
A.G. Lafley became the Chairman & CEO of P&G in 2000.
Since his taking charge, the profits have tripled to more than $10 billion on $76.5 billion in revenues.
Although lots of growth was from the acquistions, what was also impressive was its organic growth.
An average growth of 6% an year is really big considering the gigantic size of its revenues.
So how did he do it?
He did it by focusing strictly & primarily on the Customers and Innovating the way of Innovation.
When he analyzed the situation of P&G right after his inception, he realized that the customers were turning away form P&G products.
So he set 2 simple goals.
1, The First Moment of Truth : Make customers choose P&G products over other products.
2, The Second Moment of Truth : Make customers re-buy P&G products.
To reach this goal, P&G had to understand its customers in & out.
They needed something more than the regular market research and FGIs.
So they came up with 2 new programs called ‘Living It’ & ‘Working It’.
‘Living It’ program is a program where P&G workers actually live with their customers for a few days to observe the purchase & usage behaviors of their customers in the most delicate but rigorous form.
‘Working It’ program is a program where P&G workers go to work on the retail stores to observe how the customers actually ‘meet’ and shop P&G products. This was really improtant since it had great implications for goal no. 1.
By reflecting their understanding of the potent needs of the customer and optimizing the delivery route to the customers in detail, they experienced great improvements.
It is also said that Lafley induced intuitive & comprehensive ‘design thinking’ into P&G organization. While cutting other work forces, he increased the number of design related employees by 4 times.
In my understanding, this was not just to improve the ‘design’ of P&G products, but it was to enhance the emphatic sensitivity of the organization as a whole.
After adding designers, Lafley sent his designers, marketers & managers to the retail stores and asked them to discuss what they felt in their visits.
Interestingly, marketers and managers said things mostly about the composition of their product mix, while designers talked mostly about how their customers might feel in the store in relation to P&G products. This was due to the fact that most marketers & managers were accustomed to think logically and analytically but designers were more prone to use right-side of their brains.
This example also illustrates another emphasis made by Lafley, which was that ‘Innovation is a Team Sport’. He emphasized that all barriers between departments should be fallen in order to truly appreciate every idea and every capability of the company.
He took this step even further to outside of P&G. To embrace all the innovation happening outside of the company, he pursued ‘open innovation’ which was applying outside ideas & technologies in developing new products. He deemed that this could improve the R&D productivity and it’s now often known as C&D (Connect & Development).
The wholesome innovation culture of P&G can be summarized as 4Cs and a O.
Courageous, Connected, Collaborative, Curious and Open.
Finally, Lafley says that innovation leader should be a ‘Pragmatic Dreamer’.
So where do you stand? Are you a ‘Pragmatic Dreamer’?