Procter & Gamble (PG) is a 175-year-old company that’s working hard to smooth those corporate age wrinkles. And it’s getting help from an eight year old corporate initiative that’s been pushing change since its former CEO, A.G. Lafley, decided in 2001 that P&G needed to get good at design-thinking.
For Lafley, design thinking was a way to get P&G to return to its roots as a company that pays attention to consumers. As I posted, he asked a long-time P&G employee, Claudia Kotchka, to create that capability and Kotchka got help in doing that by hiring an innovator from Mattel back in 2004 who created a process at P&G to solve tough business problems dubbed Clay Street.
As he explained in a March 7th interview, Kotchka lured David Kuehler, Director, P&G Integrated Innovation Capability, from Mattel’s (MAT) Project Platypus (PP). As described in a 2005 Business Week interview, PP took 12 employees with different skills and experience away from their jobs for three months and charged them with “conceiving and developing a completely new brand.” PP ran itself out of a separate 2,000 square foot building that “looks like a playground.”
As Keuhler explained, many companies came to visit PP — including P&G. When P&G was at PP, Keuhler observed that it was “the most committed to innovation and improvisation.” Ultimately, Kotchka persuaded Keuhler to start a similar activity at P&G which he did in 2004.
One of the first challenges Kuehler faced was what to call his new P&G project. As it happened, P&G made space for Kuehler’s new operation in an old brewery, “outside the berm of P&G,” on Clay Street, in a less-than-upscale part of Cincinnati.
It turned out that Lafley was on the board of a redevelopment commission for the area. After coming up with hundreds of naming options, Kuehler and Kotchka quickly agreed to name it Clay Street.
Clay Street achieved remarkable results quickly. According to Kuehler, Clay Street’s second session in 2004 helped revive a then-tired brand of shampoo,Herbal Essences. The cross-functional team that spent 10 to 12 weeks at Clay Street came up with ideas that boosted Herbal Essences’ so-called index — a measure of sales growth relative to year ago results — from 76 before Clay Street to 124 after.
The key insight that produced this astonishing result was that the team of P&G people responsible for the Herbal Essences makeover, based on the insights of a young intern, arrived at ”a very different idea of what the word organic means for today’s consumer, versus the meaning it had for older generations.”
For example, when asked to shop for items they considered organic, the P&G team selected “below the ground” products like herbal tea, health food and granola. By contrast, the Gen Y consumer’s theme was “all possibilities” – including items such as smoothies and brightly colored blouses.
From this insight, the P&G team created a new “equity” — e.g., the brand’s logo, color, shape and ”how it performs and what it stands for in the mind of the consumer.” Instead of the clear bottle with gooey dark green shampoo, the new version of the product features pink and other more subtly-colored opaque bottles and a tag line “Discover Pure Botanical Bliss.”
Clay Street’s approach is to transform the way that P&G traditionally operates. Its tradition is for brand development to be led by staff from the marketing function — they choose the brand’s advertising approach based on its benefit to the consumer.
P&G in the past has encouraged teams to focus on their specific functions. R&D comes up with a technology to deliver the benefit that the consumer wants. R&D hands off to Design and Package Development to create the package and Sales goes to the retailer and asks how many cases it wants to buy.
At Clay Street, Kuehler’s team tries to change this mind-set. In a 10 to 12 week session, Clay Street tries to create the feeling of working in a start-up. In that context, Clay Street gets team members to take off their functional hats and see how the product looks from the perspective of the consumer — and in so doing – to view their work in the context of the other functions.
The result of Clay Street is that people behave differently. For example, the person from marketing comes into the team feeling responsible for the outcome, but more willing to listen and be open about not knowing the answer.
R&D might work with marketing to help develop advertising copy. And Sales might come up with ideas for package design based on looking at competitors’ packaging. At Clay Street, team members are able to “bring their whole selves to the problem solving process, not just their functional expertise.”
How does Clay Street accomplish this transformation? Kuehler points out that a key element is giving the team a very clear goal and near-complete autonomy — rather than waiting for their bosses to provide direction. Clay Street also immerses them in new ways of thinking by bringing in speakers with different points of view on, say, sustainability. It also gives them “improv training” and shows them how to “leverage [the team's] collective genius.”
The final challenge for Clay Street is what happens to these teams after they re-enter P&G’s mainstream business. Without proper seasoning from Clay Street, such teams tend to lose their momentum.
So when it came to Herbal Essences, Clay Street worked with senior executives such as Susan Arnold, to encourage P&G to remove procedural barriers — such as dozens of meetings that P&G traditionally requires — that might slow down the implementation of the ideas that the team developed.
If P&G can keep the idea of Clay Street going, it will probably be alive and kicking 175 years from now.
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