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Lafley, Charan In Book Excerpt: 'The Consumer Is Boss'

In an adaptation from their forthcoming book "The Game-Changer," Procter & Gample CEO A.G. Lafley and management consultant Ram Charan describe the principles of innovation that restored both earnings and morale at the packaged-goods giant after Lafley took the top position in 2000.

To turn the company around, Lafley says he focused on a few simple, powerful things. The first was to put the consumer at the center of everything it does. To achieve this, P&G tries to see the world--and opportunities for new products--through its customer's eyes. "At P&G the CEO is not the boss--the consumer is," says Lafley.

The company has also "opened up." Rather than develop everything in-house, as it was known for doing, P&G now seeks out innovation from all sources--whether it involves licensing or buying a technology, finding a partner, or making an acquisition. Other innovations include making sustainable organic growth the priority; organizing around innovation, and thinking about innovation in new ways.

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