Proctor and Gamble - P&G Innovating and Growing Strong in a Tough Economy

Did you know that Proctor and Gamble - P&G makes all these cool products below that you use everyday in your house?

You betcha... from Duracell and Gillette to Crest, Charmin to Tide, Bounty to Iams - P&G is the world's largest consumer goods company. As a matter of fact, "three billion times a day, P&G brands touch the lives of people around the world." P&G has a bigger mission that they are trying to fulfill: "Provide branded products and services of superior quality and value that improve the lives of the world's consumers, now and for generations to come."

P&G is one of the Top 20 innovators of the Innovation Index.

P&G stock is doing relatively well compared to its peers and the major indexes. Here is a snapshot of how well P&G is holding up - only down a few percentage points in 1 year, whereas the markets are down more than 30 points:

Why is P&G doing so well?

One answer: Innovation. Innovation driving new business, innovation driving growth, innovative leadership by the CEO of P&G A.G. Lafley. Back in February 2008, I had talked about how P&G is a Smart Long Term Buy in a Turbulent Market. IIG has stayed long with P&G througout the year, and has been opportunistically adding positions in P&G as well. Another fact that most investors may not know about: Barclays Global Investors and Berkshire Hathaway (Warren Buffett's company) are the top two institutional holders of P&G.

How did P&G do in the latest quarter?

P&G announced net sales growth of nine percent for the July - September quarter to $22.0 billion. Organic sales were up five percent, delivering at the mid-point of the Company's four to six percent target range. Sales growth was led by strong growth in the Beauty, Fabric Care & Home Care and Baby Care & Family Care segments. Diluted net earnings per share increased 12 percent to $1.03 for the quarter.

"This quarter was yet another example of the strength of P&G's balanced brand and geographic portfolio," said Chairman of the Board and Chief Executive Officer A.G. Lafley. "We continue focusing on leading innovation and improving productivity to deliver superior consumer and shareholder value. This focus on delighting consumers with trusted household and personal care products that consumers purchase weekly and use daily gives me continuing confidence P&G will deliver target growth over the long term, even in a challenging economic environment."

What is sexy, new and exciting that P&G is innovating?

P&G recently introduced Cascade Complete All-in-1 ActionPacs.

Cascade Complete All-in-1 ActionPacs "give you the confidence of a job done right. It breaks down, dissolves, and rinses away tough food particles without the need to pre-wash."

Here is what one highly satisfied P&G customer had to say about All-in-1 ActionPacs:

OMG this is the most amazing product

"I have an older dishwasher that came with the apartment I live in. You had to completely wash the dishes before putting them in the dishwasher. I was basically using it to drain the dishes. I saw this on T.V. and went to walmart and got it. All I can say is it is almost magical the way it cleans. I tested it on several hard to wash dishes, dried oatmeal, dried rice krispy cereal and my stainless steel pots and everything came out clean, no stuck on food, no hard water residue. thank you! thank you! thank you! what a time saver. I am disabled and one of the hardest things to do is standing over the sink washing dishes."
By beadjeannie. Reviewer from Fresno, CA August 14, 2008

Bottomline:

P&G is a great company with great leadership and employees, and highly satisfied customers. P&G will be around for the next 100 years. IIG - Innovation Index Group is long on P&G, and believes that P&G provides attractive buying opportunity at current price points. We believe that P&G will continue to grow another 10% to 15% even in this economy because of the breadth of its products, creativity and innovation, global marketshare, and delighted customers who will not buy another brand.

Innovation Index Reports

Introducing The Innovation Index
Annual Report 2007 - The Innovation Index gains 66%
Measuring Business Innovation Success
Innovation Index Group BUY Recommendations
Q1 2008 Report - Innovation Index ahead of S&P 500
Q2 2008 Report - Top Innovators Deliver
The Innovation Index Fund FAQ
Top 50 Innovative Companies in the world
Annual Report - Chapter One - Total Innovation Activity
Annual Report - Chapter Two - The Top Innovator
Annual Report - Chapter Three - The Innovation Insights
Innovation and Stock Performance Correlation
Future earnings guidance, A leading indicator
Smart Investing In Tough Economic Times
To Sell Or Not To Sell - You Decide
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies

About the Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.The Innovation Index returned 66% in 2007 based on performance model, and would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S&P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results

Top Innovators Weathering the Financial Storm

HEWLETT-PACKARD

only FOR WOMEN: Fashion designer Vivienne Tam flanked by President (PSG), Hewlett-Packard India, Ravi Swaminathan (left), and Senior Vice-President Global Marketing, Hewlett Packard, Satjiv S. Chahil

Hewlett-Packard unveiled four new laptops, including a special edition stylish notebook PC designed by U.S.-based renowned fashion designer Vivienne Tam. HP has about 33 percent market share in India's laptop segment.

