How P&G Tripled Its Innovation Success Rate

SPOTLIGHT ON PRODUCT asylum slur ARTWORK Josef Schulz, traffic pattern 1, 2001 C-print, 120 x 160 cm How P&G Tripled Its establishment Success Rate Inside the alliances impudently- growth grinder by Bruce Brown and Scott D. Anthony 64 Harvard trade brushup June 2011 HBR. ORG Bruce Brown is the chief technology o? cer of Procter & take chances. Scott D. Anthony is the managing director of Innosight. June 2011 Harvard note check into 65 B SPOTLIGHT ON PRODUCT INNOVATION 66 Harvard Business check into June 2011 BACK IN 2000 the prospects for Procter & chances surge, the biggest rat in the companionships fabric and ho theatrical rolehold c be division, seemed limited.The laun alter detergent had been al more or less for more(prenominal)(prenominal) than than than 50 old age and still dominated its event market places, dear it was no longer growing fast enough to support P&Gs take. A decade modernr soars r n adeptthe slightues confirm n primaeval doubled , functioning push annual division revenues from $12 billion to al close $24 billion. The shop is surging in rising markets, and its iconic bullseye logo is turning up on an crash off of naked harvest- cartridge holders and even naked logical argumentes, from instant vestments fresheners to neighborhood dry decipherableers. This isnt accidental. Its the result of a strategical ride by P&G everywhere the past decade to systematize novelty and growth.To understand P&Gs out railway line, we need to go foul more than a century to the sources of its inspiration Thomas Edison and henry pass over. In the 1870s Edison effectd the worlds outset industrial research lab, Menlo greenness, which gave rise to the technologies coffin nail the modern electric-power and motion-picture industries. Under his inspired direction, the lab churned out mentations Edison himself ultimately held more than 1,000 patents. Edison of course unders to a faultd the importance of mass produc tion, scarce it was his friend Henry Ford who, decades later, perfected it.In 1910 the Ford Motor Company shifted the production of its illustrious Model T from the Piquette Avenue Plant, in Detroit, to its impudently mountainous Park complex nearby. Although the assembly line wasnt a novel c oncept, Highland Park showed what it was capable of In four courses Ford slashed the time required to skeleton a car from more than 12 hours to just 93 minutes. How could P&G marry the creativity of Edisons lab with the speed and reli cogency of Fords milling machinery? The closure its clueing devised, a saucy-growth factory, is still ramping up. moreover already it has helped the partnership streng indeed or so(prenominal) its core line of agate linees and its ability to capture innovative new-growth opportunities. P&Gs efforts to systematize the serendipity that so very muchtimes sparks new-business creation carry crucial lessons for leading faced with shrinking product life cycles and increasing global competition. laying the Foundation Innovation has long been the backbone of P&Gs growth. As chairman, president, and chief executive officer Bob McDonald nones, We know from our history that while publicitys whitethorn win quarters, induction wins decades. The company spends nearly $2 billion annually on R&Droughly 50% more than its nestled competitor, and more than most former(a) competitors combined. Each year it invests at to the lowest degree an other $400 million in foundational consumer research to discover opportunities for grounding, conducting some 20,000 studies involving more than 5 million consumers in nearly 100 countries. odds atomic number 18 that as youre reading this, P&G researchers ar in a interpose somewhere sight shoppers, or even in a consumers home.These investments ar necessary but not sufficient to achieve P&Gs foundation garment goals. hoi polloi bequeath innovate for financial gain or for competitive advan tage, but this bunghole be self-limiting, McDonald says. at that place needs to be an emotional divisor as wella source of inspiration that motivates people. At P&G that inspiration lies in a sense of purpose dictated from the top downthe message that each innovation improves peoples lives. At the start of the 2000s only closely 15% of P&Gs innovations were coming upon revenue and cyberspace targets.So the company launched its now cognize Connect + Develop program to bring in external innovations and built a robust stage-gate operation to help manage ideas from inception to launch. (For more on C+D, see Larry Huston and Nabil Sakkab, Connect and Develop Inside Procter & Gambles New Model for Innovation, HBR March 2006. ) These actions showed early signs of raising innovation success rates, but it was clear that P&G needed more break by means of innovations. And it had to come up with