Topics

Innovation – The Lifeblood of our Company

Monday, December 20, 2010 3:39 pm EST

Last week, several presentations were given by P&G senior leadership on a variety of topics at the Analyst Meeting in Cincinnati, OH. Below is an excerpt from the presentation on innovation. To view it in its entirety, visit the replay of the webcast at www.pg.com/investors.

At P&G, we are currently executing the strongest, multi-year innovation program in decades. In 2010 we fielded breakthrough launches such as Fusion ProGlide, Pampers DryMax and Crest 3D White. We’ve started this year strong with introductions such as Tide with Acti-Lift and Gain Hand dish soap in the U.S. and Gillette Guard in India.

We have a robust innovation system and process that is designed to deliver four different types of innovation. Each of the four types of innovation has a specific role in driving growth.

The first is Commercial Innovation, which exploits current benefits and drives new levels of trial. Examples include the Olympics and the Old Spice campaign.

The second category is Sustaining Innovation, involving important improvements to current product offerings that enhance current benefits. These are typically the upgrades and line extensions that enable us to grow share in a category and lead competition. Tide with Acti-lift and new Charmin Ultra Soft are recent examples.

The next category of innovation is Transformational Sustaining Innovation. These innovations are big breakthroughs on existing brands that reset competitive advantage in a category, resulting in significant share increases, sustainable competitive advantage, and typically category growth. Some examples include Pampers with Dry Max, Olay Pro-X, Crest Pro-Health, the new Gillette Guard product, and Downy Single Rinse.

The last category is Disruptive Market Innovation - creating new categories for P&G or disrupting current categories. We’ve learned that disruption can occur at the low end of categories as well as at the high end. These innovations create new categories or segments that drive true incremental consumption. Many of our billion-dollar brands were created behind a disruptive market innovation. Some examples include Swiffer, Crest White Strips, Febreze.

Each of our businesses is focused on all four types of innovation.

We manage innovation as a reliable, repeatable and sustainable process, allowing us to continually find ways to improve. We have undertaken several significant interventions that will enable us to continue to innovate.

Innovation is a key driver of P&G’s return to profitable share growth over the last several years. It remains the lifeblood of the Company and our innovation pipeline is strong.

To view this presentation in its entirety, visit the replay of the webcast at www.pg.com/investors.