Addressing a press conference here, HP's Senior Vice-President (Global Marketing) of Personal Systems Group (PSG) Satjiv S. Chahil said: "We continuously work to ensure that our HP Pavilion line appeals to new markets and segments. Vivienne's fresh and authentic design speaks to an intrinsic part of a digital lifestyle-personal expression." According to HP India's President (PSG) Ravi Swaminathan, the company plans to strengthen its market leadership position with an aggressive 'go-to-market' strategy by increasing its retail footprint across 650 cities and expanding retail partner network to over 10,000 by this year-end.

HP Vice President in an interview today on CNBC indicated that HP PC business remains robust, and touted Gartner report that shows growth of at least 15%.

HP shares are down 23.5% year to date. Innovation Index Group has a BUY recommendation on HP with a 12 month price target of $50 to $60.

PROCTOR & GAMBLE

Mr. A.G. Lafley, CEO of P&G, said: "The reason P&G has grown so consistently for so long is that we're a company that sticks to the fundamentals. We build brands that improve consumers' lives. We deliver superior value day in and day out. We manage cash and costs with unrelenting discipline. And we invest in innovation as the primary driver of profitable organic sales growth.

"While the economic environment remains volatile and uncertain, I am confident that P&G can and will continue to prosper over the long term. We are committed to ensuring P&G will continue to be a company you can count on."

P&G's net sales for the fiscal year ended June 30, 2008 increased nine percent to $83.5 billion, with organic sales up five percent - in the middle of the Company's four to six percent target range. Diluted earnings per share were $3.64, up 20 percent - or double the Company's ten percent target. P&G's free cash flow was $13.0 billion for the fiscal year, or 106 percent of net earnings - well above the Company's 90 percent goal.

P&G sales have nearly doubled for each of the past three decades - from $10 billion in 1980 to more than $80 billion today with earnings growth increasing from $640 million to $12 billion over the same period. Over the past five years, P&G has delivered 11 percent compound annual total return to shareholders, nine percent over the past ten years, and 16 percent over the past 20 years. The Company's dividends have also increased every year - more than nine percent a year, on average - over the past fifty-two years, and have been paid without interruption since the Company was incorporated 118 years ago. P&G recently announced a 40 cents dividend.

P&G shares are down 15.8% year to date. Innovation Index Group has a BUY recommendation on P&G with a 12 month price target of $75 to $85

APPLE

JP Morgan is upgrading Apple to Overweight from Neutral. Apple's model is far more diverse than previous vintages, and they think the staying power has been underappreciated. With its market share momentum likely intact, Apple in firm's view offers strong relative downside protection to the looming earnings reset that they expect to impact IT Hardware companies in coming weeks and again early next year.

- Diverse model provides staying power. There has been considerable investor concern lately over the Apple model losing steam, particularly if the consumer vertical rolls over. JPM estimates that the company's total model exposure is about 70-75% consumer, but they think that Apple's brand and market share momentum offer meaningful buffers to potential macro-driven pressures on the consumer.

- Retail expansion could sustain share gains and international momentum. JPM thinks a major force behind Apple's growth story will be its diversifying revenue streams. They expect Apple's penetration of the international markets to be measured in years and supported by the increasing build-out of the retail stores overseas.

- iPhone could lead to the enterprise or other content-rich devices. Firm thinks the iPhone could be a stepping stone to penetrating the enterprise. Also, they could envision the iPhone pushing Apple deeper into the set-top box market as the convergence of voice, web, data, and content continues.

- Expect numbers to come down across the sector, but Apple likely has a backstop beyond the first round. For Apple, they are revising their below-consensus revenue and EPS estimates. Looking to fiscal 2009, revenue and EPS estimates are $36.98 billion and $5.27, versus the Street consensus of $40.26 billion and $6.02.

- Apple trades at 18.8x JPM's calendar 2009 EPS estimate, versus the peer group average of 11.1x. With macro pressures showing no signs of dissipating, they believe it is time to play defense, and they think Apple can avoid having a major problem with the "E" in the price-to-earnings multiple moving through the coming year. Firm expects the company's model to limit a series of major earnings cuts from unfolding in coming quarters, and they think this should support a valuation gap in Apple's favor.

Apple announced new aluminum shell, more powerful laptops on October 14, and reduced the price on updated laptops to under $1,000. Apple is poised to see a robust growth in its sale of notebooks during the holiday season owing to competitive pricing and better features.