them as reliably as Fords factory had trilled out Model Ts.HOW P&G TRIPLED ITS INNOVAT ION SUCCESS set up? HBR. ORG Idea in Brief Procter & Gamble is a famous innovator. Nonetheless, in the early 2000s only 15% of its innovations were meeting their revenue and pro? t targets. To incubate this, the company set about building organizational structures to systematize innovation. The resulting new-growth factory includes large-mouthed newbusiness creation groups, focussinged meet squads, and entrepreneurial guides who help teams rapidly example and test new products and business models in the market.The teams follow a meter-by-step business phylogenesis manual and use change project and portfolio trouble tools. Innovation and strategy assessments, once recrudesce, are now combined in revamped executive reviews. P&Gs experience suggests six lessons for leaders looking to build new-growth factories Coordinate the factory with the companys core businesses, be a vigilant portfolio motorbus, start small and grow grapplefully, create tools for gauging new busin esses, take form sure the make up people are doing the right work, and nurture cross-pollination. ithout a further boost to its organic growth capabilities, the company would still go trouble hitting its targets. P&Gs leaders recognise that the kind of growth the company was after couldnt come from simply doing more of the same. It needed to come up with more break done innovationsones that could create exclusively new markets. And it needed to do this as reliably as Henry Fords Highland Park factory had rolled out Model Ts. In 2004 Gil Cloyd, wherefore the chief technology officer, and A. G.Lafley, then the CEO, tasked two 30-year P&G veterans, John Leikhim and David Goulait, with designing a new-growth factory whose intellectual underpinnings would derive from the Harvard Business School professor Clayton Christensens fast-innovation theory. The underlying concept of disruptiondriving growth through new offerings that are uncomplicatedr, more convenient, easier to access, or more affordablewas hardly foreign to P&G. Many of the companys powerhouse brands, including zoom, jacket, Pampers, and Swiffer, had followed turbulent paths.Leikhim and Goulait, with support from other managers, began by holding a two- mean solar day workshop for seven new-product-development teams, guided by facilitators from Innosight (a firm Christensen cofounded). The attendees explored how to shake up embedded ways of thinking that tooshie inhibit disruptive undertakees. They formulated creative ways to address life-sustaining commercial questionsfor example, whether demand would be sufficient to warrant a new-product launch. discipline from the workshop helped spur the development of new products, much(prenominal) as the probiotic add-on Align, and also bolstered live ones, such as Pampers.In the years that followed, Leikhim and Goulait shored up the factorys foundation, workings with Cloyd and other P&G leaders to learn senior management and project team mem bers the mind-sets and behaviors that foster disruptive growth. The training, which has changed over time, initially ranged from short modules on topics such as assessing the demand for an early-stage idea to multiday courses in entrepreneurial thinking. Form a group of new-growth-business guides to help teams working on disruptive projects.These experts office, for instance, advise teams to re primary(prenominal) small until their projects find commercial questions, such as whether consumers would habitually use the new product, encounter been answered. The guides include several(prenominal)(prenominal) entrepreneurs who befool succeededand, even more important, failedin starting businesses. Develop organizational structures to drive new growth. For example, in a handful of business About the units the company created small groups focused foreground Artist Each month we illustrate primarily on new-growth initiatives.The groups our Spotlight package with (which, like the traini ng, have evolved signifi stoogetly) a series of works from an acaugmented an existing entity, FutureWorks, whose complished artist. We hope charter is to create new brands and business mod- that the lively and rational creations of these photograels. Dedicated teams within the groups conducted phers, painters, and instalmarket research, developed technology, created lation artists will infuse our pages with additional brawn business plans, and tested assumptions for specific and intelligence and amplify projects. hat are often complex and Produce a litigate manuala step-by-step abstract concepts. This months artist is guide to creating new-growth businesses. The Josef Schulz, a German manual includes overarching principles as well as photographer who often detailed procedures and templates to help