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Published: August 26, 2008

 
 

P&G’s Innovation Culture

Virtually every leading practitioner of our new design capability came from the outside as a mid-career hire. They arrived from BMW, Nike, and some of the best design shops in the world. We probably have 150 to 200 such people and, although it’s not a huge pro­portion of the P&G staff, it’s big enough to make a difference. They bring us not just the art and science and practice of design, but an integrative way of thinking.

Integrative Thinking
One of our favorite examples of integrative thinking involves Febreze, a very successful odor-control product. One of the active ingredients in Febreze surrounds a malodor and removes it, as opposed to covering it up or masking it. Febreze started out as a fabric refresher. Now it’s also an air freshener in the U.S. and elsewhere.

Not long ago we took the Febreze package, product, and brand name to Japan. We tested it on a small scale with Japanese consumers. They rejected it. As interpreted by the P&G team (a relatively junior-level group), the gut reaction of the Japanese was: “Here’s another Western product that’s not going to work in our country.”

But we persisted. “Were there any Japanese households or consumers who really liked the product?” we asked. The team didn’t know, but they went back and looked at the research. Lo and behold, 20 percent of the first survey group absolutely loved the product.

Personally, I wasn’t surprised. I had spent eight years living and working in Japan and I knew that Japanese people can be hypersensitive to malodors. A man can smoke cigarettes outside or in a subway station, but many Japanese women won’t let their husbands smoke in the house. When the husband comes home, he may have to take his smoky clothes off and wash them before he can sit down.

So we resolved to try again. The P&G team changed the viscosity of the product. They changed the fragrance from high profile to a very low profile scent. They changed the bottle to a much more delicate design that more Japanese people felt comfortable having visible in their homes. They changed the spray pattern to a mist. They changed everything but the core technology of the product, and it became a phenomenal success in Japan.

This is a story we tell ourselves at P&G to drive home the need for integrative thinking. The project started with a consumer-centric concept. It involved people in a variety of functions and at least two regions. It opened our team members’ eyes to other possibilities. And it came to fruition because we were skilled at having the kinds of processes and conversations that would lead people to synthesize their ideas.

Our long-standing middle managers, people who have grown up in the P&G system (as I did), are starting to recognize that better innovation processes can expand their personal and leadership skills. They’ve all been through cost-cutting and productivity exercises. But that’s not the same as creating top-line opportunities that can earn kudos from consumers. Nobody is telling them they have to be the geniuses who invent an idea. They will get credit for turning ideas into replicable processes and learning from their mistakes. In operating cross-functionally, they are also moving away naturally from the old silos.

The result of P&G’s focus on innovation has been reliable, sustainable growth. Since the beginning of the decade, P&G sales have more than doubled, from $39 billion to more than $80 billion; the number of billion-dollar brands, those that generate $1 billion or more in sales each year, has grown from 10 to 24; the number of brands with sales between $500 million and $1 billion has more than quadrupled, from four to 18. This growth is being led by energized managers — innovation leaders — who continually learn new ways to grow revenues, improve margins, and avoid commoditization. Our culture of innovation is helping P&G leaders be more effective, and in the process, they’re renewing our company every day.

 
 
 
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Resources

  1. Daniel Goleman, Emotional Intelligence: Why It Can Matter More Than IQ (Bantam Books, 1996): Developing individual maturity for an organizational innovation culture.
  2. Larry Huston and Nabil Sakkab, “P&G’s New Innovation Model,” Harvard Business Review, March 2006: Anatomy of an open approach for attracting ideas and consumer insights from around the world.
  3. A.G. Lafley and Ram Charan, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (Crown Business, 2008): Guide for giving large, mature companies the sustainable capacity for breakthrough innovation.
  4. Roger Martin, The Opposable Mind: How Successful Leaders Win through Integrative Thinking (Harvard Business School Press, 2007): Gaining the ability to overcome the limits of partisan thinking, to enhance innovation or anything else.
  5. Steven Wheeler, Walter McFarland, and Art Kleiner, “A Blueprint for Strategic Leadership,” s+b, Winter 2007: Context for chief executives, drawing on A.G. Lafley’s example, among others.
  6. Procter & Gamble Web site: Includes Connect + Develop, a portal for engaging innovation partners, and Everyday Solutions, through which the company connects with consumers.
  7. For more thought leadership on innovation, sign up for s+b’s RSS feed.