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 / Autumn 2008 / Issue 52(originally published by Booz & Company)


P&G’s Innovation Culture

Once people have succeeded at a game-changing innovation, the level of energy in the company elevates. Even people who weren’t directly involved are affected through the social networks. It becomes easier for them to expand their idea of what is feasible. Building this sort of capability often has the rhythm of, say, skilled basketball practice: a group of people who gradually learn seamless teamwork, reading one another’s intentions and learning to complement other team members, ultimately creating their own characteristic, effective, and uncopyable style of successful play. 

Becoming a Great Innovation Team Leader
by Ram Charan

As you read about Procter & Gamble’s social system and innovation culture, you may be thinking, “There are some good ideas here…for someone else. In my shop, we can barely keep the trains running on time. How am I supposed to do all this?”

Leaders of innovation take their game to another level through a particular set of practices:

  • Establish clear criteria and don’t hesitate to shift resources. Great innovation leaders keep a sharp eye on their short-term and long-term business goals and think through how and when various innovation projects will contribute to them. They determine which projects to accelerate or cut on the basis of resource consumption as well as market potential. They don’t hesitate to pull the plug on projects that don’t clear the hurdles or that simply consume more time or money than the business can afford.
  • Concentrate on possibility. The process of innovation is inherently uncertain. Innovation leaders live with ambiguity as ideas are shaped and reimagined; they don’t let ideas die before they’re fully formed or understood. Once a project is selected, these leaders inspire the team to keep going even as they encounter obstacles and go through iterations. At the same time, leaders are vigilant for indications that the project’s market potential has diminished.
  • Cross boundaries and help others do the same. Innovation becomes riskier when there are gulfs between, for example, technologists, marketing people, and those responsible for commercializing a new product. Inevitably, trade-offs will be required among these groups. Leaders thus must ensure that communication channels are open from the start and that facts and sound judgment prevail. They must be prepared to break deadlocks and resolve conflicts by keeping individuals focused on their common goal: the customer.
  • Reward effort and learning. Failure is a fact of life for companies that pursue innovation seriously, and a leader’s response to it has a huge effect on company culture and therefore on future projects. Innovation leaders know that failures represent opportunities to learn. They keep people energized by publicly recognizing their earnest efforts and willingness to venture from the tried and true.

Reprint No. 08304

Author Profiles:

A.G. Lafley is the chairman and CEO of Procter & Gamble Company. He was named Executive of the Year by the Academy of Management in 2007 and serves on the boards of General Electric Company and Dell Inc. He is the coauthor, with Ram Charan, of The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (Crown Business, 2008).

Ram Charan is a Dallas-based advisor to boards and CEOs of Fortune 500 companies and the author or coauthor of 14 books, including the bestsellers Execution (with Larry Bossidy; Crown Business, 2002), Confronting Reality (with Larry Bossidy; Crown Business, 2004), and Know-How (Crown Business, 2007).

Also contributing to this article was Geoffrey Precourt.
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  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.
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