One of the most important reasons for that is the masses of high-caliber talent coming out of Chinese universities. The hope is that all that brainpower will lead to innovations that will also work in the developed world. P&G is, amazingly, one of the top three choices among Chinese university graduates looking for jobs. And the place is pulsing with the energy of young people who want to make it big; as a raucous karaoke party shows, they seem to have both right- and left-brain abilities. The campus feels a bit like being at a Silicon Valley startup — except that it’s a unit of a 173-year-old company.
For most of its history P&G, which puts a whopping $2 billion annually into R&D, succeeded by inventing technically superior products at home, then pushing them out to the market in a command-and-control fashion. Only over the past decade, as former CEO A.G. Lafley pried open the company to ideas from the outside, did things change. The Swiffer and the Mr. Clean Magic Eraser — both hits for P&G — came about through partnerships with outside product developers.
BJIC is the only tech center in the developing world that operates across all the company’s global business units, or GBUs, as P&Gers, acronym lovers all, tag it. Similar to the company’s baby playrooms and fake supermarkets in Ohio, here a simulated hutong (a typical Chinese home) lets researchers observe consumers as they brush their teeth or change a diaper, then make immediate changes to prototypes. “Now we can do end-to-end product innovation,” says Brown.
Even before the new center opened last August, several new products came out of China. They included Tide Naturals, a skin-sensitive detergent for women who wash clothing by hand, and Crest Pro Health toothpaste, a premium brand whose main researcher, Wang Xiaoli, cracked a 50-year chemistry problem by finding a way for stannous fluoride — a stronger form of fluoride — to stabilize in water. Wang, who won a companywide innovation award, says she came to P&G because “I didn’t want what I learned to be published in 100 years.”
The key, says McDonald, is making sure that technical development and testing are done locally. That’s something P&G’s Gillette unit learned the hard way before P&G bought it in 2005, when it developed a razor specifically for Indian men. Since many of them shave only a couple of times a week, often using a basin, they have longer facial hair than most Western men. Rather than testing in India, Boston-based Gillette decided to try out the razor on Indian men who were studying at MIT. They loved it, so the company went ahead with a launch in India. It flopped — because the MIT students, unlike much of the Indian market, had access to running water. Lesson learned, P&G retrenched, tested locally, and last October launched Gillette Guard, a razor that is easier to rinse.
New uses for old ideas
The most valuable consumer insights for P&G’s $2-a-day explorers are transnational ones. That’s why Liu, a young Chinese woman who has worked in the research division of P&G for six years, has spent much of the past one trekking through the jungles of Brazil, the slums of India, and farming villages in rural China. She is bringing what she learns back to Beijing — and hoping that the knowledge will lead to wins elsewhere. Back at Wei’s home, she pulls out a plastic bag full of products — some new prototypes, some off the shelf — for her to sample. Wei relies on a washcloth and a scrap of soap to clean her body, and she never undresses completely — not because of water concerns, but because of privacy issues. There is no bathroom, her father-in-law lives in the home, and she feels she has no place to go.
Out of the bag comes an unmarked bottle with a body cleanser formulated to clean without much water. It’s kind of like Purell — except that it generates foam, which can be easily wiped away, instead of lather. The technology comes from an existing hair-color product, which means that it’s a potential win-win for P&G, a new use for an old idea. “We just have so much stuff,” says Graulty. “Our job is finding the right match.” Liu pulls out a bottle of Febreze — an air freshener for relatively affluent customers — and shows Wei its use as a spray to improve the smell of clothing that can’t be washed often.
She likes it, but not as much as the leave-in conditioner they try next; the look on her face when she touches her hair is one of deep desire. I can’t help but wonder whether this experience is touching and improving her life, or tantalizing her by introducing her to something she can’t have. The item Wei likes most, though, is one that P&G doesn’t even make: an off-the-shelf camping shower, basically a large plastic bag that hangs on a line or a tree and lets you shower with sun-heated water. For her it is a breakthrough product — she can wash in private.
Does that mean, I ask, that P&G should go into the camping-shower business? No, says Graulty; certainly the company might try partnering with a producer to sell, say, cleanser with one, but the real insight is privacy. Graulty’s project has uncovered other misconceptions about poor consumers, including the notion that they always want the simplest product (they don’t), and that they are not as aspirational as the more well-to-do (they are). They need more skin-care products because they spend so much more time outside. And though P&G never contemplated selling hair dye to poor customers, Graulty has learned that in those parts of the world, dye is very much in demand. “It’s a paradigm shift,” she says. “We say, ‘Why would they buy that? It’s not like food, clothing, and shelter.’ But to get a good job, to be presentable, they have to have beauty.” The R&D folks are now working on a colorant that uses little water — and is priced appropriately for a $2-a-day customer.
To be sure, it will be a while before any of this research helps P&G make real headway. In the meantime, the company is relying on classic tactics like price cuts and advertising to gain share. “Promotions win quarters,” McDonald told the analysts. “Innovation takes decades.” His message may be working. After a few years of skepticism, P&G is gaining fans like Goldman Sachs’s Andrew Sawyer, who upgraded the stock in December largely on the company’s emerging-market strategy.
Though no product has been launched yet from the $2-a-day project, Brown says several are in the works, including a hair-care product beginning formal testing in India. Last fall the group of about 100 met for the first-ever $2-a-day confab. (Ironically, the meeting took place not in Africa or Asia, but in Cincinnati — “The logistics were better,” Brown says, apologetically.) One move McDonald has not made so far is to form a formal business unit. That’s the type of thing the company might have done immediately in the past — but management now believes would be better handled locally, across silos. “If there were a $2-a-day division,” director Cook says, “everyone else would wash their hands of it.”
Now, if everyone else would simply begin to wash his hands with P&G products, the company might get somewhere.
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