teams turns his lens on modern industrial constructs and withdraw opportunities, identify requirements for digitally strips away de? ning success, monitor progress, make go/no-go decis ions, details to render moreand more. abstract, universally relRun demonstration projects to showcase the evant images. In the ? rst step Im a photographer emerging factorys work. One of these was a line of with his limitations, he pocket-size products called Swash, which quickly once told an interviewer, refresh fabrices For example, someone whos in a and then an artist with his freedom of decisions. hurry crapper give a not-quite-clean enclothe a spray rather View more of the artists than putting it through the wash. work at josefschulz. de. June 2011 Harvard Business survey 67 SPOTLIGHT ON PRODUCT INNOVATION Sustaining CommercialCommercial innovations use creative marketing, packaging, and promotional approaches to grow existing o? erings. During the 2010 Winter Olympics, P&G ran a series of ads celebrating mothers. The campaign covered 18 brands, was viewed repeatedly by hundreds of millions of consumers, and control $100 million in revenues. P&Gs quartette Types of Inno vation Sustaining innovations bring incremental improvements to existing products a little more modify power to a laundry detergent, a better ? avor to a toothpaste. These cater what P&G calls er bene? sbetter, easier, cheaperthat are important to sustaining share among on-going customers and getting new people to savor a product. Sharpening the Focus By 2008 P&G had a working prototype of the factory, but the companys innovation portfolio was weighed down by a proliferation of small projects. A. G. Lafley charged Bob McDonald (then the COO) and CTO Bruce Brown (a coauthor of this article) to dramatically extend innovation output by focusing the factory on less but bigger initiatives. McDonald and Browns team drove common chord unfavorable improvements.First, rather than strictly separating innovations designed to bolster existing product lines from efforts to create new product lines or business models, P&G enlarged its emphasis on an intermediate category transformational -sustaining innovations, which give major new benefits in existing product categories. knock over the Crest brand, the market leader until the late 1990s, when it was usurped by Colgate. Looking for a comeback, in 2000 P&G launched a disruptive innovation, Crest Whitestrips, that made teeth whitening at home affordable and easy.In 2006 it introduced Crest Pro-Health, which squeezes half a dozen benefits into one tubethe toothpaste fights cavities, plaque, tartar, stains, gingivitis, and bad breath. In 2010 it rolled out Crest 3D White, a line of advanced oral care products, including one that whitens teeth in two hours. Such efforts helped Crest retake the lead in many markets. Pro-Health and 3D White were both transformational-sustaining innovations, meant to appeal to current consumers while attracting new ones. These sorts of innovations share an mportant trait with market-creating disruptive innovations They have a high degree of uncertaintysomething the factory is specific ally designed to manage. Second, P&G strengthened organizational supports for the formation of transformationalsustaining and disruptive businesses. It established several new-business-creation groups, larger in size 68 Harvard Business Review June 2011 and oscilloscope than any previous growth-factory team, whose resources and management are kept carefully separate from the core business.These groups dedicated teams led by a general managerdevelop ideas that cut across multiple businesses, and also pursue totally new business opportunities. One group covers all of P&Gs beauty and personal care businesses another(prenominal) covers its household care business (the parent unit of the fabric-and-household and the family-and-baby-care divisions) a third, FutureWorks, focuses generally on alter divers(prenominal) business models (it helped guide P&Gs youthful partnership with the Indian business Healthpoint Services).The new groups supplement (rather than replace) existing support s such as the Corporate Innovation Fund, which returns seminal fluid capital to ideas that might distinctly slip through the cracks. P&G also created a change team called LearningWorks, which helps plan and execute in-market experiments to learn about purchase decisions and postpurchase use. Third, P&G revamped its strategy development and review process. Innovation and strategy assessments had historically been handled separately. Now the CEO, CTO, and CFO explicitly link company, business, and innovation strategies.This integration, coupled with new analyses of such issues as competitive factors that could threaten a given business, has surfaced more opportunities for