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P&G – Extraordinary Results from Innovation Acceleration

Many of you will know that Procter & Gamble is one of my favourite companies when discussing innovation acceleration. The latest Harvard Business Review (June 2011) contains an extremely important article on the impact that innovation has had on P&G recently. We all know of the Connect and Develop program that was kicked off some years ago, but where is P&G now, and where are their innovation efforts? To be honest, I was unbelievably excited when I read this article, and I think you will be as well.

Here are some of the facts reported by HBR that really impressed me:

From 2004 to now, P&G looked to carry out the following:

a) Teach senior management and project members the mind-sets and behaviours that foster disruptive growth

b) Form a group of new-growth-business guides to help teams working on disruptive projects

c) Develop organisational structures to drive new growth

d) Produce a process manual – a step-by-step guide to creating new-growth businesses.

e) Run demonstration projects to showcase the emerging factory’s work.

The challenge that they found in 2008 was that they were burdened by a number of smaller projects that were not necessarily disruptive. This scenario is very common – the organisation establishes an Innovation program and soon people ask – “So where are the Big Ideas?”. So Bob McDonald (then the COO) and Bruce Brown (then CTO and coauthor of the article in HBR) drove three critical improvements:

a) Increase emphasis on an intermediate category, transformational-sustaining innovations, which would deliver major new benefits in existing product categories

b) Strengthen organisational support for the formation of transformational sustaining and disruptive businesses. P&G created several new business-creation groups whose resources and management are kept separate from the core business – dedicated teams with a separate General Manager. What is really interesting is that there is one group, FutureWorks, solely dedicated to enabling different business models. This to me is tremendous and a lesson for other companies – while “tiger teams” might be formed to boost sales and win deals, it is rare that they are formed specifically for new business models.

c) Revamp its 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. What a great lesson!

Lessons learned include:

1. Closely coordinate the factory and the core business
2. Promote a portfolio mindset
3. Start small and grow carefully
4. Create new tools for gauging new businesses
5. Make sure you have the right people doing the right work
6. Encourage intersections – successful innovation requires rich cross pollination both inside and outside the organisation.

There are other significant lessons learned from the above cited in the article. And many more initiatives that you should read for yourself that are truly remarkable. Here, though, are some of the business impact metrics cited:

• In 2000 only 15% of its innovation efforts met profit and revenue targets. Today the figure is 50%. The past fiscal year was one of the most productive innovation years in the companyʼs history, and the companyʼs three- and five-year innovation portfolios are sufficient to deliver against their growth objectives. Projections suggest that the typical initiative in 2014 and 2015 will have nearly twice the revenue of todayʼs initiatives. Thatʼs a sixfold increase in output without any significant increase in inputs.
• In 2009 P&G introduced the wrinkle-reducing cream Olay Pro-X. Launching a $40-a-bottle product in the depths of a recession might seem a questionable strategy. But P&G went ahead because it considered the product a transformational sustaining innovation. The cream and related products generated first-year sales of $50 million in U.S. food retailers and drugstores alone.
• In 2010 P&G refreshed its C+D goals. It aims to become the partner of choice for innovation collaboration, and to triple C+Dʼs contribution to P&Gʼs innovation development (which would mean deriving $3 billion of the companyʼs annual sales growth from outside innovators). It has expanded the program to forge additional connections with government labs, universities, small and medium-sized entrepreneurs, consortia, and venture capital firms.

The HBR article can be found here. I seriously urge you to read it, digest it, look at what your organisation is NOT doing, and gather senior leaders of your organisation together in a war room to form an action plan to close the gap. NOW!.

Reigniting Innovation in the United States

Interesting article by McKinsey on how the US is slipping further and further behind in innovation. McKinsey conducted a series of interviews with CEOs of advanced industrial companies, and as they say there is “real cause for alarm. Seems the issues are:

Cutting-edge technology: the United States is competing against or even catching up with foreign companies and engineers
Demand: more than 50 per cent of the global middle class lives outside of North America
Talent: Significant scientific talent is building outside of the United State
Entrepreneurship: There is an increase of risk aversion towards new ventures in the United States, with large US corporations being most affected

McKinsey goes on to provide a set of remedies:

1. Clear the way for the cutting edge industrial technologies of the future
2. Rebuild infrastructure
3. Attract and retain talent
4. Reenergise the entrepreneurial spirit in the large US companies

The article can be found here

Digital and Printed books collide

The time people spend reading on a digital screen is now almost equal to the time spent reading printed paper text, according to a recent survey by Gartner, Inc. The huge majority of tablet and iPad users say they find screen reading either easier than reading printed text (52 percent) or about the same (42 percent). However, 47 percent of laptop users find screen reading harder than reading printed text, and 33 percent reported it was about the same.

In the fourth quarter of 2010, Gartner surveyed 1,569 consumers in six countries – the US, UK, China, Japan, Italy and India – about their subjective experiences of reading on screen versus reading printed paper text. The survey included a mixture of online, face-to-face and computer aided telephony interviews.

“There are concerns that digital media will cannibalize print media, based on the general decline in newspaper sales and take-up of online news services in many parts of the world, but the evidence from our research is that print and online are not generally regarded as direct substitutes by consumers,” said Nick Ingelbrecht, research director at Gartner. “Something more complicated than a straightforward substitution of print to digital media is taking place.”

“Trying to sell the same basic content to the same consumer in different formats risks alienating the consumer, who will balk at paying twice for the same thing,” said Ingelbrecht. “The survey results confirm that multichannel content distribution is essential for reaching consumers who are consuming near equal amounts of print and digital text. Content, publishing, and media organizations should market the synergies of multichannel products to consumers, stressing the benefits of having both print and online access, rather than selling competing stand-alone products.”

According to the Gartner survey, across the demographics, screen reading is now virtually on a par with print consumption. Survey data showed that younger age groups are happier to read on screen than older respondents, with the 40 to 54 years cohort least satisfied with their screen reading experience. In terms of gender, men typically reported screen reading easier than women, but both sexes said screen reading was generally the same or harder than reading printed text.

Gartner analysts said the shift from paper to screen-based consumption is not a straight substitution of one medium for another. There is no single paradigm for screen reading, because reading a short piece of text on a mobile phone screen is a different proposition from the reading experience with an e-reader.

The survey research indicated that around 40 percent of respondents had no experience of using e-readers, such the Amazon Kindle, Amazon Kindle DX and Barnes & Noble Nook, and this was even higher in India (75 percent), the U.K. (56 percent) and the U.S. (57 percent). Urban Chinese respondents had the highest familiarity with e-readers and also had the highest number reporting that e-readers were easier to read. This reflects the relatively high income and education level of the sample in China.

Crowdsourcing site to discuss Crowdsourcing!

The Daily Crowdsource has launched the first non-commercial forum where people can discuss the issues and news related to crowdsourcing, crowdfunding, and open innovation, in three languages – English, German and Portuguese, with plans to roll out four more languages in the coming months.

The goal of the news site, & the new forum, is to grow the crowdsourcing industry through educating the public. Seems the aim is to help people learn about crowdsourcing, discuss the best uses, and share with like-minded individuals – in multiple languages.

The interesting thing is that to showcase the power of crowdsourcing, the construction of the forums and the translation of the site was crowdsourced!! Is that crowdsourcing to define crowdsourcing?

Site here.