Proctor & Gamble’s innovation path
Proctor & Gamble has long been known to launch new product categories, as well as new products. Some of their successful innovations in history include disposable nappies and teeth-whitening solutions.
According to a Business Week study, however, the wave of innovations has slowed to a trickle, relatively speaking.
The company’s innovation spend for the financial year ending June 2012 was $2.03 billion, the same as the year before but down 3 per cent from 2006 levels.
P&G normally charges premium prices for premium products, but its new innovations were launched at least a decade ago.
Blockbusters from the company have “dried up a bit”, according to its chief technology officer. The company is seeking to cut costs and one of its main backers wants to see a stronger return on investment.
Recent achievements from P&G have just been extensions of existing products, rather than completely new gamechangers. This has resulted in a loss of customers, as consumers are making the switch to cheaper products from rival companies and generic house brands.
P&G has recently turned to outside help for some of its new launches, including enlisting the help from a French firm for the Olay Regenerist skin cream.
Research and development from P&G has been decentralised, with business units now responsible for innovation. This has meant that innovation has slowed. Between 2003 and 2008, sales of new launches shrank by half.
Beauty products are a main area of concern for the company. P&G representatives admit the company has “lost its way” and is lagging behind competitors such as L’Oreal.
P&G has annual sales of $84 billion and carved out its name as a great innovator. However, its greatest hits are at least 10 years old. Time will tell if the company can turn the tide and come out on top once again.
Read the full article at Business Week.
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Managing Director, The Strategy Group
Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.