POST OF THE DAY
Procter & Gamble Co.
Game-Changing Innovation

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By TMFCogitarius
September 2, 2008

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As AG Lafley put it: "We're in markets that in a good year grow 2 or 3 percent, so for us to do 5 to 7 percent top-line growth, which is our goal at the end of this decade, we've got to grow market shares and move into adjacencies and create new categories of business...The name of the game is innovation."

Which is why P&G keeps coming up with game changing innovations all the way through the supply chain. In 2005, MSN's Jim Jubak wrote: "For the last eight years, P&G has introduced the No.1 or No. 2 new non-food consumer product in the United States every year." And, in 2007, BusinessWeek rated Procter the 7th most innovative company in the world, with Apple at #1!
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While many companies talk about innovation , very few insist on it being the rationale for any price increase. For P&G, that's a constant refrain - pricing power, the simplest measure of a brand's moat, must be built on continuous innovation.

To nurture this creative ability in a notoriously ingrown and rule-bound organization, it redesigned reward systems, opened new ‘creative' positions for rank outsiders from BMW and Nike, and re-engineered business processes to more than quadruple the share of external partnering in its commercialization output.

In Oral care, traditionally dominated by Colgate, Crest grabbed extra shelf space and share leadership by creating a new category with its Whitestrips. P&G's compact detergent powder technology generated major savings for both retailers and its own supply chain, while the concentrated liquid rollout is driving distribution gains this year.

And, in 2007, P&G became the largest fine fragrance company in the world, boasting luxury brands such as Hugo Boss, Escada and Valentino.

In ‘The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation' Lafley, with co-author and Fortune 500 advisor Ram Charan, describes how companies can ingrain innovation into their own business processes to drive sustainable growth.
http://www.pg.com/news/lafley_innovation.shtml

Coming from a CEO with such an impressive track record, that should make for some very instructive business reading!