{"id":29344,"date":"2018-11-12T18:48:39","date_gmt":"2018-11-12T23:48:39","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/sherwin-williams-a-case-study-of-open-innovation\/"},"modified":"2018-11-12T18:50:58","modified_gmt":"2018-11-12T23:50:58","slug":"sherwin-williams-a-case-study-of-open-innovation","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/sherwin-williams-a-case-study-of-open-innovation\/","title":{"rendered":"Sherwin-Williams: A Case Study of Open Innovation"},"content":{"rendered":"<p>One might not expect a 152-year-old paint company to have an intense focus on open innovation. But Sherwin-Williams, (the \u201cCompany\u201d), the largest global producer of coatings (i.e. paint products), is doing just that. With $17 billion in revenue, Sherwin-Williams manufactures paints and coatings used by professional contractors, home improvement DIY-ers and industrial manufacturers<sup>1<\/sup>. The Company\u2019s External Innovation program was launched in 2008 as an initiative to identify externally-developed technologies for products that could improve shareholder value and financial performance<sup>2<\/sup>.<\/p>\n<p><strong>Why is open innovation important to Sherwin-Williams?<\/strong><\/p>\n<p>While the paint industry is relatively mature (global sales are expected to grow 2-3% annually), Sherwin-Williams has embraced open innovation as a means for increasing its growth rate<sup>3<\/sup>. Within the U.S., the Company has seen a shift in customer behavior linked to demographics, as more millennials are spending money on home improvement projects, and rely more on technology during the paint purchasing process. Globally, the Company faces increasing competition from smaller, low-cost players focused on commodity products, increasing the need for product innovation to maintain Sherwin-Williams\u2019 advantage<sup>4<\/sup>. In addition, the Company has used open innovation to combat its own bureaucracy as an organization with over 60,000 employees spread across five continents, by looking outwards towards smaller firms, universities, and inventors as sources of new product ideas<sup>5<\/sup>.<\/p>\n<p><strong>What has Sherwin-Williams\u2019 External Innovation team done to leverage open innovation in the short and medium term?<\/strong><\/p>\n<ul>\n<li>Technology Scouting: identifying the needs of all Sherwin-Williams divisions and scouting for potential solutions from startups, inventors, independent labs, customers, research institutes and more.<\/li>\n<li>Proof-of-Concept Testing: after sourcing new product concepts from external parties, the team uses Company research labs to develop these materials into demonstrations for customers.<\/li>\n<li>Government Funding: the team will also work with institutions such as the USDA, NIH, DoD, EU and more to secure funding for some external innovators.<\/li>\n<li>Information Services: the team conducts patent searches and provides technology landscapes to help Sherwin-Williams stay informed of competitive threats<sup>4<\/sup>.<\/li>\n<\/ul>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-29309\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel-1024x742.png\" alt=\"\" width=\"640\" height=\"464\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel-1024x742.png 1024w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel-300x217.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel-768x557.png 768w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel-600x435.png 600w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/SHW-Open-Innovation-Funnel.png 1794w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/a><\/p>\n<p style=\"text-align: center\"><em>[Source: Company Presentation, 2016]<\/em><\/p>\n<p>In the near-term, this has led to product developments that would not have occurred without heavy reliance on external innovation, such as the Forever&#x2122; Paint &amp; Primer, marketed under Sherwin-Williams\u2019 Dutch Boy brand and sold in hardware stores nationally<sup>2<\/sup>. For this product, Sherwin-Williams was able to address a particular pain point for its customer base (predominantly female DIY customers), by partnering with an outside firm, Nottingham Spirk, to develop a lightweight, easy-to-open plastic container which eliminates the need for paint keys and screwdrivers<sup>6<\/sup>. In addition, the Company partnered with Arm &amp; Hammer&#x2122; to integrate odor-eliminating technology into the product, allowing painted rooms to smell better for longer periods of time<sup>7<\/sup>. Forever&#x2122; Paint &amp; Primer\u2019s integration of multiple external innovations have allowed it to serve an emerging demographic with a customer-centric design-thinking approach one might not expect from Sherwin-Williams.<\/p>\n<p><iframe loading=\"lazy\" title=\"Sherwin Williams Twist &#039;n Pour\" width=\"640\" height=\"480\" src=\"https:\/\/www.youtube.com\/embed\/Gx230bF2dbI?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p style=\"text-align: center\"><em>[Source: YouTube]<\/em><\/p>\n<p>Over the medium-term, the Company is engaged in partnerships with universities to develop new materials and products that are potentially useful for commercial purposes. These investments tend to be longer-term in nature and require Sherwin-Williams to fund research initiatives over an extended period of time<sup>4<\/sup>. One example is the Company\u2019s commitment in 2015 to fund $1 million towards materials research through the Institute for Advanced Materials at Case Western University<sup>8<\/sup>.<\/p>\n<p><strong>Recommended steps for Sherwin-Williams to further harness open innovation<\/strong><\/p>\n<p>To-date, Sherwin-Williams\u2019 focus on external innovation has been highly-targeted, by \u201cscouting\u201d partners who can fill specific product needs outlined by the Company\u2019s divisions. But \u201copen innovation\u201d can involve the use of competitions or contests to solve problems traditionally faced by closed enterprises such as Sherwin-Williams<sup>9<\/sup>.