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Review of the Article How P&G Tripled Its Innovation Success Rate by Bruce Brown and Scott D. Anthony

HARVARD BUSINESS REVIEW, JUNE 2011

REVIEW
Whole article revolves around the innovation techniques used by P&G in last decade and its effect on the profit of the company and what are the learnings for the emerging leaders in the industry. The articles discusses that how innovation and growth complements each other. Initially, it talks about the previous record of Tide, the detergent brand of P&G, when due to lack in innovation techniques, the scope of the growth in the category was very limited and how innovation and increased investment in R&D, just doubled the revenues gained from the brand. It also talks about the New-growth Factory concept used by Edison and Ford and how it helped P&G to strengthen its core business and its ability to capture the innovative new-growth opportunities, even in the nascent stage. The companys CEOs belief that promotions may win quarters, innovation wins decades is the key to success. Company spends 50% more on R&D than its competitor. It also shows how P&D invests a huge chunk of money to do research about the consumer behavior and needs to nourish its innovation techniques. According to the CEO, their innovation is not only growth based but it also has a emotional value because each innovation improves people lives. It also talks about the Connect + Develop strategy used by P&G and how its helping them in their remarkable growth. When P&G thought that only this program is not sufficient, they took inspiration from the Disruptive Innovation theory and started producing new lines and new extensions of their products by making them simpler, convenient, easier in use and more affordable. P&G conducted workshops to formulate creative ways of solving the business problems and came up with innovative solutions. After 2004, did a lot of changes in the factorys foundation to change the mind sets of the managers and tech management members with its new training. They provided them the guides which talked about the new innovation systems and how they succeeded or failed. They understood that these new innovation techniques needed a dedicated team and they provided them the full process manual. Articles also talks about the innovation techniques used by P&G in short. It delivers the knowledge about the four innovation techniques used by the company, which are : 1. Sustaining Innovations- It talks about the required changes in the existing products and making them better. 2. Commercial Innovations- It comprises of the packaging and the promotional aspect of the products. 3. Transformational-Sustaining Innovations- It means the reframing the existing product lines. They typically bring order-of-magnitude improvements and fundamental changes to a business and often lead to breakthroughs in market share. Example Olay Pro-X wrinkles reducing cream.

4. Disruptive Innovations- When company thinks to launch a new product line or enters entirely new business. Example- Swiffer and Febreze. Innovations not only appeal to current users but also attract new ones too. This is the basic fundamental strategized by P&G and to examine this article gives the example of Crest, a toothpaste brand of P&G. Article talks about the time to time innovation in the product according to the demand of consumers. Most of these innovations were transformationalsustaining innovations. These changes have high degree of uncertainty, but the factory was there to manage these challenges. Article also delivers the concept of required dedicated teams for the innovation purpose, especially disruptive and transformational-sustaining innovation techniques. How teams like Future-Works and Learning-Works helped P&G in its growth is commendable. As the article goes further, it again takes the example of tide to explain the mechanism of the factory. Initially Tide was an ordinary detergent brand, which used to come in regular bottles and boxes. Then they targeted laundry services and came up with Tide Stain Release. Within a year, hey launched Tide with Acti-Lift. Articles also throws light on the importance of the ethnographic research in the innovation and talks about the Indian tendency to wash clothes by their hands. So they came up with Tide Naturals, which was soft on hands and hard on stains. They also priced it around 30% below the competitors in that range. They did experimentation time to time and came up with Swash which helped Tide to move out from the laundry room. Tide Dry Cleaners represents an entirely new business model. It started when a team began exploring ways to disrupt the dry-cleaning market, using proprietary technologies and a unique store design grounded in insights about consumers frustrations with existing options. Then the article talks about the learnings for the leaders. According to author, proper organizational structure, enough time for experimentation and provision of resources, plays an important role in the success of new-growth factory. Summary of the learnings for the leaders are following: 1. According to author, core business should always coordinate with the innovations. If the core business model is healthy, leaders feel free to think about more expansive growth initiatives. 2. Core business is always capable to support the new growth techniques. Relations play an important role in success. 3. Portfolio approach is also one of the factors of the high rate of growth of P&G. 4. The whole new-growth factory concept has nourished gradually, it started with a two day workshop, then small scale pilots and then it became companywide initiative. 5. This new-growth factory concept may not change the fortune of company overnight, it takes its own time, and its a process of various stages.

6. Its very important to analyse the market regularly, for that you need new tools to gauge new businesses. P&G conducts Transaction Learning Experiments, in which a team make new products in a lesser quantity and then they try to sell it. 7. Dedicated teams are most important; always make sure that right people are doing the right jobs. 8. Not only this, some more strategies were also used by P&G like they swapped employees with noncompeting companies for learning new innovative techniques. It also brings in outside talent and gives them exposure. The whole point of the article is to understand the overall process of the new-growth factory of P&G and how it helped the company to increase the innovation and target meeting from 15% to 50%. Predictions about the growth of P&G, also seems very encouraging. According to the author, creativity of a team can also be managed and the factory process can create sustainable resources of growth- no matter how big a company becomes.

Ratings from my sideI will rate the article 3.5 on the scale of 5, and the reasons behind my rating are: 1. Article talks about the all the innovation techniques being used by P&G in very simplistic manner, even a person not knowing much about the management jargons can also understand the reason behind the success of the company in last decade. 2. Author has quoted relevant examples about the innovations and the research done for that innovation be it Tide, Crest, Gillette, Swiffer, Pampers or Febreze, or the insights about the research done on the ethnography of Indians. Also you can easily understand the thought process of the company easily behind every move. 3. I have cut the 1.5 point because of the fact that innovation should always be supported by the promotion, in the article very less information has been provided about the marketing and promotion techniques of P&G. I am sure that their marketing strategy would also be more innovative and interesting.