One of my favorite business travel books is Winning with the P&G 99: 99 Principles and Practices of Procter & Gamble’s Success by Charles L. Becker (1998). The little book has its own place in the outside pocket of my worn briefcase, and my ongoing addiction to its content is evidenced by hundreds of scribbled notations in the margins, underlined words, and pink and yellow highlighted phrases and quotes.
Even where the highlighter has long since faded, you can see where it has been refreshed again and again, as I continue to think about the insights and strategies of one of the world’s most innovative companies.
How Did They Do That?
My interest and fascination with Proctor & Gamble began while studying Biblical literature and language at a conservative theological seminary in the Midwest. Although the rigors of my studies had me translating passages from the Patristic Fathers and defending the proper use of first-century Greek syntax, I became captivated by the idea of a soap company marketing more than 300 brands to more than 5 billion people worldwide. How did they do that? What kinds of forces were at work to allow two ordinary European immigrants to lay the foundation of what would become one of the most successful and influential business enterprises in history? How could anyone go from pedaling soap and candles on the streets of Cincinnati to supplying household goods to ninety-eight percent of all American homes?
One of the answers to Proctor & Gamble’s incredible success can be summed up in a word – innovation. Over the years, I have had the privilege of interviewing and working with a number of former Proctor & Gamble leaders and managers, and they have consistently remarked that their experience was one of the most challenging, empowering, inspiring, and innovative of their careers. Becker (1998), who was one of the company’s top brand managers, describes the company as:
An extraordinarily creative and innovative company, Proctor & Gamble has had an impact on the social landscape and quality of life that goes beyond the many product innovations it has pioneered. P&G is cautious, deliberate, and methodical-that’s part of the company’s culture. But it is also part of P&G’s culture to be proactive in looking for not only new and better products but new and better ways to conduct business-leaving its competitors to react to each new initiative (p. 3).
Becker goes on to describe how the culture of innovation established by the company’s founders, William Procter and James Gamble, has helped shape the way we live both in America and abroad (1998). Did you know that:
- P&G has been an innovative force in employee relations, having pioneered a shorter workweek over a hundred years ago and the oldest profit-sharing plan in continuous operation the U. S.
- P&G had a lot to do with the rapid development of both radio and TV. While other businesses were skeptical about radio in the early 1930s, P&G seized the initiative, developed programming, and dominated the medium. Then in the 1950s, the company shifted its advertising budget almost entirely to television, created the daytime “soap opera”. . .
- P&G also played an important role in the evolution of the ubiquitous and highly efficient supermarket retail distribution system (p. 3-4).
Innovation and Organizational Culture
We know that organizational culture is an essential part of what allows an innovative leader such as Proctor & Gamble to perpetuate itself over long periods of time (Kotter and Heskett, 1993). This has also been the case with Hewlett-Packard, IBM, Microsoft, Dow Corning, and others whose organizational cultures have helped them survive global competition, economic downturns, and shifting customer demands.
It is the values and behaviors of the work culture that are passed down from generation to generation and that have the power to either encourage and reward innovative thinking and risk taking, or discourage and punish those who try (Burns and Stalker, 1961). According to Dressler (1998), Procter & Gamble is an excellent example of corporate culture in action. He believes that the firm’s historical emphasis on “thoroughness, market-testing, and ethical behavior,” are what have helped transmit the values and behaviors of innovation to new employees as they are recruited, socialized, and indoctrinated into the P&G way of life.
Better Doesn’t Just Happen, You Have to Do Something
In addition to Proctor & Gamble’s work culture, the company’s mission to develop products that are of real value to the customer has resulted in an ongoing investment of time and resources into innovative new ways of developing products that people like. From my little book by Becker (1998), here are four innovative product development strategies used by Proctor & Gamble leaders to stay on top:
- Invest in innovation. Better products don’t just happen. The company that is committed to being a leader in the science and technology of the categories in which it competes will be the company that consistently develops the best products. . . P&G holds more than 2,500 active patents, protecting 250 proprietary technologies. It employs 7,000 scientists working in its seventeen research centers around the world. Among them are 1,250 PhD scientists, which is more than are in the combined science departments of Harvard, MIT, Stanford, Tokyo University, and London’s Imperial College.
- Err on the side of technology. Products based on new technologies don’t always succeed at first. Have some tolerance for mistakes; rework the products or try to address the consumer reservations. . . That patience and persistence has paid off for major brands such as Pampers, Crest, Pringles, and Pantene.
- A product is only as good as it does. Real value for the consumer in a product is a result of functional performance benefits-rather than benefits that are “cosmetic” or based on imagery. P&G makes laundry products that get clothes clean, toothpaste that prevents cavities, shampoo that cleans and conditions at the same time, diapers that keep babies dry.
- The best is never good enough. Once you have improved a product, improve it again. The process never ends. Every P&G brand is continually improved. P&G has improved Tide detergent’s product formulation and packaging more than seventy times (p. 31-40).
Summary
Companies like Proctor & Gamble have a lot to teach us about how successful business leaders leverage human creativity and innovation to develop new and better products, and even improve the way we live. If we take the time to read, and re-read their business principles and practices, we can deepen our knowledge and understanding of how to apply this same wisdom to our own fields of interest. My continual interest in Proctor & Gamble has lead to a number of breakthroughs in my own thinking over the years, as well as constant improvements in the principles and strategies we use at the Institute for Organizational Leadership to help our clients build best practice organizations.
By the Way
Now for those who might think that I abandoned my seminary studies in search of more worldly knowledge about the secrets of market domination and brand loyalty, you will be encouraged to know that I did graduate on time and with considerable expertise. I can still tell the difference between the original writings of Augustine of Hippo and Eusebius of Caesarea with a little help from reading glasses.
References
Burns, T. and Stalker, G. M. (1961). The management of innovation. London: Tavistock, 1961.
Dressler, G. (1998). Management: Leading people and organizations in the 21st Century. Upper Saddle River, NJ: Prentice Hall.
Kotter J. and Hasket, J. (1993). Corporate culture and performance. NewYork: The Free Press.