Monica Penagos: Disruptive Innovation Requires Shaking Things Up

Monica Penagos knows disruptive innovation can sometimes be daunting. After all, human nature leans towards the comfortable. But when done well, she believes this style of innovation can drive growth and help companies stay one step ahead of the competition.

Penagos, P&G Senior Director-Brand Innovation, believes successful innovation and disruption start by listening to customers’ needs — and finding new paths to meet them. That can lead to new delivery platforms for products, including Tide Pods or new technologies like streaming music.

“I think the successes are focused on the importance of understanding consumer pain points,” she says. “They’re rooted in dissatisfaction in the market and the consumer, either by a founder or by a group, and leveraging technology advancements to create a seamless experience.”

You can hear more from this conversation with Penagos in the video below or read our lightly edited conversation.

Stan Joosten
Hello, everyone. I’m here today with Monica Penagos, a dear friend and colleague and one of the resident experts in P&G on disruptive innovation, with long standing experiences in that space. That’s the topic of our conversation today, how to manage disruptive innovation in a large company. Monica, the first question would be, can you first explain what disruptive innovation is actually?

Monica Penagos

Stan, Thank you for having me. It’s a pleasure to be talking with you. Certainly I’m a practitioner and learner in the space of disruptive innovation. If you ask me what disruptive innovation is, it’s all about really shaking up an industry,  bringing groundbreaking ideas to business, challenging the existing norms of the category and making a significant shift that consumer behavior will change on that. So unlike other forms of innovation, disruptive innovation goes beyond being incremental and creating incremental improvements like a new flavor of a toothpaste or a new scent. It really aims to create entirely new markets segments for the company. Think about brands like Netflix, that disrupted the entire activity industry by introducing streaming services.

I sense that this is important for large companies like P&G. But can you explain why it is important for a company like P&G to do disruptive innovation?

For P&G, it’s really crucial for us, to one, stay one step ahead of the competition and two, to drive growth. We are all about bringing category growth, meeting evolving consumer needs, and making sure that consumers don’t stay static, and that technology certainly does not stay static. So for us, for our survival, if we want to disrupt ourselves and bring that innovation that is disruptive into the forefront, we will never get there if we only do it with sustained innovation. It is about inventing our future as a business and for the consumers.

What are some great illustrations to bring disruptive innovation to life for the audience?

P&G has many great illustrations on disruptive innovation. Maybe before I go there, I can explain how P&G thinks about disruptive innovation. We think about disruptive innovation in the core and as the more. As the core, we think of it as a new technology platform that will replace the platform that we have today. Think about Tide Pods replacing liquids, or adding to liquids that will get the same job done, but will will bring more consumers into the category, and start replacing that technology that we have by introducing another one.

Then there’s disruption in the more that it’s either we are entering a category that is new to P&G or we’re inventing something completely new. So for example now with waterless soaps and detergents, we’re inventing a new category or when we introduce White Strips, we invented a new category. With other technologies, we are just adding more to the category like when we did Dawn Powerwash. It was a new job in the category, so we call that more because we are adding a new job to be done with the goal of washing dishes.

It is a great example. I recently saw the announcement of the launch of Tide evo, which would fall into disruptive innovation.

That is exactly it. We just launched in South by Southwest. Ammie Walter is a commercial leader on that and Chris Boeckerman is the R&D leader for that. Both of them are good friends. This is new to the market and we are waiting to see how the market responds to it. Product market fit is going to be daunting because disruptive innovation sometimes is daunting, but that is exactly one great example of disrupting.

We’re gonna put you on the spot a little bit. But what is your favorite example outside of P&G of disruptive innovation?

I knew you were going to ask me this. There are many. Some of the best examples for me are in the music streaming industry. So what Spotify has done is amazing, how they disrupt the way that consumers consume music. Before, from the LPs to the cassette to CDs to streaming is a great example. But one that I personally also like is, and this is not high tech but it’s so life changing, is when you go to the doctor. I don’t know if you have MyChart, but having your records already in your phone that are electronically communicated across all the healthcare system, that anybody can pull up, any doctor or anybody that you give permission to, having those markers already there so you can track your health better, is a game changer.

That’s a fantastic example. This all sounds simple, create breakthroughs that grow markets. But from your experiences, there is a magnitude of challenges. What are the key challenge is to do disruptive innovation well, that you have encountered?

