Contemplating the new and creative ideas of upstarts

4. Reach Outside for Ideas - P & G is letting go of their traditional "we have all the answers" attitude. They now utilize innovation from outside their organization through acquisition of entrepreneurial designs, outsourcing product development to companies like BASF, and collaborative with other R & D teams (such as the work with IAMS' researchers that created life lengthening pet products). 5. Strategic Alliances - It may be beneficial to work with other companies. For example, when P & G sold Astra Zeneca and when P & G established a joint venture with Clorox to create a new product, the Press 'n Seal. 6. Open Idea Exchange - P & G managers are encouraged to share ideas and core competencies with each other through such mediums as the corporate internet. Withholding managers are not promoted. Credit is given for both the giving and receiving of ideas. IV. Organic Growth P & G plans to accomplish organic growth by redefining their brands in a broader sense, working with markets in developing countries, innovating, spending money to further their core brand and reducing the amount of test marketing. The reduction in test marketing will shorten the lead times for new product introduction, improve efficiency and profit growth. Thus far, P & G has increased the market share 19 of their 20 top products. Costs have been cut by $1.7 billion dollars and the new product hit rate has gone up from 70% to 90%. This has translated to core volume increasing 12% last quarter, 7% per annum since 2001. Operating income has increased 17% since 2001. Lastly, P & G's stock price has doubled since Lafley took over the reigns of the company. P & G has work to do to improve their market share in developing countries. While competitors Colgate and Unilever generate 45% and 35% of their revenue from developing countries, respectively, P & G remains at only 20%. On a positive note, P & G has the number one skin-care products line for Asia. Their dental care brand, Crest, has the best selling toothbrush, 70% of teeth-whitening market and has doubled sales in the last three years. An innovation on Mr. Clean, Mr. Clean AutoDry tripled sales for the product line in just one year. With the acquisition of IAMS, the brand's distribution increased 50% overnight and IAMS has moved from being the number five pet food brand, to being number one. V. Future Challenges and Lafley's Leadership Many of the future challenges for P & G can be seen as the result of their current strategies and tactics. For instance, P & G's rapid growth in the last three years will eventually decline due the increasing difficulty of finding new innovations and the maturity of many of the markets P & G operates within. The projected growth for P & G for next year is 3% less than the previous year, even though 6% is still great for its industry. With the cooperative culture, business units may blend together. Management may have trouble deciding on the correct allocation of resources. As P & G continues to acquire other firms, difficulties in integrating these companies may develop. The past financial data of P & G indicates an up and coming downturn for the company. Lafley needs to find ways to overcome these problems during this next year. When analyzing Lafley's effectiveness, one can consider P & G's main stakeholders': employees, customers and stockholders. Employees have gained a friendlier and more flexible culture, empowerment from managers, improved job security and more pride in their company. Customers have received increased value through P & G's innovative products, lower prices and improved quality. Stockholders' are also very happy, as P & G's stock has doubled in the last four years with Lafley at the helm. Considering these stakeholders, Lafley has done an excellent job providing leadership P & G.