Proctor and Gamble 2004 Annual Report Download - page 11

P&G’s฀approach฀to฀Research฀and฀Development฀is฀a฀good฀
example.฀Historically,฀systems฀for฀evaluating฀R&D฀were฀
strongly฀linked฀to฀technical฀product฀performance.฀There฀฀
was฀a฀heavy฀focus฀on฀patents฀and฀internally฀generated฀
innovation.฀There฀was฀less฀focus฀on฀perceived฀consumer฀
value,฀on฀the฀cost/benefit฀trade-off฀for฀consumers฀versus฀
competition,฀and฀on฀fast,฀successful฀commercialization.
In฀the฀new฀structure,฀R&D฀leaders฀are฀more฀effectively฀
integrated฀into฀the฀global฀business฀units.฀There’s฀greater฀
emphasis฀on฀winning฀when฀consumers฀compare฀brands฀for฀
overall฀value.฀We’re฀integrating฀commercial฀and฀technical฀
innovation฀more฀seamlessly,฀and฀we’re฀leveraging฀the฀
Company’s฀“connect฀and฀develop”฀capability฀to฀build฀even฀
stronger฀relationships฀with฀external฀innovation฀partners฀for฀
increased฀speed฀to฀market.฀
We’re฀accelerating฀the฀pace฀of฀innovation฀and฀increasing฀฀
the฀efficiency฀of฀R&D฀investments.฀We’ve฀doubled฀P&G’s฀
innovation฀success฀rate.฀Our฀portfolio฀of฀initiatives฀launched฀
in฀the฀last฀calendar฀year฀is฀on฀track฀to฀deliver฀more฀than฀
100%฀of฀going-in฀expectations.฀At฀the฀same฀time,฀R&D฀
investment฀as฀a฀percent฀of฀sales฀is฀down฀from฀4.5%฀of฀net฀
sales฀three฀years฀ago฀to฀3.5%฀of฀net฀sales฀this฀past฀fiscal฀
year.฀P&G฀R&D฀is฀now฀much฀more฀effective฀and฀efficient.
The฀focus฀on฀rigorous฀cost฀control฀and฀cash฀management฀
ensures฀consumer฀value฀that฀keeps฀P&G฀brands฀competitive฀
worldwide.
Earning฀Your฀Trust
The฀three฀factors฀I’ve฀outlined฀–฀strategies฀that฀are฀working,฀
strengths฀that฀enable฀us฀to฀deal฀effectively฀with฀challenges฀
and฀trends,฀systemic฀and฀structural฀changes฀that฀are฀
improving฀the฀reliability฀of฀P&G฀performance฀–฀convince฀me฀
that฀P&G฀can฀sustain฀double-digit฀earnings-per-share฀growth฀
for฀the฀foreseeable฀future,฀particularly฀when฀combined฀with฀
the฀capability฀and฀commitment฀of฀P&G฀people.
It’s฀almost฀a฀cliché฀in฀CEO฀letters฀to฀shareholders฀to฀credit฀
employees฀as฀a฀company’s฀greatest฀asset.฀It’s฀far฀more฀than฀฀
a฀cliché฀at฀P&G.฀There฀is฀no฀greater฀evidence฀of฀this฀than฀฀
the฀performance฀of฀P&G฀people฀over฀the฀past฀four฀years.฀฀
We฀committed฀ourselves฀at฀the฀beginning฀of฀this฀decade฀to฀฀
get฀P&G฀back฀on฀track฀and฀to฀ensure฀that฀P&G฀is฀and฀is฀seen฀
as฀one฀of฀the฀world’s฀great฀companies.฀In฀many฀companies,฀
a฀crisis฀like฀the฀one฀P&G฀faced฀in฀the฀spring฀and฀summer฀฀
of฀2000฀could฀have฀sent฀people฀running฀for฀the฀doors.฀Not฀
here.฀P&G฀people฀are฀proud฀of฀their฀company,฀and฀they฀
refused฀to฀let฀P&G฀be฀anything฀other฀than฀the฀industry฀
leader฀we’ve฀always฀been.฀They฀dealt฀with฀the฀reality฀of฀
what฀we฀were฀up฀against฀and฀set฀about฀the฀hard฀work฀of฀
fixing฀problems,฀creating฀and฀seizing฀opportunities,฀and฀
getting฀P&G฀back฀in฀the฀lead.฀It’s฀been฀genuinely฀inspiring฀to฀
watch฀and฀be฀part฀of฀this฀tremendous฀employee฀response.฀
Ultimately,฀this฀is฀the฀reason฀P&G฀is฀where฀it฀is฀today.฀P&G฀
It’s฀been฀genuinely฀inspiring฀to฀watch฀the฀way฀P&G฀people฀have฀responded฀
to฀the฀Company’s฀challenges฀over฀the฀past฀four฀years.฀In฀the฀end,฀฀
P&G฀people฀–฀their฀values฀and฀capabilities,฀commitment฀and฀dedication฀฀
to฀excellence฀–฀are฀the฀best฀guarantee฀of฀consistent,฀reliable฀growth.
Strength
of฀P&G
People
A.G.฀Lafley
Chairman฀of฀the฀Board,
President฀and฀Chief฀Executive

strategies฀provide฀clear฀direction.฀P&G฀systems฀and฀structure฀
leverage฀P&G฀strengths.฀But฀it’s฀P&G฀people฀who฀are฀the฀
best฀guarantee฀of฀consistent,฀reliable฀growth.฀It’s฀P&G฀
people฀who฀create฀and฀execute฀strategies,฀who฀get฀to฀know฀
consumers฀and฀create฀the฀innovations฀that฀delight฀them,฀
who฀work฀side-by-side฀with฀customers฀and฀business฀
partners.฀It’s฀P&G฀people฀whose฀individual฀efforts฀ultimately฀
deliver฀the฀returns฀we฀provide฀to฀you,฀as฀shareholders.฀In฀฀
the฀end,฀you฀place฀your฀trust฀in฀P&G฀people.฀And,฀we฀work฀
hard฀to฀earn฀your฀trust฀by฀delivering฀consistent,฀reliable฀sales฀
and฀earnings฀growth฀year฀after฀year.฀
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