It’s really pretty daunting. Let’s start externally with three challenges that people will think about when they think about disruptive innovation. Let’s start with the startup ecosystem, and then translate it to P&G. Externally, I can think about three challenge. The first challenge, we’ll say, is the market uncertainty, because disruptive innovation is created in the market. What that translates into for startups is the difficulty in raising money. Or for the VCs when they are trying to create a pool of companies within an ecosystem because they don’t know really which one is going to break.

The second will be creating a solution that really has a unique point of difference that will attract a consumer demand. Many companies never really have a point of difference.

The third one will demonstrate product market fit. Demonstrating product market fit is what I call the love triangle. The love triangle is really where you have a product that is delivering strong consumer needs, then you get the consumer demand. When the product gets into the market there’s a trend, and it catches those two things, intercepting that trend and creating a business or a new category in the market.

For example let’s take Native that P&G acquired. That is a perfect example of getting that love triangle together to a point that is needed, and then P&G took it to the next level, amplifying the distribution and amplifying the product portfolio. So those are the three main challenges for disruptive innovation. If we bring that internally to companies like P&G, they are similar.

When we talk about market uncertainty, we also talk about inside a big corporation at P&G, and we talk about strategic fit. In the second one, where we talk about creating that MVP, then the decision is, are we going to create this internally and invent internally and spend the resources there or are we going to borrow invention or license from outside? In the third one, we will talk about product market fit. This is where you are in that in-between, where you need to create enough to understand the market demand, but not enough that there are millions of units. The approach to capital investment and then further capital investment is still not there. That’s where you see a lot of challenges in advancing that business, because the business model is not completely profitable yet.

You mentioned some really successful examples in there including Spotify and Native.  There might be some others. What can we learn from the successes?

I think the successes are all focused on the importance of understanding consumer pain points. They’re rooted in dissatisfaction in the market and in the consumer, either by a founder or by a group, and leveraging technology advancements to create a seamless experience.

I will say that understanding and impacting pain points, liberating technology and creating that seamless customer experience are the key ingredients. But it’s also, frankly, timing in the market and risk that will play a role into it.

Thank you for that explanation. I think there’s many aspiring innovators in the audience that are seasoned innovators. What advice do you have for people that want to start a career or building a career in innovation in a large company like P&G, who would like to practice disruptive innovation, from a personal perspective?

Aside from staying in the know with Signal 360?

I would say, sign up with Signal 360, correct.

Absolutely. I would say like for people that are new to innovation inside P&G, and if this is really a new role for them, I will say, get the foundational knowledge in place. It’s not that difficult to get the foundational knowledge. There’s formal training, as we have partnered with Harvard Business School, they have a phenomenal course. And really understand this idea of innovation strategy.

In P&G, there’s a great course on innovation strategy. Getting those foundations, so you talk the same language with your partners in R&D or your partners in IT or your partners in AI, is going to be key. Many people say like that innovators embrace curiosity all the time. But I will say that curiosity for me is going deeper on really trying to master jobs to be done, and understanding the consumer trends. That’s where I’m going back to Signal 360. I’m not kidding. How can we really stay updated in the latest trends and technologies, pilot things small, that will help you test and stretch the boundaries and also give you a diverse perspective of what’s going on in the marketplace. I’m very passionate about it. I will say it will require resilience and dedication. But there are many ways in the company to do that. Signal is one of them, training is another one, but also, in your job, you can experiment with it.

Great, wonderful advice. You’ve been doing this for a while now. What do you love about your experiences, your jobs that you had in innovation? What gets you excited every day you get to work?

So innovation is one of my happy places. It is not the only one but it’s definitely one of my happy places. I would say that I myself consider disruptive innovation one, because I have been training on the capabilities.

Innovators are not born but are created. So how do we learn disruptive innovation and how do we master it? Within the last six years what I have been doing with Growthworks has been going from launching something every five years to learning fast and trying to bring lean inside the company. So I love this job because you are tackling complex problems, constantly learning and contributing to making a positive change for the consumers. That really drives me and shaping the future and is something that I’m very passionate about.

Thank you, Monica for this insightful conversation. I hope it actually increase the passion in the people watched it. Hopefully there will be many more disruptive innovation experts around the future for us, and thank you for everything you you’ve done that you are doing, and I look forward to continuing the journey.

Thank you, Stan. I look forward to the next thing that in July. Remind me of the date.

It’s July 17. I look forward to having you there.

I’m looking forward to tone of the most inspirational events that we have inside P&G and outside P&G. I’m looking forward to attend.

Thank you very much, Monica.