Final 5j4g58

HOW P & G TRIPLED ITS INNOVATION SUCCESS RATE

Aditya Vikram (U110006) Harshdeep Singh (U110023) Manivannan (U110027) Nikhil Agarwal (U110032)

THE GROWTH STORY 

Pillars for Exceptional Growth: Innovation  Mass Production Techniques 

Consistently spent highly on R&D  Integrated Emotional Component : ―innovation to improve people‘s lives‖  Launched ―Connect + Develop‖ Program  Still only 12% innovations hitting revenue targets 

SOLUTION TO CONUNDRUM Required more organic growth capability  Disruptive innovations that create new markets e.g. Tide, Pampers  Workshops to aid disruptive approaches  Resulted in development of ‗Align‘ and improvement in ‗Pampers‘!‘  Come up with ―New-Growth Factories‖ 

OBJECTIVES OF WORKSHOPS 

Teaching Senior Management and Project teams Disruptive thinking Approaches Assess Demand for early-stage idea  Entrepreneurial thinking 

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Form group of New-business growth guides 

Entrepreneurs successful and failed

Develop organizational structures to drive new growth  Produce a Process Manual for New-Businesses to 

Describe Opportunities  Identify requirements for success  Take Go/No-Go decisions 

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Run Demonstration Projects to 

Showcase emerging factories work

LESSONS TO BUILD ―GROWTH-FACTORIES‖ Co-ordinate factory with company‘s core businesses  Manage Portfolio vigilantly  Start small, grow carefully  Create tools to gauge new businesses  Ensure right people doing right things  Nurture cross-Pollination 

SHARPENING THE FOCUS The company‘s innovation portfolio was weighed down by a proliferation of small projects  Aim was to dramatically increase innovation output by focusing the factory on fewer but bigger initiatives.  To achieve this, team suggested three critical improvements. 

TRANSFORMATIONAL SUSTAINING INNOVATIONS Rather than strictly separating innovations designed to bolster existing product lines from efforts to create new product lines or business models, P&G increased its emphasis on an intermediate category: transformational-sustaining innovations.  It delivers major new benefits in existing product categories. 

STRENGTHENING OF ORGANIZATIONAL Established several new-business-creation groups, larger in size and scope than any previous growthfactory team, whose resources and management are kept carefully separate from the core business.  These groups develop ideas that cut across multiple businesses, and also pursue entirely new business opportunities. 

REVAMPING OF STRATEGY DEVELOPMENT AND REVIEW PROCESS Innovation and strategy assessments had historically been handled separately.  Now the CEO, CTO, and CFO explicitly link company, business, and innovation strategies.  This integration, coupled with new analyses of such issues as competitive factors that could threaten a given business, has surfaced more opportunities for innovation.  Evaluations are made of individual business units as well as broad sectors. 

P&G‘S FOUR TYPES OF INNOVATION 

Sustaining 

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Commercial 

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Commercial innovations use creative marketing, packaging, and promotional approaches to grow existing offerings.

Transformational-Sustaining 

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Sustaining innovations bring incremental improvements to existing products.

Transformational-sustaining innovations reframe existing categories.

Disruptive 

Disruptive innovations represent new to the world business opportunities.

SUCCESS OF TIDE 

Tide always leading the pack with innovations  

Numerous products and product line extensions Ordinary bottles and boxes to numerous scents and capabilities Tide Stain Release in 2009  Tide with Acti Lift in 2010 – Liquid Laundry detergent 

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Tide Naturals specific to Indian markets

MORE INNOVATIONS AT P&G 

Swash brand – Moved Tide out of the laundry room 

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Innovative distribution means

Tide Dry Cleaners to disrupt the dry cleaners market 

specialized treatments, drive-through windows, and 24hour storage lockers to facilitate after-hours drop-off and pickup

CONSUMER RESEARCH AND INNOVATION •

Consumer Research the focus –

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Single blade razor by Gillette specially for rural Indians

Innovation at the core of the organization –

Regular dialogues among several leaders—CEO McDonald, CTO Brown, the vice-chair of the household business unit, and the president of the fabric care division. – Focus of discussions at Corporate Innovation Fund meetings and similar reviews

P&G suggests six lessons for leaders looking to create new-growth factories •

Closely coordinate the factory and the core business. — New-growth efforts depend on a healthy core business . — A core business is rich with capabilities that can new-growth efforts. — Tools for managing core efforts are also useful

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Promote a portfolio mind-set.

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Start small and grow carefully.

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Create new tools for gauging new businesses.

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Make sure you have the right people doing the right work. Encourage intersections. — P&G and Google — Refreshed its C+D goals — Brought in outside talent.

Conclusion SOME THINK large organizations should just outsource innovation, by acquiring promising start-ups. But P&G‘s efforts appear to be working. In 2000 only 15% of its innovation efforts met profit and revenue targets. Today the figure is 50%. Projections suggest that the typical initiative in 2014 and 2015 will have nearly twice the revenue of today‘s initiatives. That‘s a sixfold increase in output without any significant increase in inputs.