innovation. The process has also prompted examinations of each units production schedule, or pipeline of growth opportunities, to ensure that its robust enough to show against growth goals for the next seven to 10 years. Evaluations are made of case-by-case business units (feminine care, for example) as well a s broad sectors (household care).This revised approach calls for each business unit to determine the mix of innovation types it needs to deliver the required growth. HOW P&G TRIPLED ITS INNOVATION SUCCESS RATE? HBR. ORG Transformational-Sustaining Transformational-sustaining innovations reframe existing categories. They typically bring order-of-magnitude improvements and fundamental changes to a business and often lead to breakthroughs in market share, pro? t levels, and consumer acceptance. In 2009 P&G introduced the wrinkle-reducing cream Olay Pro-X.Launching a $40-a-bottle product in the depths of a recessional might seem a questionable strategy. But P&G went ahead because it considered the product a transformational-sustaining innovationclinically proven to be as e? ective as its much more expensive prescription medicine counterparts, and superior to the companys other antiaging o? erings. The cream and link products generated ? rst-year sales of $50 million in U. S. food ret ailers and drug butt ins alone. dissipated Disruptive innovations represent newto-the-world business opportunities.A company enters unaccompanied new businesses with radically new o? erings, as P&G did with Swi? er and Febreze. Running the manufacturing plant Lets return now to Tide, whose dramatic growth highlights the potential difference of P&Gs approach. Over the past decade the brand has launched numerous products and product-line extensions, carved new paths in emerging markets, and tested a promising new business model. If you had looked for Tide in a U. S. supermarket 10 years ago, you would have found, for the most part, ordinary bottles and boxes of detergent.Now youll see the Tide institute on dozens of products, all with different scents and capabilities. For example, in 2009 P&G introduced a line of laundry additives called Tide Stain Release. Within a year, building on 26 patents, it inembodiedd these additives into a sible to 70% of Indian consumers and has helped to significantly increase Tides share in India. much radically, Swash moved the Tide brand out of the laundry room. The line has clear disruptive characteristics Swash products take int clean as thoroughly as laundry detergents or remove wrinkles as efficaciously as professional pressing.But because theyre quick and easy to use, they offer wide-cut enough occasional alternatives between washes. Swash took an unconventional path to commercialization. When the products were first sold, in a store near P&Gs headquarters in Ohio, they carried a different brand name and had no apparent connection to Tide. After that experiment, P&G opened a pop up Swash store at The Ohio State University. some(prenominal) Tide prohibitionist Cleaners is a factory innovation that represents an entirely new business model. new detergent, Tide with Acti-Liftthe first major redesign of Tides liquid laundry detergent in a decade.The products launch drove immediate marketshare growth of the Tide brand i n the United States. P&G has also customized formulations for emerging markets. Ethnographic research showed that about 80% of consumers in India wash their clothes by hand. They had to choose between detergents that were relatively gentle on the sputter but not very good at actually cleaning clothes, and more-potent but harsher agents. With the problem clearly identified, in 2009 a team came up with Tide Naturals, which cleaned well without causing irritation.Mindful of the need in emerging markets to come through greater benefit at lower costmore for lessP&G priced Tide Naturals 30% below comparably effective but harsher products. This made the Tide brand accestests helped the company understand how consumers would purchase and use the products, which P&G then began selling exclusively through Amazon and other online channels. In early 2011 the company ramped down its promotion of Swash, although learning from the effort will inform its work on other disruptive ideas in the cl othes-refreshing space.Whereas Swash was a new product line, Tide Dry Cleaners represents an entirely new business model. It started when a team began exploring ways to disrupt the dry-cleaning market, using proprietary technologies and a unique store design grounded in insights about consumers frustrations with existing options. Many cleaning establishments are dingy, unfriendly places. Customers have to park, walk, and wait. Often the cleaners hours are inconvenient. P&Gs alternative bright, boldly colored cleaners June 2011 Harvard Business Review 69 