As Patricia Verduin, CTO of consumer products giant Colgate-Palmolive (IW 500/73), sees it, over the last few decades, the very nature of manufactured goods has changed.
"Before, it was all about making lives easier," she explained. "Everybody was buying the same things — the wealthy people, the less wealthy people, they all had the same appliances; they all had the same curtains."
But all of that has changed.
"Today's customers want more," she said. "They are more discerning; they want things that are specific to them and their culture."
Today's consumers, she said, will no longer accept one-size-fits-all. Nor do they expect it.
"It's mass customization," she explained. "So that's what we have to give them; that's our industry today."
These comments were delivered to an eager group of technologists, innovators, professors and manufacturers gathered in Washington, D.C. this spring to celebrate the 75th anniversary of the Industrial Research Institute. In this milestone year, the topic of discussion seemed to hover around one subject in particular: How has innovation changed in the last 75 years?
And the answer seemed clear — today, the consumer is king.
Joining Verduin at the event was Robert McDonald, president and CEO of Procter & Gamble (IW 500/12), who shares this new vision of custom-fit manufacturing and has made it integral to the company's R&D DNA.
"For 175 years, innovation has been at the heart of everything we do at P&G — it is our lifeblood," he said. In today's global, consumer-focused market, that dedication to innovation has transformed the company from mass producing candles and soaps in 1838 to regional, localized centers of product innovation today.
"You can't help but be local as a consumer products company," he explained. "A consumer in China has very different needs than a consumer in the U.S., or a consumer in Africa for that matter. We have to make for the local market and the local physiology."
As an example, he noted that, physiologically, Asian hair has about twice the radius of Caucasian hair, giving it about six times the surface area. As a result, U.S. shampoos and conditioners are considered too weak in Japan and Japanese products too heavy in the U.S.
"By our very nature, we have to have localized product offerings around the world," he explained. "And we must be near the markets we serve in order to best understand their individual needs."
To do this, P&G has strategically distributed innovation centers and R&D labs around the world among its 135 global plants. In those facilities, of the $2 billion the company spends on R&D each year, over $350 million is dedicated solely for understanding the individual needs of its customers.
Those dedicated funds, McDonald said, are essential for growth in the mass customization market.
“It gives us unique insights that teach us where the innovation opportunities are and how best to serve and communicate with people in developed and developing markets alike," he explained. "And that is what has enabled us to grow for 175 years."
Artist-Scientists of the Consumer Age
"You have to change your model," Colgate's Verduin said.
Manufacturers today can no longer follow the Model T's one car, one color for all formula. To succeed, companies have to think about ways to "wow" the customer on an individual level.
"In our industry, it's all about fragrances and flavors and skin feel and foam levels," she said. "So what we need are artists — these artist-scientists to finish off products and make them really specific for each type of consumer."
Failing to understand what those customers want and incorporate that understanding deep into the basic R&D functions of an organization, she said, there is no way to thrive.
"Everything has changed," she said. "So your offerings have to change as well. If you don't understand that, you're never going to create the right products for your consumers."