P&G distinguishes between 3 different types of innovation:
- Commercial innovation, focusing on the new usages of existing products without packaging or product changes.
- Sustaining innovation, consisting of improvements or extensions of existing products and brands.
- Disruptive innovation, creating new categories, segments, and sources of consumption.
To make these innovations systemic, P&G sees eight main drivers, at the core of which is the consumer.
- Motivating purpose and values. Represented through P&Gs slogan “Touching Lives. Transforming Life.”
- Stretching goals: sales growth, margins, free cash flow, net present value, shareholder value, EPS.
- Choiceful strategies focusing on the core businesses, fast growth, higher margins, and low income consumers and developing markets. Strategies define where to play, how to win and what not to do.
- Focus on core strengths: consumer understanding, innovation, go-to market capabilities, branding.
- Enabling organizational structure: organizing for innovation, “just-enough structure”, no one-size-fits-all structure.
- Consistent and reliable systems enabling flexible social processes.
- Courageous and curious culture, which is purpose driven, open and collaborative.
- Inspiring leadership, promoting collaboration and connections, courage and integrative thinking.
To sum it up, P&G’s approach to innovation focuses on:
- balancing sustainable + disruptive innovation
- managing innovation as a social process
- being customer driven.
(Source: Presentation by Bruce Brown, Chief Technology Offier, Procter & Gamble, MIT Europe ILP Conference, March 26 2009 Vienna)
