Digital Disciplines: Attaining Market Leadership via the Cloud, Big Data, Social, Mobile, and the Internet of Things

Chapter 16Procter & Gamble Cleans Up

On March 7, 2000, just when the Dow had finally cleared 10,000, it plummeted 375 points, or almost 4 percent, its fourth-worst point loss in history at the time, destroying $300 billion in market capitalization. The cause? A surprise earnings miss from Procter & Gamble, which ended down 31 percent for the day and 50 percent for the year to date. Three months later, in the midst of continuing financial turmoil, then-CEO Durk Jager resigned, and was replaced by A. G. Lafley.¹,² Under Lafley's leadership, the stock has turned the tide and tripled, in large part by P&G rethinking its approach to innovation.

Procter & Gamble's logic was straightforward: The need for top-line growth drives a requirement for continued successful innovation, but the need for bottom-line growth means that funds allocated to innovation need to remain relatively constant. Thus, innovation productivity needs to increase, a simple principle made difficult in a world with increasingly arcane technologies, global competition, and the complexities of interdisciplinary connections, often ameliorated only through serendipity.

The Procter & Gamble story begins in 1837, when William Procter, who made candles, and James Gamble, who made soap, accepted their (mutual) father-in-law's suggestion to go into business together, partly to better negotiate for raw materials. Since then, Procter & Gamble has become the world's largest consumer packaged goods company thanks in large part ...