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Procter & Gamble and Innovation in Asia

November 29, 2011

“Asia Fueling Global Innovation.” That was the theme of the 2-hour panel discussion I moderated as part of a full-day ceremony celebrating the groundbreaking of Procter & Gamble’s SGD 250m Innovation Centre in Singapore.

As promised, I asked Bruce Brown, P&G’s CTO, one of the questions readers submitted last week: “As you look forward into the future what do you see as P&G’s largest challenges, as seen through your eyes as CTO?” Brown noted three specific challenges.

First, the general challenge of growth. P&G is about an $80 billion company. It typically shoots for 4 to 6 percent organic growth every year. Historically, 80 percent of its growth comes from innovation. Run the numbers and you’re looking at close to $4 billion dollars in growth, every year. As a point of comparison, Hasbro — an 87-year-old company — has annual revenues of $4 billion. So P&G has to create a new Hasbro, every year. This is a challenge when realizing some of that potential requires smartly re-thinking core systems and structures. (Brown and I are working on a more expansive piece on this very topic.)

Second, Brown highlighted how P&G has to deal with the fact that 50 percent of its R&D scientists will reach retirement age in the next few years. While that presents a clear challenge — retaining the awesome accumulated knowledge of these scientists — it also creates an opportunity to make sure that R&D talent is balanced with global opportunities.

Third, P&G has to deal with sustainability issues. It has publicly announced goals to reduce its dependence on petroleum and to increase its use of recycled and renewable materials. He noted how Singapore Agency for Science, Technology & Research (A*STAR) has told P&G that sustainability is “no longer a program, it is part of how we do our work.”

Brown’s remarks set off a fascinating back-and-forth among the panel about some of the general challenges facing companies in Asia and globally. At the end of the day’s wide-ranging discussion, I shared the eight phrases that had stuck with me:

  1. “For and amongst consumers.” Bruce Brown used this phrase to describe how P&G will achieve its stated goal of serving 5 billion consumers by the year 2015 (an increase of 800 million from today). Brown described how localizing research activities is a key component of that strategy.
  2. “The Red Dot.” A*STAR Managing Director Low Teck Seng used that phrase to describe how Singapore appears on a map. He described how the country’s small size allowed it to be more nimble, reminding the audience that sometimes constraints can foster innovation.
  3. “Florence.” P&G R&D VP for Asia Maurizio Marchesini noted similarities between Singapore and Florence during the Italian Renaissance, with free-flowing ideas and disciplines colliding. He and I both noted how solving tough problems requires this kind of interdisciplinary co-location where people work together in new ways.
  4. “Simplifying technology and new business models.” Those are the two ingredients Shamik Dasgupta, the regional head of Medtronic’s Cardiac Rhythm Management business unit, described as vital for driving disruptive growth in markets like India and China.
  5. “Non-consumption.” National University of Singapore Professor CC Hang used that term to answer the question of where there are the greatest opportunities for disruptive growth in Asia. He noted how there were more than 20 million electric bikes sold in China in 2010, many of them to women or other non-traditional vehicle purchasers.
  6. “As common as possible, as different as needed.” That’s how Deb Henretta, the head of P&G’s Asia business, described how she thought about approaching Asian markets. She pointed out some of the real differences between consumers in different markets. For example, “beauty” means fair skin to many Asian consumers and tanned skin to many U.S. consumers. But using scale where appropriate can help companies like P&G realize its full global potential.
  7. “Non-obvious disruptions.” Marchesini didn’t quite use this term, but it was how I described an example he provided. He described how P&G sells a product under the Downy brand that provides long-lasting scent benefits to clothes using microcapsules. In markets like the Philippines, this technology allows P&G to bring scent benefits to consumers who can’t afford higher end perfumes.
  8. “Re-frame.” Henretta noted how important re-framing was to manage many of the challenges inherent in mastering innovation in today’s economy. One intriguing thing she noted, “You have to make sure your workforce reflects the consumers you are going to serve.”

It was great to see the energy around the topic, and the passion that the six leaders had for Asia’s innovation potential.And, at the end of the day after Brown, Henretta, and key government officials officially broke ground on the Innovation Centre, I got a chance to participate in lo hei — the ceremonial tossing of a salad to bring good fortune in the coming Chinese Lunar New Year.

Scott AnthonyScott Anthony

Scott leads Innosight’s Asian operations. His fourth book on innovation, The Little Black Book of Innovation, will be released in early 2012. Follow him on Twitter at @ScottDAnthony.

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