P&G’s innovation centre in Singapore.
As Procter & Gamble (P&G) gets ready to celebrate its 180th anniversary at the end of this month, its evolving innovation practices and culture throughout the years in the face of digital disruption and emerging technologies is one of the many causes for celebration. So what can brands learn about innovation from a legacy company like P&G?
For starters, innovation at its core should be focused on delivering the mission of improving the lives of the consumers that brands serve in their categories across the world, says Olga Lahuerta, head of innovation and consumer insights at P&G.
Lahuerta, who was speaking to The Drum on the sidelines of the 2017 ACI Asia Business Summit, adds that innovation at its best for P&G means that the company has defined the needs that often are not articulated and translated them into product experience that are so irresistible, that consumers are willing to pay for them and come back again.
“If you look at our history, innovation is our lifeblood and a good testimony for this is the investments we are making in innovation. I work on research and development, and we invest a lot in that area compared to our key competitors,” she says.
The executive highlights the fact that beyond the investments by P&G, there is also a strong innovation culture in the company because it recruits people who are like status quo and keep that culture alive in them throughout their career so that P&G progress in the ways it does things, and to better serve consumers.
Another important aspect of P&G’s innovation practice is that one of its motto is that ‘innovation is everyone’s job’. Returning to her point about recruitment, Lahuerta explains that P&G wants to make sure that new hires can contribute from their early days in the company. “We recruit world class talents that comes with a lot of knowledge in their disciplines in their universities and they also come with a fresh outlook on things.”
Aside from recruitment, she emphasises the need for companies to ensure in the way they operate, that they welcome, embrace and encourage a new way of thinking, and challenge the way the it has done things in the past. Senior management is key to this process, she adds.
“Senior management has a critical role in two ways. The first is to keep the organisation focused on what are the toughest problems to solve and the key markets to serve. Secondly, like I mentioned before, they need to welcome and encourage different points of view because what may work in the past, may not work now.”
Innovation is especially important for P&G’s businesses in Asia Pacific because it is a growth region for the company and has an expanding segment of consumers in the middle class, who are affluent, very sophisticated, very discerning, which is why it is imperative for the company to be in touch with them.
The FMCG giant ensures that it has innovation footprint in APAC with three hubs in the region and in Singapore, it has the largest private sector research facility. Its other innovation hubs are in South Korea, Japan and in China. These hubs ensure that P&G not only stay close to the consumers, but also help the company to recruit talent and stay relevant in the way it innovates for Asian consumers.
The presence of these hubs also allows P&G to use its global model of open innovation to operate in APAC, says Lahuerta, adding that the model has been evolving from the early days where the company was trying to look for partners and collaborators that would help it with specific parts of the innovation process.
Explaining how the model has since evolved for P&G when it tries to develop a specific molecule or work on a specific method now, she says: “One of the things that we have been learning, is that it can also be very useful to come up with finished propositions. We have evolved it from components of the innovation process in the extreme part, towards developing final solutions that consumers can see.”
An example of how P&G encourages open innovation in APAC is its master collaboration agreement with the Agency for Science, Technology and Research, where it exchanges a lot of research and information with the government agency. The agreement is also one of the largest public-sector agreements in Singapore for a company.
In terms of its downstream side of the supply chain, P&G recently launched a magnetic wand it developed for its brands SK-II and Olay, a device which helps the brands increase active ingredients penetration in the skin for better skincare. The development of the device was done with a technology company in Australia and a Singapore-based device manufacturer.
While Lauerta encourages brands to follow P&G’s example of having an open innovation culture both in and outside of the organisation, she urges them not to lose sight of the ultimate goal of providing customers with the best experiences.
“It is difficult for someone to say ‘I am going to avoid technology’ because it has been integrated in so many ways in our lives that we cannot live without it. But it is true that, that trend is awakening a counter-trend of people who want authentic relationships, want a human touch with the brands,” she says. “As a company, we need to be very aware of this segment of people and in each brand, we need to bring it out in a relevant way. It will become more important for certain brands to maintain that human touch.”
Looking ahead, Lahuerta expresses her belief that while there are many different trends going on in APAC, some macrosocial trends apply to all consumers globally. However, she notes that some of these trends are disproportionately present in APAC, citing organisation trends like growth of mega cities, growth of smartphones and technology integration in homes.
“We have Febreze smart home devices that enables one to connect your scent and freshness delivery to your thermostat. It can know whether one is at home, consider the availability of the perfume that you are using to release it the way you want and when you want,” she explains, adding that P&G is trying to bring that smart trend into the way it designs products for highly-demanding consumers.
In order to research more about trends that are disproportionately present in APAC, like technology and digital trends, P&G partnered with Singapore’s Economic Development Board to establish its new digital-first innovation centre in Singapore, in addition to its existing centre, earlier this year.
This has helped P&G to uncover new insights that found Asian consumers to be very early adapters of new gadgets, which is why the company is trying to integrate more modern technology into its products, according to Lahuerta.
“If you think about the Pampers programme, pregnant women usually Google pregnancy. The moment she does that, Pampers will know about it. We can make sure that our brand, if the consumer wishes, can deal with her throughout the whole process and we can leverage artificial intelligence to address any concerns and questions that she has about pregnancy,” she explains.