Design -Driven Growth::
The Resurgence of
Procter and Gamble
BY KHUSHI PANCHAL / 28 AUGUST, 2021
P&G’s incorporation of Design Thinking is a benchmark for innovation.
n 2000, Procter and Gamble, the world’s biggest consumer goods company, was on a descent. P&G’s stock lost around 48% in two months, investors lost confidence, and CEO Durk Jager was forced to step down after just a year and a half. In the years following this crisis, however, P&G implemented vital changes and underwent a remarkable recovery. From 2000 to 2008, revenue grew from 39 Billion USD to 83 Billion USD, and cumulative earnings went from 2.5 Billion USD to 12 Billion USD. How was this soap business from Ohio able to bounce back so quickly?
I
From 2000 to 2008, revenue grew from 39 Billion USD to 83 Billion USD, and cumulative earnings went from 2.5 Billion USD to 12 Billion USD.
After P&G’s new CEO Alan George “A.G.” Lafley arrived, he commenced the remarkable turnaround. He downsized underperforming sections of the employee workforce and shed numerous non-performing brands. But despite being able to create an environment of efficiency and discipline, Lafley was still unable to fix the problem of product stagnation. Lafley realised that merely laying off employees was not enough to rejuvenate P&G. It hit him that maybe this mammoth company needed “Design Thinking” to pave the way for its future. To implement this strategy, he appointed Claudia Kotchka as the first Design Chief of P&G.
Alan G. Lafely (Photo by Craig Ruttle)
“Design Thinking is a human-centered approach to innovation that draws from the designer​'s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”
Illustration by Kezia Gabriella via Pinterest
According to Tim Brown, Executive Chair of IDEO, a global design and innovation company, “Design Thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Its steps are simple: understand the problem thoroughly, explore an extensive variety of solutions, recapitulate using prototyping and testing, and finally, implement the best solution identified during the prototyping phase. However, this process is not always linear. Rather than considering them as steps to achieve the perfect solution, they must instead be viewed as multiple modes contributing to a plan. These primary stages are the regular stages expected to be carried out in any design project.
Kotchka, the new Design Chief appointed by Lafley, had entered P&G in 1978; she led the marketing for several brands, including Pantene, Crest, and Head & Shoulders.
In her 31 year career, Kotchka progressed from marketing to management and finally to design and innovation leadership. Kotchka led a creative team; they worked with IDEO and embarked on a journey to empower creativity in others and understand consumers in a way they had not previously. She was vital in teaching P&G the importance of watching how consumers performed their everyday activities instead of how consumers used P&G’s products.
Let us take the example of “Oil of Olay,” one of P&G’s most adored skin care brands, which faced fierce competition from other nascent brands. “Oil of Olay '' was perceived as an old and outdated product. Olay’s team believed that the product needed fashionable packaging because consumers were puzzled as to which one met their needs best with so many skin care choices. However, under Kotchka’s training, the team devised a new strategy, one based on the principles of design thinking. The first step was understanding the users; through extensive research on their target group, they concluded that all hope was not lost. Finding out that the consumers were already familiar with the name “Oil of Olay” gave the team comfort that their product still had the potential to capture the market with maneuvering and an effective marketing strategy.
They strategised to diversify their market by targeting non-consumers, especially women in their 30s who are willing to spend more on good skincare and would do anything to keep their younger-looking skin for as long as possible. These women were vulnerable and more worried when it came to dealing with the signs of ageing. Their strategy was to make women feel good about themselves. They set out to be more inclusive and created a website known as “Olay for You.” This website helped consumers choose the specific product they needed before arriving at the retail store. They formulated numerous products, one of them being “Olay Regenerist”, which tackled various skin concerns such as dry skin and dark spots.
Illustration by Borja Bonaque via Pinterest
In conclusion, P&G’s incorporation of Design Thinking, led by CEO A.G. Lafley and Design Chief Claudia Kotchka, revolutionized its marketing strategy and made its brands once again relevant to consumers. This new strategy redeemed the company in the eyes of investors, sparked resurgent revenue growth, and grew its consumer base substantially. Henceforth, P&G created a benchmark for all other skin care brands to echo.
'
Keywords
Procter and Gamble, Durk Jager, Ohio, A.G. Lafley, design thinking, IDEO, Tim Brown, Claudia Kotchka, innovation, Pantene, Crest, Head & Shoulders, Oil of Olay, Olay Regenerist, Olay for You, creativity, marketing, management, P&G, stocks, investors, soap business
​
​
References
Dam, R. F., & Siang, T. Y. (2021, January). 5 stages in the design thinking process. The Interaction Design Foundation.
https://www.interaction-design.org/literature/article/5-stages-in-the-design-thinking-process.
Chatterjee, M. (2021, March 23). How design thinking helped P&G re-invent the brand? GreatLearning Blog.
https://www.mygreatlearning.com/blog/how-design-thinking-helped-pg-re-invent-the-brand/.
​
Cohan, P. (2012, March 3). How Procter & Gamble's design guru spurs growth. Forbes. https://www.forbes.com/sites/petercohan/2012/03/02/how-procter-gambles-design-guru-spurs-growth/?sh=73c4958d6207.
​
Cable News Network. (2009, June 8). P&G CEO quits amid woes. CNNMoney. https://money.cnn.com/2000/06/08/companies/procter/.
P&G Designed to Innovate 2008 Annual Report. (2008, August). Procter & Gamble. https://www.pg.com/annualreport2008/PG_2008_AnnualReport.pdf
Yu, H. H. (2018, August 16). Beyond the beautiful How design thinking shaped P&G’s strategy. IMD Business School.
https://www.imd.org/research-knowledge/articles/beyond-the-beautiful/
DISCOVER MORE STORIES
The views published in this journal are those of the individual author/s and do not necessarily reflect the position or policy of the team behind Beyond Margins, or the Department of Economics of Sophia College for Women (Autonomous), or Sophia College for Women (Autonomous) in general. The list of sources may not be exhaustive. If you’d like to have the complete list, email us at beyondmarginssophia@gmail.com