P & G: Innovation in a Global Environment
On Wednesday, May 11 Bruce Brown, the Chief Technology Officer (CTO) for the global consumer products behemoth Procter & Gamble, spoke at a forum at the Wilson Center hosted by the Program on America and the Global Economy (PAGE). After introductions from Kent Hughes, PAGE Director, Brown began by providing an overview of the enormous array of products that P&G offers. Regardless of the brand or product, Brown remarked that from Crest to Tide to Gillette, '[i]nnovation is our lifeblood."
As Brown noted, Procter and Gamble has been in existence for 173 years. Based in Cincinnati, Ohio, it has expanded from a candle manufacturer into one of the world's largest companies. Procter and Gamble (P&G) currently serves 4.2 billion customers through their many brands and products. Brown stated that the goal was to serve 5 billion by the year 2014. 50 of their brands are referred to as P&G's 'leadership brands,' 23 of which have sales of over $1 billion annually. P&G currently operates in 26 countries on five continents, with the majority of operations within U.S. borders. In addition to the U.S. government, P&G also maintains partnerships with the Singapore government and a number of American universities, notably the University of Michigan and Ohio State University.
Brown oversees a very active and vital segment of the P&G universe; the technology, research and development, and innovative arm. He manages a research and development (R&D) staff of 8,700, one thousand of which hold PhD's. Brown stated that it is P&G's goal to get the percentage of researchers with PhD's up to 50% in the near future. As one measure of P&G's commitment to innovation, Brown pointed to P&G's 40,000 patents with another 20,000 pending.
In his role of CTO, Brown not only must have his finger on the pulse of consumers' desires today, but must help ensure that the company's proud history continues through a clear focus on the long term future. Again and again, Brown attested to P&G's commitment to innovation. Brown pointed to an annual investment in R&D of $2 billion as demonstrating P&G's commitment to ongoing innovation. They made their investment in R&D at a time when many other companies are cutting back on their R&D budgets.
In order to facilitate this innovation, P&G not only focuses on in-house innovation, but looks outside its walls for the next great idea as well. Brown stated that over half of P&G's innovations have external roots. This is accomplished largely through P&G's 'Connect and Develop' initiative. This program aims to foster connections with outside innovators, and combine their innovations with P&G's research, production, and marketing strengths to bring new products to market faster.
Notwithstanding P&G's impressive track record and global reach, Brown acknowledged that the company faces some daunting challenges in the future. The most pressing of which, according to Brown, is the need to recruit a talented workforce in the face of a large number of impending retirements. If he could point to one question that keeps him up at night, it was: "[w]here are we going to find the scientists and engineers?"
Given this dilemma, P&G is very concerned about the current state of American education. According to Brown, P&G is a "big believer in the need to improve K-12 education" particularly science, technology, engineering, and mathematics. Brown predicted that engineers will be more and more important for P&G's future, and without an ample and competent supply of them, P&G could stand to lose some of its innovative luster.
P&G however, shows no signs of slowing down. It has been recognized as one of the top innovators of the decade. It is one of three Fortune 500 companies that have a special board of directors for innovation. For a company to stay in business and thrive for 173 years it must not only meet its customer's needs, it must continually grow, and as Brown stated, "[w]e only grow when we innovate."
By: Clark Taylor
Kent Hughes, Director, Program on America and the Global Economy