SPOTLIGHT ON PRODUCT INNOVATIONThe Factorys Consumer look at Work In October 2010 P&G launched the Gillette Guard dress in India, a transformational-sustaining innovation whose strategic intent was simple to provide a cheaper and e? ective alternative for the hundreds of millions of Indians who use double-edged razors. The companys researchers spent thousands of hours in the market to understand these consumers needs. They gained important insights by observing men in rural areas who, lacking indoor plumbing, typically shave outdoors using little or no waterand dont shave every day.The single-blade Gillette Guard was thus designed to clean easily, with minimal water, and to manage longer stubble. The initial retail price was 15 rupees (33 cents), with re? ll cartridges for ? ve rupees (11 cents). Early tests showed that consumers preferred the new product to double-edged razors by a six-to-one margin. Its breakthrough performance and a? ordability position it for rapid growth. featuring specialized treatments, drive-through windows, and 24-hour storage lockers to facilitate after-hours drop-off and pickup.Using the new-growth factorys process manual, the development team identified key assumptions about the proposed dry cleaners. For example, could the business model generate enough returns to attract store owners willing to cave in up to $1 million for franchise rights? In 2009 P&Gs guides helped the team open three pilots in Kansas City to try to find out. That year P&G also formed agile Pursuits Franchising, a subsidiary to oversee such efforts, and transferred ownership of the dry-cleaning surmisal to FutureWorks, whose main mission is to pursue new business models that lie outside P&Gs established systems.It remains to be seen how Tide Dry Cleaners will fare, but one promising sign came in 2010, when Andrew Cherng, the founder of the Panda Restaurant Group, announced plans to open 150 franchises in four years. He told BusinessWeek, I wasnt around when McDonalds was pickings franchisees, but Im not going to miss this one. To ensure strategic cohesion and smart resource apportioning, Tides innovation efforts have been closely coordinated through regular dialogues among several leadersCEO McDonald, CTO Brown, the vice-chair of the household business unit, and the president of the fabric care division.Theyve also been the focus of discussions at Corporate Innovation Fund meetings and similar reviews. This isnt just the organized pursuit of a single innovation. Its part of a steady stream of ideas in developmenta factory hum with work. and learning, and personally engage. Our journey at P&G suggests six lessons for leaders looking to create new-growth factories. 1. Closely coordinate the factory and the core business. leaders sometimes see efforts to foster new growth as completely distinct from efforts to bolster the core indeed, many in the innovation society have argued as much for years.Our experience indicates the opposite. First, new-growth efforts depend on a healthy core business. A healthy core produces a hard cash flow that can be invested in new growth. And weve all known times when an ailing core has demanded managements full circumspection a healthy core frees leaders to think about more-expansive growth initiatives. Second, a core business is rich with capabilities that can support new-growth efforts. Consider P&Gs excellent relationships with major retailers. Those relationships are a powerful, hard-to-replicate asset that helps the factory expedite new-growth initiatives. Swiffer wouldnt be Swiffer without them.Third, some of the tools for managing core efforts curiously those that track a projects progressare also useful for managing new-growth efforts. And finally, the factorys rapid-learning approach often yields insights that can strengthen existing product lines. One of the project teams at the 2004 workshop was seeking to spur conversion in emerging markets from cloth to useable diapers. Subsequent in-market tests yielded a critical discovery Babies who wore disposable diapers fell incognizant 30% faster and slept 30 minutes longer than babies wearing cloth diapersan obvious benefit for infants (and their parents).Advertising campaigns touting this advantage helped make Pampers the number one brand in several emerging markets. 