Proctor and Gamble 2008 Annual Report Download - page 9

handsoversuccessfulideastotheappropriatebusinessunits.
TheFutureWorksteamfocusesexclusivelyoninnovationsthat
cancreateentirelynewbusinesses.Therearenew-business
developmentteamsineveryglobalbusinessunitfocusingon
opportunitiestocreateadjacentcategories.Innovationcenters
helpussolvetoughinnovationchallengesbyprovidingsimulated
in-homeandin-storeenvironmentswhereP&Gteamscan
isolatethemselvesandinteractwithconsumersandshoppers
fordaysorevenweeksatatime.
Onceanideaisqualiedandbeginsmovingthroughour
productlaunchsystem,theinnovationteamcontinuestoface
go/no-gogatesateverycriticalmilestone.Ateachgate,we
makedecisionsaboutwhichinitiativesarereadytoprogress,
whichneedfurtherwork,andwhichshouldbestopped.Every
decisionisgroundedinmaximizingtheproductivityofinnovation
investmentsandgeneratingshareholdervalue.
Thisdisciplinedapproachisessentialtoinnovationsuccess.
Itbuildsaccountabilityintoboththecreativeandexecutional
aspectsofinnovation.P&G’sFamilyCarebusinessisagood
examplehere,aswell.FamilyCareisoneofP&G’sstrongest
value-creatingbusinesses.They’veinnovatedbroadlyacross
brandplatforms—Bounty,CharminandPuffs—whiledelivering
industry-leading,double-digittotalshareholderreturnforthe
pastone-,three-andve-yearperiodsinahighlycapital-
intensivecategory.They’veincreasedgrossmargins7%and
havedeliveredfreecashowwellabovetheCompany’s90%
cashproductivitytargetforthepastveyears,despiteinvest-
mentsininnovationandinnewmanufacturingcapacityto
supportgrowth.
TherearesimilarstoriesinFabricCare,FeminineCare,Baby
Care,BeautyCare,andHealthCare.Thesearetheresultsof
disciplinedinnovation.

WhatI’veexplainedsofar—thewaywethinkaboutinnovation,
ourabilitytoinvestinit,andthedisciplinewithwhichwe
manageit—aretheelementsofP&G’sinnovationdesignthat
aredifculttoseefromtheoutside.Eachofthesefactorshelps
tosetP&Gapartasaninnovator.Whatcountsmost,however,
istheinnovationthatconsumersexperiencedayafterday,
yearafteryear.
Weearnconsumertrustandloyaltyovertimebydeliveringan
unendingstreamofinnovationthatconsumerslearntoexpect
fromP&Gbrands.Weplanthree-to-veyearsoutandllour
pipelinewiththreedistinctkindsofinnovation.
Disruptive innovation• createsnewcategories,newsegments,
orentirelynewsourcesofconsumerconsumption.Theseare
innovationsthataddressconsumerneedsnootherbrandor
producthasmet.VirtuallyallofP&G’sbillion-dollarbrands
werecreatedwithdisruptiveinnovations.
Sustaining innovation• iswhatwefocusonmost.Theseare
extensionsorimprovementsofexistingproducts:biginitiatives
thatmeetconsumerneedsbyllinggaps,eliminatingconsumer
trade-offs,orprovidingnewbenets.Examplesinclude
PampersCaterpillar-Flex,whichimprovedthetandcomfort
ofbabydiapers,andCrestPro-HealthRinse,theCrestbrand’s
entryintothemouth-rinsecategoryadjacenttotoothpastes.
Commercial innovation• generatestrialonexistingproducts
withoutaproductorpackagechange.Examplesincludethe
GilletteChampionsandPampersUnicefprograms,marketing
effortsthatgiveconsumersnewreasonstobeinterestedin
andloyaltoaP&Gbrand.
Alwaysisagreatexampleofhowthismultidimensional
innovationstrategybuildsloyaltyandcategoryleadership.
WeintroducedAlwaysin1984astherstfeminineprotection
padwithaninnovative,dry-weavetopsheet.In1986,the
brandsetyetanotherperformancestandardwithitsproprietary
“wings”product,followedbyUltraThinproductsin1991.
Thesethreedisruptiveinnovationsbroughtyearsofcompetitive
advantage.Inadditiontothesedisruptiveinnovations,wehave
maintainedasteadypaceofproductupgradeswithsustaining
innovationslikeAlwaysFresh,AlwaysCleanandAlways
Overnight.Thisyear,Alwaysisleadinginnovationagain,witha
disruptiveinitiativecalledAlwaysInnitythatusesauniquepad
designandnew,state-of-the-arttechnologytobringanew
levelofsuperiorprotectionandabsorbencytoconsumers.
Alwayshasalsodeliveredasteadystreamofmeaningful
commercialinnovation.Thebrand’sschooleducationprograms
teachgirlsaboutpuberty,andintroducethemtothecategory
andourbrands.Anothercommercialinnovation,fromboth
AlwaysandTampax,isbeinggirl.com,auniquewebsitethat
enablesteenstogetinformationinasafe,discreetenvironment
andtointeractwithpeersfacingsimilarlife-stageissues.
Thiscombinationofdisruptive,sustainingandcommercial
innovationkeepsabrandlikeAlwaysgrowingyearafteryear.
Alwayshasgrownin21ofthe24yearssincelaunchandhas
increaseditsU.S.marketsharefrom14%to48%,andtoday
hasaglobalshareof31%.ThereareexampleslikeAlways
throughoutP&G’sbrandportfolio.
TheProcter&GambleCompany 7