Designing Innovation

In this extended edited interview transcript, Procter & Gamble CEO A.G. Lafley expands on why design is important, how to incorporate it into your organization, and the value of partnerships.

by Jennifer Reingold

Fast Company: Why did Procter & Gamble start to concentrate more on design?

AG Lafley: One of the opportunities was technology. The other opportunity was to get up the learning curve on design. It became quite clear to me that both were important not only in beauty but even moreso in household care and consumer care -- where products were arguably under designed or not very well designed.

Our basic argument is that we are moving from a world where innovation was driven by technology to a world where innovation is increasingly driven by design. You have to be careful because it's really not either/or. If there's a great technology and it's well designed, or if a great design is underpinned by a great technology, there's probably a greater innovation.

FC: How do you put that approach into practice?

We talk a lot about creating a great purchase experience and a great usage experience. The truth of the matter is that we have to create a great experience every time you touch the brand. The design is a really big part of creating the experience and emotion. Our job is to have more women and their families vote for our brands and products every day than the year before. We stand for election every day, and design is an important part of it.

We recruited outside for almost all of our design team. We import PhD's in pharmaceuticals, tech specialists, and doctors. Your average liberal arts or engineering student out of Stanford or a Big 10 school is not necessarily going to be a great design resource. We want to become the number one consumer design company in the world, so we need to be able to make it part of our strategy. We need to make it part of our innovation process. We need to have access to the best designers in the world, and we need to develop marketers, product researchers, and general managers who know good design when they see it.

FC: Tell me about your partnership with Valentino and Lacoste

Lafley: The fact that Valentino chose P&G to do a fragrance blew them away in Paris. We didn't know if we were going to get it, but I think we were able to demonstrate that we're really pretty good at design and that we have a process that integrates design and innovation. He also was convinced that we could formulate a good fragrance. V Valentino just launched.

Now, Lacoste is a brand that's come back. They approached us a few years ago and have since taken the brand from under $20 million to well over $200 million. More importantly, we've helped rebuild the Lacoste equity. The fashion line is now doing quite well. They'd given the license away and destroyed it. Now it's actually quite fashionable. We did the design on their fragrances. The one that's hot now is called Pink.

FC: Have there been any challenges?

Lafley: You just have to keep getting better and keep taking it to the next level. You know, we do a lot of consumer research, and we know there are still a lot of dissatisfiers out there, a lot of things that really aren't exactly right. They're just sort of the way they are because that's the way they've always been. More than half the time, the consumer can articulate what she doesn't like, but she can almost never articulate what you need to do to remove the dissatisfier or to create delight. That's what we have to work on. There are lots of opportunities. Every place I turn, there are opportunities.

But our success has been highly variable. Remember that one of the disciples had to put his hand in the bloody wounds to believe. We have some businesses that are doubting Thomases. And we have other businesses that couldn't wait. Some of those that couldn't wait got into design in a reasonably disciplined and strategic way with good results; others sort of leaped into the middle of the lake and are having problems trying to go too fast. We have a whole range. I don't think anybody thinks we're not seriously in the design businesses. But it has taken time.

On the one hand, design is simple. On the other hand, it didn't fit in the way branded consumer products companies work and are organized. I've been in this business for almost 30 years, and it's always been sort of functionally organized, you know, marketing, product development, manufacturing, and sales. Where's design? The answer is, in all of the above.

We want to design the purchasing experience, what we call the first moment of truth. We want to design every component of the product from the first engineering and the first conceptualization, and we want to design the communication experience, design the user experience. It's all design. That's been hard for people to come to grips with.

Our biggest discussion item with Wal-Mart and with a lot of retailers is to get them to understand that consumers are interested in value and price -- but that in many cases, that's not the deciding factor. An awful lot of evidence across an awful lot of categories shows that consumers will pay more for better design, better performance, better quality, better value, and better experiences. Wal-Mart and other retailers are really driven by same store sales. If everything in your store goes down in price every year, it's difficult to build same store sales. What we keep reminding them is that the real key to driving same store sales is innovation.

FC: How do you think that will play out with Gillette?

Lafley: It's going to be exciting. They are fairly committed to design. Just look at toothbrushes. They make some of the best designed and engineered toothbrushes in the world. Venus was phenomenal. In the male razor and system side, they are arguably the best designed and engineered in the world. So I think we're picking up a company that has a commitment to design. We will be able to help

We can help in other areas, too. OTC drugs are an under-designed category. Pills and containers are not desirable experiences. It's little things like the purple Prilosec package. It's amazing how the little purple pill in the purple package stood out in a store environment that is incredibly difficult to shop. We're trying to make design a primary source of innovation. The better designed our products are, the more innovative they are. And the more likely they are going to sell.

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