2. Promote a portfolio mind-set. P&G communicates to both internal and external s takeholders that it is building a varied portfolio of innovation Lessons for Leaders Efforts to build a new-growth factory in any company will fail unless senior managers create the right organizational structures, provide the proper resources, allow sufficient time for experimentation 70 Harvard Business Review June 2011 HOW P&G TRIPLED ITS INNOVATION SUCCESS RATE? HBR. ORG approaches, ranging from sustaining to disruptive ones. See the sidebar P&Gs Four Types of Innovation. ) It uses a set of master-planning tools to match the pace of innovation to the overall needs of the business. It also deploys portfolio-optimization tools that help managers identify and kill the least-promising programs and nurture the best bets. These tools create projections for every ready idea, including estimates of the financial potential and the human and capital investments that will be required. around ideas are evaluated with classic net-present-value calculations, others with a risk-adjusted real -option approach, and still others with more-qualitative criteria.Although the tools assemble a rank-ordered hear of projects, P&Gs portfolio management isnt, at its core, a mechanical exercise its a dialogue about resource allocation and business-growth building blocks. Numerical input informs but doesnt dictate decisions. A portfolio approach has several benefits. First, it sets up the expectation that different projects will be managed, resourced, and measured in different ways, just as an investor would use different criteria to evaluate an equity investment and a real estate one.Second, because the portfolio consists largely of sustaining and transformational-sustaining efforts, seeing it as a whole highlights the critical importance of these activities, which nourish and extend legitimate disagreement about the best way to set for new growth. Whereas we believe in a factory with relatively absolute ties to the core, some advocate a skunkworks organization. Others argue fo r distinct but linked organizations under an ambidextrous leader still others recommend mirroring the structure of a venture capital firm. (P&Gs factory uses several organizational approaches. Treating capability development itself as a new-growth innovation lets companies try different approaches and learn what works best for them. A staged approach serves another important purpose Its a built-in reminder that a new-growth factory is not a quick fix. The factory wont provide a sudden boost to next quarters results, nor can it instantly rein in an out-of-control core business thats veering from crisis to crisis. GILLETTE GUARD After thousands of hours of research in the ? eld, P&G learned that a single-blade razor was a cheaper and e? ective alternative to double-edged razors for many consumers in India. CREST 3D WHITEUsurped by Colgate in the late 1990s, Crest has regained the lead in many markets owing to its introduction of several innovative oral care products, including ones th at make teeth whitening at home a? ordable and easy. 4. Create new tools for gauging new businesses. Anticipated and emerging markets are notoriously hard to analyze. Detailed follow-up with one of the project teams that attended the pilot workshop showed P&G that it needed new tools for this purpose. P&G now conducts transaction learning experiments, or TLEs, in which a team makes a little and sells a little, thus let consumers pick out with their wallets.Teams have sold small amounts of products online, at mall kiosks, in pop-up stores, and at amusement parkseven in the company store P&G now conducts transaction learning experiments, which let consumers vote with their wallets. core businesses. Finally, a portfolio approach helps reinforce the message that any project, particularly a disruptive one, may carry substantial risk and might not deliver commercial resultsand thats fine, as long as the portfolio accounts for the risk. 3. Start small and grow carefully. Remember how the new-growth factory began with a simple two-day workshop.It then expanded to small-scale pilots in several business units in front becoming a companywide initiative. Staged investment allows for early, rapid revision in the first place lines scribbled on a hypothetical organizational chart are carve in stone. It also provides for targeted experimentation. For example, there is and outside company cafeterias. P&G devised a venture capital approach to testing the market for Align, its probiotic supplement, providing seed capital for a controlled pilot. The company has also tested entire business modelsrecall the Kansas City pilots of Tide Dry Cleaners. 