The consumer product giant’s CEO discusses its move into devices, addressing users’ experiences, and Gillette’s competitiveness.
In addition to becoming the world’s largest consumer products concern, with its planned $60 billion acquisition of Gillette (G ), Procter & Gamble (PG ) — best known for brands like Crest, Tide, and Pampers — is moving into gadgets.
Look on store shelves, and you will see Febreze Scentstories, an air-freshener machine that plays discs of scent much like a CD player plays music. Check out the Tide Buzz Ultrasonic Stain Remover, a machine that uses an ultrasound wand to remove stains. There’s also the Swiffer Sweep+Vac, a device that combines a Swiffer electrostatic dust mop with a vacuum, the Crest SpinBrush electric toothbrush, the Home Café coffee machine, and plenty more.
P&G’s gadget strategy was started in the second half of the 1990s by former CEO Durk Jager and ex-chief of research and development Gordon Brunner. Both were trying to jump-start innovation and believed there were limits to developing a better floor cleaner. Alan G. “A.G.” Lafley, who took over from Jager as CEO in 2000, has evolved the concept.
In a recent interview with BusinessWeek correspondent Robert Berner, Lafley discusses the strategy’s development. Here are edited excerpts from their conversation.
Q: Jager and Brunner started P&G in the gadget direction. How have you taken it further?
A: What Durk and Gordon touched off was trying to create a renaissance in innovation. So we looked at a number of new technologies. The second side we pushed on was: How do we improve the performance of some of our core technologies? How do we get more bang for the invention that we already have?
I wanted to get after what we call unarticulated consumer needs. What she wants that she can’t tell us about. And there are lots of techniques we have developed or are developing to do that. And two, I wanted to focus more on the consumer experiences as much as on the product and technology.
Q: Does focusing on the experience help build brand loyalty?
A: People remember experiences. They don’t remember attributes or benefits. We talk a lot about how you create a delightful experience. Now, when you’re dealing with underarm deodorants and cleaning dirty floors, you have to work real hard to try and deliver a less unpleasant experience.
But when you get into hair and skin care, and even fabric care, you can create some pretty delightful experience with fragrances. So we do think about the experience because it’s the beginning of a relationship.
I’m fond of saying this because I really believe it: The most precious stakeholder at P&G is a loyal consumer. That’s really what investors ought to ask us about. How are we doing at creating trial [usage], and then converting trial to loyal usage of a brand.
Q: Could you talk about Swiffer in this context?
A: The beauty of Swiffer is there’s a standardization of the process. So there’s basically a handle, an implement, and there’s a cleaning cloth. Some are wet. Some are dry. Some are shaped in a funny way so they can dust. And some are electrically aided. But it brings much more predictability to the process. Because if you’re focused on the experience, she likes the fact it’s simple and easy to use. She likes the fact it’s convenient, it’s not too back-breaking. They’re very easy to manipulate. It’s easy to dispose of.
We had this sort of paradox where cleaning certain surfaces was a dirty, ugly task. With Swiffer it’s not. It’s a relatively easy, simple, and hygienic task, because when you’re done you take the implement, you slip the cloth off when it’s expended, and it’s disposable.
I know we didn’t see the end-vision of what the Swiffer lineup of implements and cleaning clothes would be. We were thinking about floor cleaning. Now we’re thinking about all the surfaces in the home. And Swiffer has sort of become a verb for some consumers. A way of cleaning — easy, convenient, and simple.
Q: How much of a competitive advantage do these devices give P&G?
A: Our competitive advantage remains to be seen. I think Gillette is very competitive, probably the best in the world right now in power [tooth] brushes. But we’re in the game. Swiffer changed the game and did give us a competitive advantage.
With Scentstories, there will be a few more rounds. The game has just begun. It’s going to be very interesting to see what happens because we went to the market relatively early. The device is still a little too big and a little too complicated. The experience is good. But it’s a tradeoff for some consumers.
Q: What’s the risk with devices?
A: We’ve got to be careful about having too much complexity and too much technology. In our business it has to be intuitive.
Q: You had to recall the Swiffer Vac recently. Some people raise issues of quality with these products vs. your traditional ones. Can that hurt?
A: The standard in the software industry is that a lot of the software that’s shipped doesn’t work. The issue in the small-appliance industry is their standard of ready-to-launch has more defects than our standard of ready-to-launch. So I think we’re going to raise the bar. It’s going to be good for people who buy our small appliances.
We have a lot of chemists, a lot of chemical engineers, a lot of biochemists. We aren’t going to go out and hire a lot of electricians and mechanical engineers. We’re going to people who know how to do that, design that, and engineer it. But we’re going to use our techniques for reliability and quality because they apply across manufacturing processes.
Q: I don’t want to overstate this, but would you see this move beyond traditional consumer staples to devices as a paradigm shift?
A: I think it’s an evolution. We have opened our minds to it, but it’s an evolution, because we have to be careful. It’s like anything — if there isn’t a good consumer experiential reason for doing it, and if it doesn’t really lead to a better benefit or better bundle of benefits, then it’s just empty marketing. It’s not substantial. We have to be careful we don’t push it too far.