Innovation as P&G’s Key
CHARAN: Drawing on his global consulting experience.
Photo by John Abbott
LAFLEY: Customers are “the boss.”
Photo courtesy Proctor & Gamble
What does it take to delight low-income Mexican buyers of sanitary pads?
The answer is not a punch line to a poor joke; instead it’s a successful product, Naturella. The story behind how Naturella’s creator, Procter & Gamble, got inside the heads of those consumers is just one of many valuable insights related in The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (Crown Business, 2008).
P&G chairman and CEO A.G. Lafley (MBA ’77) and consultant Ram Charan (MBA ’65, DBA ’67) team up to show how P&G has reconnected with customers and primed a sustainable innovation engine. Charan contributes cases and lessons from companies he has worked with, including IDEO, Nokia, Shimano, Honeywell, and LEGO.
By the time he rose to CEO in 2000, Lafley relates, the company had lost its fabled touch with consumers, whom he calls “the boss.” He rallied the company around the goal of delighting consumers at two “moments of truth”: first, when they purchase the product, and second, when they use it. “Consumers are now at the center of every key decision we make in a routine and disciplined way,” Lafley says.
The “disciplined way” is the major revelation of the book. For Lafley and Charan, innovation is an operational imperative driving sustainable organic growth, not something left to chance. The key: bake innovation into managerial decision-making at every level, and effectively manage risk. At Honeywell, for example, the Automation and Control Solutions business relies on a homegrown Velocity Portfolio Manager software program for managers. At a glance the user sees a list of current projects, their status, the team involved, technologies used, markets targeted, and revenue and profitability projections. “The tool automatically brings to the top of the list individual projects that need attention,” the book states.
By Lafley’s count, P&G has created seventeen disruptive innovations, so HBS alumni will come across familiar case material on many pages. But more recent triumphs are also instructive, such as how the tired Herbal Essences brand was revived in part by pouring it into a curvaceous, nestable bottle intended to appeal to Gen-Y women.
The Game-Changer is rich with prac-tical pointers. In “Rules for Brain-storming,” drawn from IDEO, we are told to speak in visual terms, use props, and let the conversation flow into “odd territory.” Also helpful is a look inside P&G’s quarterly and annual innovation reviews, which answer such questions as “How robust is my innovation portfolio?” and “Is it attractive from a financial and returns standpoint?”
The P&G experience in expanding consumer research in developing countries is especially fascinating for global brand managers.
— Sean Silverthorne
