P&G, Avon, Kraft and More Talk Innovation

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P&G, Avon, Kraft and More Talk Innovation

By Alliston Ackerman and Alarice Padilla

September 29, 2008 - In the competitive and ever-changing consumer goods market, even the best of ideas won't stand a chance if you do not have the right people, processes and technology in place to back their timely delivery to market. On September 24-26, more than 70 senior-level consumer goods executives gathered at The Four Seasons in Miami, Fla. for the third annual Consumer Goods Growth & Innovation Forum. There, they heard from Procter & Gamble, Church & Dwight, Avon and Kraft, among others, on how to cultivate a true culture of innovation. Here is snapshot of some of the event's many highlights:

> Part of a winning innovation strategy is understanding the customer so well that you know what they need before they do. From softening the blow of a pet goldfish's death for a young guest to putting rocks under a guest's pillow (at her request), the Ritz-Carlton Hotel Company prides itself on meeting individual customer preferences. In an opening keynote presentation, Greg Merrick, the Ritz-Carlton's senior director human resources, revealed the strategies and systems in place that facilitate the proactive employee's ability to "stay in the moment" to anticipate and fulfill their guests' expressed and unexpressed needs.

> Dr. Len Sauers, vice president of Global Sustainability for Procter & Gamble (P&G), highlighted how P&G effectively innovates in a market where the public increasingly demands that consumer goods companies improve their environmental profiles. In this presentation, Dr. Sauers revealed that, according to historical trends, there is an upsurge of environmental concern every 10 years or so. "This time, it's different," he said. There is consumer awareness, especially when it comes to younger generations. This is part of the reason why P&G develops new products that involve consumers looking at the entire sustainability spectrum - creating innovations that are win-win for manufacturers, consumers and the Earth. "Changing consumer behavior is very difficult," Sauers said, but with the success of sustainable products, like P&G's Tide Cold Water, consumer behavior shows that the change is happening.

> As the consumer goods industry continues its drive toward becoming demand driven, companies are turning to consumer insights to direct new products and/or experiences. Steven Cugine, EVP Global New Product Innovation, Church & Dwight Co. Inc., shared details on how the company was able to build brand equity and establish differentiation in crowded categories for both its Trojan and Arm & Hammer Essentials lines through multi-layered innovation. For example, to take advantage of the emerging trend areas of green and value, Church & Dwight launched Arm & Hammer Essentials Cleaners, a less expensive, environmentally-sound product that earned market share in a category where it previously had little presence.

> In a session titled "Growing a Mature Brands in a Mature Market," Tim Lesmeister, vice president of Marketing for WD-40 Company, explained how a company that boasts a single product with more than 2,000 uses applies consumer insights to reach new customers. The company launched the WD-40 No-Mess Pen to increase its value proposition for women, a consumer segment, which up until now, had experienced sales declines. The company also launched the Smart Straw to answer its consumers' No. 1 complaint: "I always lose the (insert favorite curse word here) little red straw!" As of June 2008, Smart Straws are now on 95 percent of all WD-40 cans worldwide.

> Avon Products Inc. creates more than 1,000 products per year and is sold in more than 100 countries. Its pace of innovation needs to be fast yet meet the needs of a diverse consumer base. Lisa Midyette, executive director, Global Brand Marketing Project Integration for Avon, explored the company's journey over the last few years to evaluate new product development processes around the world and streamline the process into a truly global method. In this session, attendees learned about best practices for globalizing innovation and implementing a common process to maximize efficiency and excel in product development. For more on this story, read "Avon Connects Worldwide Innovation Efforts" in the September issue of CGT.

> In the a closing session on Day 1 of the event, Innovationedge President Cheryl Perkins and a panel of consumer goods innovation experts from Tyson Foods, Kimberly-Clark and Colgate-Palmolive discussed a cross-functional approach to innovation. Topics covered included the evolving definition of "innovation"; the metrics used to evaluate and measure success; how to drive new products to market; the role of leadership and the importance of top-down support; and innovating as a global company that is challenged to balance internal and external cultural differences. USB Securities Senior Analyst Nike Modi shared an industry-wide perspective, pointing out which companies have mastered innovation and how.

> "The average person complains 15 to 30 times a day," said William Bowen, author of "A Complaint Free World." In a powerful second-day, opening keynote session, he emphasized how the epidemic of complaining can damage morale, motivation, the emotional and physical health, and the relationships of employees. This, in turn, inhibits an organization's ability to compete and be successful. Attendees learned:
   o The five reasons people complain and the benefits perceived in doing so
   o The four stages a person must go through to become a competent, complaint-free person
   o How to reframe challenges into opportunities for greater growth and success

> Given that 97.8 percent of intellectual property exists outside its four walls, Kraft Foods acknowledges that open innovation can expand its external networks to tap into opportunity and drive new business growth. Stephen Goers, PhD, vice president Open Innovation and Investments for Kraft, covered some approaches employed over the past two and a half years to build open sourcing capabilities through culture, processes and tools, to ultimately become a partner of choice. Examples of "proudly-found elsewhere" successes include: Bagel-Fuls, a partnership with a third generation bagel baker; Tassimo, through a strategic partnership with Bosch Siemens; and guest brands, including a partnership with Starbucks, among others.

> Using her trend, culinary and scientific expertise to evaluate food and other consumer areas such as lifestyle, social and demographics, Connie Jones, food insight strategist for McCormick & Company, offered insights on the future of new products, innovation and its supporting strategies regardless of the category. In the mouth-watering presentation, she also reviewed the 2008 Flavor Forecast (conducted by McCormick since 2000) and charted how food and flavor trends have evolved, benchmarked history, evaluated the current state and forecasted ahead.

> Tom Szaky, CEO and co-founder of TerraCycle, revealed how "garbage is an incredibly robust commodity." In the fall of 2001 in a Princeton University dorm room, a simple idea was born: take waste, process it and turn it into a useful product. Szaky then realized, "If we make a product out of garbage, why not package it in garbage...how about we use soda bottles?" From dorm to shelf, Home Depot decided to carry TerraCycle's "worm poop" fertilizers in 2004. Now the company's products are also sold at Target, Whole Foods, Walgreen's and more. Its portfolio has grown as well and includes an expanded line of garden products, totes, backpacks and office products made from recycled plastic bags, cookie wrappers and old juice boxes. Szaky believes that TerraCycle's success insofar is only a sliver of what is to come. For more on this story, read "TerraCycle Turns Waste into Wonder" in the September issue of CGT.

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