R&D takes centre stage

20 February 2012

NEW YORK: Major companies like Procter & Gamble, Nestlé and Google are putting an increasing emphasis on innovation to drive sales and tap new sources of revenue.

Procter & Gamble, the FMCG giant, is prioritising "discontinuous innovation", defined as introducing products that create new categories or revolutionise existing ones.

The company's Tide Pods, described as a "multi-chamber laundry detergent", are one example of this, as was the Swiffer, a range of dusters using a model similar to that employed by Gillette razors.

"[This is] something we began investing more in and reorganising more for three years ago," Bob McDonald, P&G's CEO, told Information Week. "It takes time, but we'd all like to see more discontinuous innovation."

Procter & Gamble sold Pringles for $2.7bn to Kellogg's, the food group, for this kind of reason. "Pringles in many was more a receiver of ideas and technology for P&G than a giver," said McDonald.

Nestlé, the Swiss food and beverage manufacturer, has also engaged in a long term programme seeking to enhance its portfolio in Europe, targeting segments including health and wellness.

Four years ago, the organisation established the objective of generating CHF1bn from its European innovation output, and these sales now stand at CHF1.2bn just three years into the scheme.

"The key to our progress and our continued progress in Europe is innovations, smarter innovations, large very impactful innovations," James Singh, its CFO, said. "It is the innovation that is really driving our performance in Europe."

Google has been equally active, creating Google Wallet, the mobile payments tool, Google+, the social network, and numerous new features for its Google Analytics service for marketers.

"Innovation comes from the nature of the people who are hiring and are hired," said Sissie Hsia, group product manager at Google Analytics. "But it's also about making intentional decisions around priorities, strategy, and approach. It comes from processes that champion evolution and refinement."

Elsewhere, L'Oréal, the cosmetics manufacturer, recently formed several new marketing hubs in crucial outlets such as Brazil, China, India, Japan and the US, but which could make a broader impression.

"[The aim is] to create major innovations there that will bring success for our brands in these markets, but in some cases, they will then be rolled out in the rest of the world using the principle of reverse innovation," said Jean-Paul Agon, its CEO.

Data sourced from Information Week, Seeking Alpha, Econsultancy; additional content by Warc staff