Apple shares are down 48.6% year to date. Innovation Index Group has a BUY rating on Apple, and is now updating the 12 month price target in the range of $160 to $190.

IBM

JPMorgan upgrades IBM as a stock that is a 'sturdy ship' in rough economic waters

A JPMorgan analyst upgraded International Business Machines Corp. saying the company's diverse and steady revenue streams make the stock a "sturdy ship" in the worsening economic environment, the firm said Wednesday.

Mark Moskowitz raised his rating to "Overweight" from "Neutral" because IBM has diverse revenue sources that offer relative stability. He also said at least half of the company's revenue comes from annual payments on long-term services and software contracts.

IBM represents a "flight to quality" for investors" due to its broad services, hardware and software reach," the analyst wrote. IBM 3Q profits jumped 20% from last year in large part due to services contracts.

IBM shares are down 15.3% year to date. Innovation Index Group has a BUY recommendation on IBM with a 12 month price target of $125 to $150.

These four innovators present attractive buying opportunity at the current price points.

Innovation Index Reports

• Introducing The Innovation Index
• Annual Report 2007 - The Innovation Index gains 66%
• Measuring Business Innovation Success
• Innovation Index Group BUY Recommendations
• Q1 2008 Report - Innovation Index ahead of S&P 500
• Q2 2008 Report - Top Innovators Deliver
• The Innovation Index Fund FAQ
• Top 50 Innovative Companies in the world
• Annual Report - Chapter One - Total Innovation Activity
• Annual Report - Chapter Two - The Top Innovator
• Annual Report - Chapter Three - The Innovation Insights
• Innovation and Stock Performance Correlation
• Future earnings guidance, A leading indicator
• Smart Investing In Tough Economic Times
• To Sell Or Not To Sell - You Decide
• Creativity and Innovation Best Practices
• Creativity and Innovation Case Studies

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007 based on performance model, and would have returned 174% over the previous five years (2002-2006) based on historical model*. This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.*

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NASDAQ: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.
*Past Performance Does Not Guarantee Future Results

3M and PG - Smart Long-Term Buys in Turbulent Markets

3M (NYSE:MMM) and P&G (Proctor & Gamble) (NYSE: PG) are two of the Top 20 Innovators of The Innovation Index.

Both 3M and P&G are resilient innovators who time and again find ways to grow and excel in turbulent times, and reward their investors. 3M is an innovation machine. P&G knows how to grow through innovations.

For instance, "the Board of Directors of 3M (NYSE:MMM) declared a dividend (this month) on the company's common stock of 50 cents per share for the first quarter 2008, a 4.2 percent increase over the quarterly dividend paid in 2007." This would mark the company's 366th consecutive quarterly dividend and the 50th consecutive year of 3M dividend increases. Also, 3M has returned $16.6 billion to shareholders through dividends and share repurchases, $4.6 billion of which was in 2007.

How is 3M stock performing over the last two years? It has gained 12%, and has been at times choppy. However, if one accounts for the dividends that 3M has rewarded, it has performed reasonably well.

3M Stock Performance

We believe 3M will rebound for the rest of 2008, and 3M stock will finish in the range of at least 5% to 10% appreciation. Main reasoning has to do with the latest earnings report where it reported 2007 sales of $24.5 billion, an all-time record for the company. Sales were up 7 percent from a year ago, and up 11 percent adjusted for recently divested businesses. Net income for 2007 was $4.1 billion, or $5.60 per share, versus $3.9 billion or $5.06 per share in 2006, up 6 percent and 11 percent, respectively. And the company emphasized its 2008 guidance: "3M reiterated its 2008 earnings expectations. The company expects 2008 earnings to be a minimum 10 percent increase over its 2007 earnings-per-share of $4.98, which excludes special items."

P&G stock has performed rather well gaining 28% over the last two years. We believe P&G will have another double-digit performance in 2008 owing to its strong growth and earnings momentum, and new innovations across various industries.

P&G Stock Performance

The Procter & Gamble Company (NYSE: PG) announced "net sales growth of nine percent to $21.6 billion for the latest quarter. Sales were up behind strong volume growth from continued success on key product initiatives and double-digit organic growth in developing regions. Organic volume increased six percent and organic sales were up five percent for the quarter. Diluted earnings per share increased 17 percent to $0.98 per share, above the top end of the company's $0.95 to $0.97 per share guidance range. Earnings grew as topline growth and continued Gillette synergy benefits more than offset higher commodity costs." P&G also announced new coffee business under the Folgers coffee brand to be called The Folgers Coffee Company. P&G continues to grow under the creative leadership of A.G. Lafley, Chairman of the Board and Chief Executive Officer. Lafley is a creative leader who knows how to drive new innovations.

