Selected references:
What drives this new business growth at GE and P&G?
GE's CEO Jeffrey Immelt and P&G's CEO A.G. Lafley focus on "growth" and "sustained excellence" that create new innovations in technologies, products, leadership and globalization -- key ingredients for new revenue growth.
The strategy at GE emphasizes sound business processes driving creativity and innovation, and is rooted on the following three pillars:
1. Focus on key technologies:
"Immelt wants GE to "own" certain technologies -- renewable energy, energy efficiency, nano-technology" and applications in medical imaging. GE wants to capitalize on the emerging market trends and assume leadership in those it goes after.
2. Growth-oriented leadership:
"After a study of fast-growing companies, GE managers are now evaluated on five criteria -- external focus, decisiveness, inclusiveness, risk taking, and domain expertise." This has the making of an innovation factory that encourages calculated entrepreneurship led by domain managers while taking into consideration company policies and processes.
3. Business portfolio:
"Immelt has jettisoned much of GE's insurance business, while bulking up in health care, water, security, and other areas." GE wants to focus on the core businesses where it is in the position of market leadership, and position itself for organic growth.
There are similarities between the Innovation strategies of GE and P&G. For instance both companies have divested non-core businesses. Both emphasize strong leadership and innovation accountability. Both are focused on new products driving current and future growth.
The strategy at P&G is buoyed by the following three pillars driving new innovations:
1. Brand mix:
"Lafley has divested such stalwarts as Crisco, Jif, Pert Plus, and Sure, while spending big to buy Clairol, Wella and Gillette (including Braun and Duracell)." The driver at P&G is focus on the core and the critical few products that create pervasive, global brand and market leadership.
2. Global top team:
"P&G does more than half its business outside the U.S., so Lafley has recast his top executive group to be 50% non-American." P&G has taken bold steps to talk the talk and walk the walk by making it a truly global multi-national company thereby driving growth internationally.
3. New products:
"Lafley has shifted P&G's focus from inventing all its new products to developing others' inventions at least half the time." For instance, Mr. Clean Magic Eraser was successful because of a product found in an Osaka market. Do you buy, build or partner to create new innovations? P&G does all of the above, but has also gotten smarter on leveraging existing ideas and inventions from partners and turning them around on a dime to create new markets.
In a Q & A with senior editor Geoff Colvin, P&G CEO Lafley had this to say on Innovation:
"We've got to grow market shares and move into adjacencies and create new categories of business. So the name of the game is innovation. We work really hard to try to turn innovation into a strategy and a process that's a little more consistent, a little more reliable, so that we can build a portfolio of innovations and the yield we need to get that $6 billion or $7 billion a year."
GE CEO Immelt agrees with Lafley on the core principles that drive growth and innovation. He adds: "It's important to make growth a process...Just like A.G (Lafley), I want a pipeline of innovation. Some projects will fail. But the goal for a company like ours or P&G is using size as an advantage. Most people just assume that big companies are slow and lethargic, and only a small company can grow. But if you get good processes, you can make size an advantage."
Both Lafley and Immelt believe that "narrowing the focus makes a difference." Rather than doing too many projects at once (read few dozen), their companies focus on key innovations in markets that they can literally own (less than a dozen). Further, R&D and Leadership centers are distributed globally and reengineered to take advantage of the new technologies and global business trends. And in particular, new global partnerships are formed to co-create innovations. Lafley admits: "We did have to kill not-invented-here. We have to make 'reapplied with pride' just as important a part of the culture as 'invented here.'"
In response to globalization and competition, and its impact on the economy, Immelt argues that "it's all about innovation and technology." He gives an example of the jet engine business at GE, where GE is the world market leader, and spends $1 billion annually on R&D. Immelt states that "we can go toe to toe with anybody, and we'll be able to do that for a very long time." However, in other areas such as appliances, he believes that GE has to take steps to make profits and hence manufacture overseas. The key though is readiness, willingness and motivation to compete for the future according to Immelt. Lafley adds that both companies offer retraining, early retirement, and employee benefits to provide best opportunities to employees who get impacted by globalization. And at times Lafley believes one needs to be creative in dealing with this area.
GE and P&G are two of the top 18 innovators in The Innovation Index. Together, they do over $230 billion in annual business, a number larger than GDP of many countries of the world. And yet, they must find new ways of innovation to grow at least 10% each year, or add about $23 billion in new revenue. Leaders Immelt and Lafley provide us the blueprint of creatvity and innovation that drives huge revenue growth each year at their companies.