<\/p>\n<p>In the near-term, Sherwin-Williams can build on its current practice of sourcing external partners for \u201cidea generation\u201d by gathering product ideas via an open competition where monetary incentives are offered to teams of researchers who can best develop chemicals to solve a particular issue that the Company faces in its coatings business<sup>10<\/sup>. Rather than have to \u201cscout\u201d for the solution, Sherwin-Williams could use an even broader form of open innovation to have the solution come to them.<\/p>\n<p>In the medium-term, Sherwin Williams can expand its open innovation practice to using its consumers for \u201cidea selection\u201d<sup>10<\/sup>. For instance, the Company\u2019s consumer paint products are offered in a variety of seasonal colors \u2013 perhaps the Company can leverage social media to create a voting contest where customers can choose their favorite colors. In turn, this could inform Sherwin-William\u2019s decisions to produce certain hues earlier in the manufacturing process.<\/p>\n<p><strong>Open questions for discussion<\/strong><\/p>\n<ol>\n<li>Given that many of its products are commoditized and contain few discernible features, how else can Sherwin-Williams use open innovation to create new products?<\/li>\n<li>Imagine you work in Sherwin-Williams\u2019 External Innovation team, tasked with scouting technologies from startups and developing them for commercial use. What challenges might you face as you try to get buy-in from stakeholders within the company to bring new products to market?<\/li>\n<\/ol>\n<p>Word count: 800<\/p>\n<p><strong>Citations<\/strong><\/p>\n<ol>\n<li>Sherwin-Williams, 2017 Annual Report, p. 1-8, <a href=\"https:\/\/investors.sherwin-williams.com\/doc\/annualreports_2017\">https:\/\/investors.sherwin-williams.com\/doc\/annualreports_2017<\/a>, accessed November 2018.<\/li>\n<li>Canadian Innovation Centre, \u201cMC: Open Innovation: Victoria Scarborough &#8211; Sherwin-Williams External\/Internal Innovations,\u201d YouTube, published Oct. 5, 2015, <a href=\"https:\/\/www.youtube.com\/watch?v=IygSK_DezQY\">https:\/\/www.youtube.com\/watch?v=IygSK_DezQY<\/a>, accessed November 2018.<\/li>\n<li>Robert J. Wells, Senior Vice President of Corporate Communications &amp; Public Affairs at Sherwin-Williams, remarks made at The Sherwin-Williams Company Q3 2018 Earnings Call, Oct. 25, 2018. From transcript provided by CapitalIQ, accessed November 2018.<\/li>\n<li>Victoria Scarborough, \u201cSherwin-Williams Overview,\u201d PowerPoint presentation, July 2016. Available at: <a href=\"https:\/\/www.innovationleader.com\/wp-content\/uploads\/2016\/07\/2016-SherwinWilliams-Overview.pdf\">https:\/\/www.innovationleader.com\/wp-content\/uploads\/2016\/07\/2016-SherwinWilliams-Overview.pdf<\/a> [Accessed November 2018]<\/li>\n<li>Sherwin-Williams, 2017 Annual Report, \u201cOur Global Footprint\u201d, <a href=\"https:\/\/investors.sherwin-williams.com\/doc\/annualreports_2017\">https:\/\/investors.sherwin-williams.com\/doc\/annualreports_2017<\/a>, accessed November 2018.<\/li>\n<li>&#8220;Twist &amp; Pour Paint Container.&#8221; Nottingham Spirk. Accessed November 12, 2018. <a href=\"https:\/\/nottinghamspirk.com\/project\/twist-pour-paint-container\/\">https:\/\/nottinghamspirk.com\/project\/twist-pour-paint-container\/<\/a>.<\/li>\n<li><em>Dutch Boy Forever Color Card<\/em>, Sherwin-Williams brochure (Cleveland, OH, 2018).<\/li>\n<li>\u201cSherwin-Williams to Commit $1 million toward Materials Research at Case Western Reserve University,\u201d Sherwin-Williams press release, Nov. 2, 2015, <a href=\"https:\/\/www.prnewswire.com\/news-releases\/sherwin-williams-to-commit-1-million-toward-materials-research-at-case-western-reserve-university-300170297.html\">https:\/\/www.prnewswire.com\/news-releases\/sherwin-williams-to-commit-1-million-toward-materials-research-at-case-western-reserve-university-300170297.html<\/a>, accessed November 2018<\/li>\n<li>Lakhani and J. Panetta. The principles of distributed innovation. Innovations: Technology, Governance, Globalization 2, no. 3 (Summer 2007): 97\u2013112.<\/li>\n<li>A. King and K. Lakhani. Using open innovation to identify the best ideas. MIT Sloan Management Review 55, no. 1 (Fall 2013): 41\u201348.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>One might not expect a 152-year-old paint company to have an intense focus on open innovation. But Sherwin-Williams, the largest global producer of coatings (i.e. paint products), is doing just that.<\/p>\n","protected":false},"author":11891,"featured_media":29349,"comment_status":"open","ping_status":"closed","template":"","categories":[4411,1346,4404,4408,3952,2277,1195,4405,4407,4414,4401,4409,4406,4415,4416,4239,4403,1958,4412,4410,4402,4413],"class_list":["post-29344","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-advanced-materials","category-chemicals","category-coatings","category-color","category-contractors","category-crowdsource","category-crowdsourcing","category-distributed-innovation","category-diy","category-dutch-boy","category-external-innovation","category-forever","category-home-improvement","category-idea-generation","category-idea-selection","category-open-innovation","category-paint","category-plastics","category-ppg","category-primer","category-sherwin-williams","category-shw","hck-taxonomy-organization-sherwin-williams","hck-taxonomy-industry-chemical","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2018\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Sherwin-Williams: A Case Study of Open Innovation - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/sherwin-williams-a-case-study-of-open-innovation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sherwin-Williams: A Case Study of Open Innovation - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"One might not expect a 152-year-old paint company to have an intense focus on open innovation. 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