Innovation The ‘Heart Of Our Business Model’

McDonald Shares Insights At Global Fabric and Home Care Conference
Monday, October 29, 2012 7:53 am EDT

There’s no question that companies, institutions and society in general face significant challenges. And while there’s no one solution, many of the challenges are highly responsive to innovation.

“Innovation is the key to improving quality of life for people in every part of the world,” P&G Chairman of the Board, President and CEO Bob McDonald told attendees during his keynote address at the American Oil Chemists’ Society (AOCS) World Conference on Fabric and Home Care in Singapore. The conference, held October 29-31, is providing attendees perspective on the technology, products and business trends of the global fabric and home care business. 

During his address, McDonald talked about the importance of innovation, shared innovations lessons P&G has learned over our 175-year history and talked about some of the innovations changing our industry for the better.

“The heart of our business model is innovation,” he said. “Innovation has been the primary driver of P&G’s growth over our 175 years.”

He shared four main lessons:

1) Innovation has to be inspired by fundamental human truths: We must intimately know the people we serve and want to serve. Once we know that, we have to understand the tension in their lives and the underlying problem that causes the tension.

“Deep empathy helps us identify tensions in people’s lives that we can help resolve, which leads to insights… that inspire big ideas… which become life-improving innovations… that grow our industry.”

2) Innovation has to be everybody’s job, inside and outside the company: At P&G, we look for innovation ideas across our portfolio of businesses, and we share technology and ideas across those businesses. At the same time, we have an external network of partners through our Connect and Develop program. 

“With innovation coming from so many sources, it becomes everyone’s job,” McDonald said. “We want every P&Ger to be in the innovation game and to continually look for opportunities to innovate, no matter where they may be in the company.

“When innovation becomes everyone’s job and responsibility, you unleash the innovative capacity of your organization.”

3) Innovation has to be balanced: It has to represent a continuum of innovation – sustaining and discontinuous – that meets the different needs of consumers and creates value for all consumers. Sustainable innovation involves improvements that enhance current offerings, while discontinuous innovation creates new categories or disrupts current categories.

“We need more discontinuous innovation,” he said. “Innovation that obsoletes current products and creates new categories and brands.”

4) Innovation must communicate value: Consumers must be able to see and embrace the value it provides. This requires marketing that is focused on communicating the superiority of new innovations with competitive benefit-driven selling ideas, powerful superiority claims, product performance demonstrations and superior end-benefit visuals. 

Bob emphasized the importance of the fabric and home care industry to the business, saying it still has plenty of room to grow. Per capita spending on fabric and home care products in China, for example is just over $6, versus more than $78 in North America.

“If we can take the global per capita spending average from $20 to $43, which is the current figure in Brazil, the total F&HC market size would increase by nearly $162 billion USD,” he said.

Bob closed by talking about the significant role innovation has played in our history and our ability to impact the world and the important role it will continue to play in the future.

“Innovation creates opportunities,” he said. “Innovation improves lives – which makes it the most intrinsically rewarding work any of us can do.”

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