Harvard Business Review, June 2011, Brown, Bruce & Anthony, Scott, pgs. 66-72
In the early 2000s only 15% of P&G’s innovations were meeting their revenue and profit targets. After P&G built organizational structures to systematize innovation, that figure is 50%. Chairman, President, and CEO, Bob McDonald explains, “People will innovate for financial gain or for competitive advantage, but this can be self-limiting. There needs to be an emotional component as well-a source of inspiration that motivates people.”
P&G began hosting a 2 day workshop that adopted Clayton Christensen’s disruptive-innovation theory. The workshop helped launch new product ideas and how to build on existing ones. From there, P&G formed a “new growth factory”. The purpose is to strengthen it’s core business and innovate new strategies and products.
The results? Look at Tide-In 2000, Tide had been in existence for 50 years and while still dominant, it’s revenues were not enough to support P&G’s needs. Through the new growth factory, it launched Tide Acti-Lift, Tide Stain Release, and Tide Naturals (created for Indian consumers). Within one year, Tide had 26 new patents.
Tide’s revenues have nearly doubled, from $12 billion to almost $24 billion. P&G shares numerous lessons, from which we can all learn something, but here are just a few:
- Branding: P&G communicates their innovation approaches to both internal and external stakeholders
- Make sure you have the right people doing the right work: In the past, their innovation team members had other, full time job responsibilities. They were not always “going the extra mile” since they were pulled in other directions. P&G realized their innovators must be fully invested, and completely focused. They made changes and hired full time innovation team members. These are the types of people that “go to bed thinking about new innovations”.
- Shared employees with noncompeting companies: In 2008, P&G and Google swapped 2 dozen employees for 2 weeks to gain new perspectives, collaborate, and leverage each other’s strengths