GE's CEO Jeffrey Immelt and P&G's CEO A.G. Lafley focus on "growth" and "sustained excellence" that create new innovations in technologies, products, leadership and globalization -- key ingredients for new revenue growth.
The strategy at GE emphasizes sound business processes driving creativity and innovation, and is rooted on the following three pillars:
1. Focus on key technologies:
"Immelt wants GE to "own" certain technologies -- renewable energy, energy efficiency, nano-technology" and applications in medical imaging. GE wants to capitalize on the emerging market trends and assume leadership in those it goes after.
2. Growth-oriented leadership:
"After a study of fast-growing companies, GE managers are now evaluated on five criteria -- external focus, decisiveness, inclusiveness, risk taking, and domain expertise." This has the making of an innovation factory that encourages calculated entrepreneurship led by domain managers while taking into consideration company policies and processes.
3. Business portfolio:
"Immelt has jettisoned much of GE's insurance business, while bulking up in health care, water, security, and other areas." GE wants to focus on the core businesses where it is in the position of market leadership, and position itself for organic growth.
There are similarities between the Innovation strategies of GE and P&G. For instance both companies have divested non-core businesses. Both emphasize strong leadership and innovation accountability. Both are focused on new products driving current and future growth.
The strategy at P&G is buoyed by the following three pillars driving new innovations:
1. Brand mix:
"Lafley has divested such stalwarts as Crisco, Jif, Pert Plus, and Sure, while spending big to buy Clairol, Wella and Gillette (including Braun and Duracell)." The driver at P&G is focus on the core and the critical few products that create pervasive, global brand and market leadership.
2. Global top team:
"P&G does more than half its business outside the U.S., so Lafley has recast his top executive group to be 50% non-American." P&G has taken bold steps to talk the talk and walk the walk by making it a truly global multi-national company thereby driving growth internationally.
3. New products:
"Lafley has shifted P&G's focus from inventing all its new products to developing others' inventions at least half the time." For instance, Mr. Clean Magic Eraser was successful because of a product found in an Osaka market. Do you buy, build or partner to create new innovations? P&G does all of the above, but has also gotten smarter on leveraging existing ideas and inventions from partners and turning them around on a dime to create new markets.
In a Q & A with senior editor Geoff Colvin, P&G CEO Lafley had this to say on Innovation:
"We've got to grow market shares and move into adjacencies and create new categories of business. So the name of the game is innovation. We work really hard to try to turn innovation into a strategy and a process that's a little more consistent, a little more reliable, so that we can build a portfolio of innovations and the yield we need to get that $6 billion or $7 billion a year."
GE CEO Immelt agrees with Lafley on the core principles that drive growth and innovation. He adds: "It's important to make growth a process...Just like A.G (Lafley), I want a pipeline of innovation. Some projects will fail. But the goal for a company like ours or P&G is using size as an advantage. Most people just assume that big companies are slow and lethargic, and only a small company can grow. But if you get good processes, you can make size an advantage."
Both Lafley and Immelt believe that "narrowing the focus makes a difference." Rather than doing too many projects at once (read few dozen), their companies focus on key innovations in markets that they can literally own (less than a dozen). Further, R&D and Leadership centers are distributed globally and reengineered to take advantage of the new technologies and global business trends. And in particular, new global partnerships are formed to co-create innovations. Lafley admits: "We did have to kill not-invented-here. We have to make 'reapplied with pride' just as important a part of the culture as 'invented here.'"
In response to globalization and competition, and its impact on the economy, Immelt argues that "it's all about innovation and technology." He gives an example of the jet engine business at GE, where GE is the world market leader, and spends $1 billion annually on R&D. Immelt states that "we can go toe to toe with anybody, and we'll be able to do that for a very long time." However, in other areas such as appliances, he believes that GE has to take steps to make profits and hence manufacture overseas. The key though is readiness, willingness and motivation to compete for the future according to Immelt. Lafley adds that both companies offer retraining, early retirement, and employee benefits to provide best opportunities to employees who get impacted by globalization. And at times Lafley believes one needs to be creative in dealing with this area.
GE and P&G are two of the top 18 innovators in The Innovation Index. Together, they do over $230 billion in annual business, a number larger than GDP of many countries of the world. And yet, they must find new ways of innovation to grow at least 10% each year, or add about $23 billion in new revenue. Leaders Immelt and Lafley provide us the blueprint of creatvity and innovation that drives huge revenue growth each year at their companies.
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