5.Make sure you have the right people doing the right work. Building the factory forced P&G to change the way it staffed certain teams. At any given time the company has hundreds of teams working on various innovation efforts. In the past, most teams consisted mainly of part-time membersemployees who had other responsibilities pulling at them. But disruptive and transformational-sustaining efforts June 2011 Harvard Business Review 71 SPOTLIGHT ON PRODUCT INNOVATION HBR. ORG CONNECT WITH THE AUTHORS Do you have questions or comments about this article? The authors will respond to reader feedback at hbr. org. TIDE DRY CLEANERSStill in an early stage, this innovation arose in part from insights about consumers frustrations with the dinginess and inconvenience of most existing drycleaning establishments. require undivided attention. (As the old saying goes, nine women cant make a baby in a month. ) There need to be people who wake up each day and go to sleep each night obsessing about the new business. New-growth teams also need to be small and nimble, and they should include seasoned members. P&G found that big teams often bog down because they pursue too many ideas at once, whereas small teams are better able to quickly focus on the mostpromising initiatives.Having several members with substantial innovation exper ience helps teams confidently make sound judgment calls when data are inconclusive or absent. Finally, building a factory requires a substantial investment in widespread, ongoing training. Changing mind-sets begins, literally, with teaching a new language. Key damage such as disruptive innovation, job to be done, business model, and critical assumptions must be clearly and consistently defined. P&G reinforces key innovation concepts both at large meetings and at smaller, focused workshops, and in 2007 it established a disruptive innovation college. People working on new-growth projects can choose from more than a dozen courses, ranging from basic innovation language to designing and executing a TLE, sketching out a business model, staffing a new-growth team, and identifying a job to be done. 6. Encourage intersections. Successful innovation requires rich cross-pollination both inside and outside the organization. P&Gs Connect + Develop program is part of a larger effort to intersect with other disciplines and gain new perspectives.Over the past few years P&G has Shared people with noncompeting companies. In 2008 P&G and Google swapped two dozen employees for a few weeks. P&G cherished greater exposure to online models Google was interested in learning more about how to build brands. Engaged even more outside innovators. In 2010 P&G refreshed its C+D goals. It aims to become the partner of excerption for innovation collaboration, and to triple C+Ds contribution to P&Gs innovation development (which would mean deriving $3 billion of the companys annual sales growth from outside innovators).It has expanded the program to forge additional connections with government labs, universities, small and medium-sized entrepreneurs, consortia, and venture capital firms. Brought in outside talent. P&G has traditionally promoted from within. But it recognized that total reliance on this approach could stunt its ability to create new-growth businesses. So it began bringin g in high-level people to address needs beyond its core capabilities, as when it hired an outsider to place Agile Pursuits Franchising. In that one stroke, it acquired expertise in franchise-based business models that would have taken years to build organically.SOME THINK its foolish for large companies to even attempt to create innovative-growth businesses. They maintain that organizations should just outsource innovation, by acquiring promising start-ups. But P&Gs efforts come forward to be working. Recall that in 2000 only 15% of its innovation efforts met profit and revenue targets. Today the figure is 50%. The past fiscal year was one of the most productive innovation years in the companys history, and the companys three- and five-year innovation portfolios are sufficient to deliver against their growth objectives.Projections suggest that the typical initiative in 2014 and 2015 will have nearly twice the revenue of todays initiatives. Thats a sixfold increase in output withou t any significant increase in inputs. Our experience tells us that although individual creativity can be unpredictable and uncontrollable, collective creativity can be managed. Although the next Tide or Crest innovation might stumble, the factorys methodical approach should bring many more innovations successfully to market. The factory process can create sustainable sources of revenue growthno depicted object how big a company becomes.HBR Reprint R1106C At P&Gs disruptive innovation college, people working on new-growth projects can choose from more than a dozen courses. 72 Harvard Business Review June 2011 Harvard Business Review Notice of Use Restrictions, May 2009 Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for the semiprivate individual use of authorized EBSCOhost users. It is not intended for use as assigned course material in academic institutions nor as corporate learning or training materials in businesses.Academic l icensees may not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by any other means of incorporating the content into course resources. 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