P&G gets a new president, Lafley becomes Chairman

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P&G online communities innovationProctor and Gamble has had a massive impact on the way companeis use social media and online communities. Much of this is thanks to A.G.Lafley who just announced that he’s leaving his role as President and Chief Executive to become Chairman of the Board. Bob McDonald will be taking his place.

Lafley’s determination to make P&G an open innovation company has had a major effect on the business over the last 9 years and an knock-on impact on other branded goods firms. He pushed the consumer-driven innovation model that led to the creation of Connect & Develop and numerous other online communities.

Being Girl, for example, a community focussed on young women, is four times as effective per dollar spend as advertising in encouraging sampling and driving sales. It has been rolled out in 21 markets.

Over the last decade, Lafley helped the firm become one of the 10 most valuable companies on the planet. And his open innovation communities have resulted in external collaboration playing a key role in nearly 50% of their products.

As Jim McNerney, presiding director of P&G’s Board, put it  “P&G is a far more consumer-driven, externally focused and innovative company than it was a decade ago”. And it’s thank to this that so many otehr companies are now following suit with their own online communities for innovation.

Am I just a P&G fanboy? maybe. I did work there on interactive marketing back in 2000. And it was partly that experience that inspired me to start building online communities for innovaiton.  So thanks A.G. good luck in the new role.

Here’s a good video Q&A with Lafley on his approach to Innoation by The Harvard Business Review.

“We want P&G to be known as the company that collaborates — inside and out —
better than any other company in the world.”

Some more reading

  • A tough job for P&G’s new CEO (money.cnn.com)
  • On P&G’s Lafley: Why Step Down Now? (blogs.harvardbusiness.org)
  • P&G’s leadership machine (money.cnn.com)
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Innovate through a downturn, but make it customer-led

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Okay, so it’s been a tricky week so far for businesses round the world. I knew it was bad when the chatter  around the coffee machine in our office on Tuesday morning wasn’t about something that was on TV last night, or about something going on in the office. It was about how they were going to face the current economic downturn. From banks failing and being taken over by the state, to falling retail spend and even reports that Britons are raiding their piggy banks, there’s only one thing on people’s minds this week

And at times like this it is interesting to see how businesses react and respond. Of course, there are the counter-cyclical industries (lawyers, accountants, take-away food, bunk beds…) but how do the rest plan and build a strategy in times like this?

For most businesses there are probably two pieces of advice:

  1. Make sure you are close to your customers and that they are close to you. It should be your brand they think about when they do want to make a purchase and you should be aware of what they think and how their habits are changing.
  2. Innovate to stay ahead of the game. A crisis is a great time to innovate - you have to think of ways of staying ahead of the competition, of being more efficient or of new products that you can offer. It’s true of war-time, where many of the best innovations (from the pie-chart to nylon) originate; and it’s true of business during challenging economic times.

So how do you innovate at a time like this? Well we want to innovate to mean that we continue to attract customers and meet their changing needs. We want to make sure our products are meeting essential needs and are of benefit to them. And if possible we want to make sure that we are more efficient in the way we do this so that our own costs can be controlled.

What is common across all of these aims is the need to better focus on the customer and what the customer wants. That’s why the best innovation during these times will be customer-led innovation. Rather than asking questions of customers and then going away and coming-up with ideas to meet what you find (customer-centred innovation), it’s about co-creation and really working with your customers innovate and have new ideas.

So how do you let the customer lead your innovation process? Well there are probably a few things all organisations can do:

  1. Call ten of your customers from the last six months and ask them what you could do better - they’ll appreciate the personal touch and you will start to get some ideas
  2. Bring together a group of customers (either offline or online) to co-create and share ideas based on specific areas you think you could improve. This will help you generate some ideas to contribute to specific areas you’ve already identified
  3. Bring together a group of customers (and perhaps non-customers) in an online community where they can co-create, share ideas and innovate with you over a much longer time-scale.

This latter suggestion will be most effective in terms of identifying those innovations that are most likely to help you face the economic downturn. The benefit we see at FreshNetworks of building online innovation communities is that you get ideas in areas you had never thought of before. We’ve helped clients to reposition their product and even to just talk about it in different ways, using the language their customers use. Real customer-led innovation will shock and surprise you, because it’ll be the thing you haven’t thought of before. But in the current climate, it’s these new and effective ideas that you need.

  • What Does the Financial Crisis Mean for Innovation? Xconomists Weigh In
  • Financial crisis: The tech innovations at risk
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