteria
Must vs. Want
What enables the business case?
Supplier integration – it’s all about the network!

36. Conclusions
Open Innovation impacts all aspects of product creation
Determine where you want to innovate – focus on biggest gaps
in overall system (technical-consumer-business)
Build capability specific to your needs – no prescribed
templates
Recognize the change management needed to
systematize OI
Develop change processes and work processes to support OI
Start with changing the mindset and culture
Identify Innovation Models that resonate with your company
Build the supporting needs and gaps analysis
Deliver work systems and networks to deliver against those
needs

37. Thank You