Abstract

The case is about innovation at consumer goods giant, P&G, and the challenges before AG Lafley in reinvigorating the culture of innovation in the company. Right from the time the company was founded, innovation was given top priority in order to help P&G gain an advantage over rivals. P&G introduced a lot of new-to-the world product categories by emphasizing research at the basic science level. It was highly successful in understanding the current problems faced by companies in the market and it came out with innovative alternatives which addressed those shortcomings effectively. The innovative products introduced by P&G enabled it to command a price premium over its rivals in the industry. Responding to an internal financial crisis faced by the company in the early 2000s under the leadership of Lafley, P&G also started a new innovation program called the Connect + Development (C + D) initiative. After Lafley’s exit in 2009, the company continued with its innovation agenda but some analysts started expressing doubts on the future of innovation at P&G as they felt that the company was no longer as innovative as it used to be. In mid-2003, Lafley was brought back, but he was coming back to a company, which some analysts believed, was very different from how he had left it.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the importance of innovation for the growth and success of a company.
• Analyze the innovation strategy followed by P&G over the years.
• Understand the importance of the people strategy in systemizing innovation and inculcating a culture of innovation in an organization.
• Analyze the problems faced by P&G on the innovation front and discuss the problems faced by AG Lafley in his second coming to the company.
• Explore the ways in which P&G could reinvigorate its spirit of innovation.

Keywords

Innovation, Innovation process, Customer-focused innovation, Product innovation, Strategic innovation, Innovation management, Innovation strategy, People strategy, Systemizing innovation, Culture, Leadership, Organizational Behavior, Consumer goods, P&G, AG Lafley