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The Game-Changer

Author: A.G. Lafley & Ram Charan

Publisher: Crown Business

ISBN: Mick Yates

Summary:A.G. sums this up as "purpose driven innovation". This means innovation designed to do more than build market share and profits, and instead to focus on transforming new ideas and technologies into useful products that help consumers.

Leader Values

In June, 2000, A.G. Lafley got a call from John Pepper, former Chairman and CEO of Procter & Gamble. To cut a short story even shorter, he was offered the CEO's job as his predecessor had just resigned. Bluntly spoken, P&G was not doing well with several profit warnings issued, and the stock price dropped 50% in six months.

This book is the story of P&G's turnaround under A.G. Step one sounded obvious for a consumer company like P&G, but it was to put the customer more firmly at the centre of everything. The aim was (and still is) to delight the customer at the two "moments of truth" - first, when they buy the product, and, second, when they use it.

Step two was to open up P&G to outside influence and innovation. The company had long been seen as rather internally focussed, and attempted to be self-sufficient. But A.G. saw that the company needed to innovate, and must attract partners of all kinds to succeed.

The third step was to make "sustainable growth" a business priority. Put another way, P&G needed to focus on its big, core brands, and eliminate the small ones. And, to make the big brands grow, innovation was the fuel required.

Of course, this all entailed both organizing around innovation, and thinking about innovation in different ways. The book tells the story of how this was done. Of particular interest is P&G's "Connect and Develop" approach to R&D, which uses networks of all kinds to meet consumer opppotunities, solve problems, and pull in new ideas and technologies from all over the world in a very cost effective fashion.

A.G. admits in the book that the plan emerged over time, rather than appeared "fully formed". But it still seems to me that the essence was clear at the start. In particular, the goal he set of making at least 50% of P&G's innovations come from outside the company was critical in forcing the organization to change and to focus on the real work at hand. A.G. sums this work up as "purpose driven innovation". This means innovation designed to do more than build market share and profits, and instead to focus on transforming new ideas and technologies into useful products that help consumers.

With Ram Charan's incisive style, the book explores the components of how this all came to be. This ranges from the re-affirming of motivating purpose and values, affecting everyone in the organization, to creating structures and building reliable systems to make innovation a central (and sustainable) activity for P&G. The authors also draw comparisons with other innovative companies, on how they too became "Game Changers" - companies like Lego, Nokia, HP and DuPont.

This is an easy to read book, with clear principles brought alive with case histories and detailed explanations. Perhaps not surprisingly, the book closes with discussion on "The New Job of a Leader" - to be an innovation leader requiring appropriate role-modelling, value added roles and the development of critical skills. A.G. himself was named CEO of the year in 2006 by Chief Executive magazine.

I've read many books about business turnarounds, and how a heroic CEO does the job. But this strikes me as better than most. Firstly, it is more about the systems and activities of the enterprise than it is about A.G. himself. Second, it has many useful pointers on how to innovate in other companies, rather than simply list a string of P&G successes and uniquenesses. And, finally, with Charan's help, it serves as a text book on how to make change happen in even the largest organizations. A book I recommend to students and managers alike.