3M and P&G - they are both smart, long-term buys in turbulent markets!

Invest in the Innovation Index Fund

We launched the new Innovation Index Fund in December, 2007 that invests in the Innovation Index and returned 66% in 2007, and 174% in the previous five years. If you want to learn more about the Innovation Index Fund, fill out your contact information at the bottom of this form: http://www.innovationindexgroup.com/invest.html

The Innovation Index Reports:

Invest in The Innovation Index - Invest in the brand new Innovation Index Fund
Introducing The Innovation Index Fund - Invest into The Innovation Index
Top 50 Innovative Companies in the world - 2007 Report on Top 50 Companies
Annual Report - Chapter One - Total Innovation Activity - 2006 Annual Report One
Annual Report - Chapter Two - The Top Innovator - 2006 Annual Report Two
Annual Report - Chapter Three - The Innovation Insights - 2006 Annual Report Insights
Innovation and Stock Performance Correlation - The Innovation Index and Stock Performance
The Innovation Index gallops to 56% - Quarterly Report - Q3, 2007

About The Innovation Index

The Innovation Index introduced in December 2006 is a weighted stock price index of the top 20 Innovators in North America.

The Innovation Index returned 66% in 2007, and returned 174% over the previous five years (2002-2006). This assumes equal investment in each stock of The Innovation Index as of December 31, 2001. An average of $100 invested in The Innovation Index on December 31, 2001 returned $454 as of December 31, 2007. By comparison, $100 invested in S & P 500 returned 28% or $129, $100 invested in NASDAQ returned 34% or $136, and $100 invested in the Dow Jones Index returned 30% or $131 through December 31, 2007. The Innovation Index beats the S & P 500, NASDAQ and Dow Jones Index by more than seven times over the past six years.

Alphabetical list of the Top 20 Innovators of The Innovation Index for 2008 and their stock ticker symbols:

3M Company - (NYSE: MMM)
Amazon.com, Inc. - (NASDAQ: AMZN)
America Movil - (NYSE: AMX)
Apple Inc. - (NASDAQ: AAPL)
AT&T Inc. - (NYSE: T)
Best Buy Co., Inc. - (NYSE: BBY)
Cisco Systems, Inc. - (NASDAQ: CSCO)
Costco Wholesale Corporation - (NASDAQ: COST)
eBay Inc. - (NASDAQ: EBAY)
General Electric Co. - (NYSE: GE)
Google Inc. - (NASDAQ: GOOG)
Hewlett-Packard Co. - (NYSE: HPQ)
Intel Corporation - (NYSE: INTC)
International Business Machines Corp. - (NYSE: IBM)
Merck & Co., Inc. - (NYSE: MRK)
McDonald's Corporation (NYSE: MCD)
Microsoft Corporation - (NASDAQ: MSFT)
NIKE, Inc. - (NYSE: NKE)
Research In Motion Limited - (NASDAQ: RIMM)
The Proctor & Gamble Company - (NYSE: PG)

The Innovation Index will analyze the positions and standings of the Top 20 Innovators at the end of each year. For 2008, there will be no further changes in The Innovation Index.

Disclaimer: The Innovation Index Group, Inc. invests in the stocks comprising The Innovation Index.

Innovations Driving Growth at General Electric and Proctor & Gamble

General Electric (NYSE: GE) and Proctor & Gamble (NYSE: PG) (P&G) are two of the top 18 Innovators in North America representing the The Innovation Index list of companies. GE stock is even for the year and down 11% since the new CEO took charge, while P&G stock is up 9% for the year and is near its all time high. Fortune magazine interviewed the CEOs of these two innovators in the December 2006 issue. GE has a daunting revenue challenge each year: create $15 billion or higher in new business each year or about the size of Nike's total revenue; on the other hand P&G needs to carve out $7 billion in new business each year, comparable to IAC Interactive's total revenue. Large numbers indeed. Fortune article explores in-depth on how these companies create innovations driving growth in the billions of dollars each year.

Selected references:

Leading eBook on Creativity and Innovation in Business

Creativity and Innovation Best Practices

Creativity and Innovation Case Studies

The Innovation Index

Top 50 innovative companies in the world

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.

Selected references:
Leading eBook on Creativity and Innovation in Business
Creativity and Innovation Best Practices
Creativity and Innovation Case Studies
The Innovation Index
Top 50 innovative companies in the world

References:

Fortune Magazine: Lafley and Immelt: In Search of Billions