Defining Innovation Broadly

We define innovation broadly. We innovate in every area where our brands touch consumers’ lives: the package and product, the shopping experience, the in-home product usage experience, and every aspect of communication. We also create innovative new business models and organizational structures. By innovating so broadly, we get to see more innovation opportunities and to leverage more innovation resources than more narrowly focused competitors.

Our Family Care business is a good example. Twenty years ago, we created a proprietary paper-making process that enables us to produce the strongest, softest, most absorbent paper towels and tissues on the market. But our approach to innovation in Tissues and Towels is driven by consumers, not by the technology.

Consumers don’t all want the same benefits from a brand like Bounty. Some consumers want a paper towel designed for spills and light cleaning; it’s important to them not to be wasteful. We created Bounty Basic for these consumers, which is just right for everyday tasks but not over-designed. We created Bounty UltraStrong for consumers who value strength and absorbency and Bounty Extra Soft for those who want more softness. All these products use the same paper-making technology, but provide highly tailored benefits to meet specific consumer needs.

Designed to Innovate

We also tailor marketing and communications to specific consumer needs. Bounty Basic consumers aren’t persuaded by television advertising; they get all the brand communication they need at the store shelf. Other consumers are receptive to information about our brands at different times and places, and we respond with communication and marketing plans tailored to their desires and preferences.

We’re able to innovate broadly and successfully because we engage consumers as co-designers of innovation. We live with consumers in their homes, shop with them in stores, and observe their daily behavior for days, weeks and even months at a time. Consumers are active participants in P&G’s innovation process, and we keep them involved in every step that guides a new product or idea from concept to launch.

We also involve external innovation partners to turbo-charge P&G’s internal innovative capability — an approach we call “Connect and Develop.” Six years ago, only 15% of our product initiatives included innovation from outside P&G. Today, more than half of all P&G innovation includes an external partner. In just the past year, we evaluated more than 5,000 innovation opportunities from small entrepreneurs, universities, research institutes, and large companies. This is a fourfold increase over the number of external innovations we were considering at the beginning of the decade.

By defining innovation so broadly — what it is, where it comes from, who’s responsible for it — we continually expand and unleash P&G’s innovation potential. The best proof of our innovation capability is the number of top-selling new products that come from P&G. The IRI Pacesetters study tracks and ranks the most successful new consumer products introduced in the U.S. For the past 13 years, one-third of the most successful Pacesetter products, on average, have come from P&G and Gillette — more than our top six competitors combined. In 2008, 5 of the 10 best-selling new products came from P&G, including Tide Simple Pleasures detergent, Febreze Noticeables air freshener, the new Herbal Essences line of products, Crest Pro-Health toothpaste, and Olay Definity skin care products.