gillette knows shaving--and how to turn out hot new products - oral b electric toothbrush sale

(
Fortune magazine)
-At a Gillette factory in the tenacious South Boston, 200 men wash their faces and scrape 15 employees every day
In the past 24 hours, they have grown 10,000 beards.
Look from the sideby-
The volunteers are evaluating future razors to get the sharpness of the blade, the smoothness of the taxiing, and the convenience of handling.
When they are done, they enter their judgment of the prototype into the computer.
In a nearby shower room, women perform the same exercise on their legs and underarms, which the company calls a "bikini area ".
"These ceremonies were carried out in an ancient building, with the ancient symbol printed on it, declaring it the headquarters of the world shaving;
The whole exercise seems a bit out of date, like some practice back to the pastindustrial age.
However, the humble factory is run by one of the leading corporate innovators in the United States, which produces so many cutting products
It has climbed into a select circle of Wall Street superstars.
Over the past five years, more than 40% of sales have come from new products, which helps to refresh the overall record of brilliance.
Earnings have climbed at an annual rate of 17% since 1990, with a return on equity close to 33% and a profit margin of about 12%. Among consumer-
The product company makes Gillette's sales return second only to cocaCola's 16. 6%.
All of this pushed up Gillette's share price. -
This makes its investors very happy.
Ranking of wealth companies (
1995 income: $6. 8 billion)No.
Fortune 10 am Top 500 total returns from investors over the past decade-
Far ahead of Wall Street favorites like Merck and Disney.
Stern Stewart's study of added value to the market lists the first
20 out of 1,000 is $13.
8 billion of shareholder wealth.
From this data, you may suspect that the Oracle of Warren Buffett, a value investor, will take him to Gillette, and you are right.
Buffett's Berkshire Hathaway company owns 10 companies. 8% of the stock
He confided, "I am happy to go to bed at night because I know that when I go to bed, the hair on the legs of billions of men and women around the world is growing.
More interesting than counting sheep.
"Buffett and Gillette's other shareholders recently celebrated more good news after the company announced its merger with battery maker Duracell International.
Gillette uses its rich price-earnings ratio of 33 (
Income in 1995)
Acquisition of Dulak--
There is no slack, P/E is 24--
Trading through shares worth about $7 billion.
Wall Street blessed the mix by immediately raising Gillette's share price to about $4 to $70 and $52week high.
Duracell's deal reached an orderly climax
Gillette's annual search for a business could become a solid "sixth leg ".
The company mainly manufactures razors and blades, and also produces Braun appliances, Gillette cosmetics and cosmetics (
Right back, soft and Dri)
Stationery supplies (
Parker, paper partner and Sailor Pen), and Oral-B toothbrushes.
All these consumers
There are common features of the product business: they are not.
1 in the global market, profit, fast
Supported by a strong technological foundation.
Alfred Zeien, CEO of Gillette (Pronunciation Zane)
I 've been looking for an extra business that not only fits these categories, but is growing at least as fast as the parent company.
Duracell met his strict requirements. A $2. 3 billion (
Sales for fiscal 1996)
Duracell is the world's largest manufacturer of alkaline batteries, headquartered in Bethel, Connecticut, with a market share of nearly 50% in the United States. S. market.
But the company has yet to break into attractive overseas markets such as China and India.
Zeien envisions a huge synergy when Gillette starts distributing Duracell batteries through its Far East region
The distribution network.
However, Gillette's future depends largely on its continued commitment to innovation.
The company will have to keep its technical edge on the shaverand-blade business--
40% of sales in 1995 and 67% of profits-
At the same time, it ignited a fire of innovation under other businesses.
The formula may not sound complicated, but its execution will require extraordinary discipline, largely because it relies on putting hundreds of millions of dollars into it.
There is technical research every year.
Unlike most consumer companies, Gillette's idea of a new product is an endless array of gimmicks that proudly only introduce new products that represent significant improvements.
Dwight Getz, consultant at Mercer Management Consulting, said: "Everyone thinks innovation is the most successful way to grow.
However, few companies create more business through new products and services.
Gillette is a prominent exception to Getz's rule.
CEO Zeien expressed disdain for the method of attaching surface decoration to existing products and labeling them with innovative labels.
He made a mess of "adding blue dots to soap powder.
"Trained as an architect and engineer for naval vessels and yachts, 66-year-
Lao Zeen declared: "Good products from market research.
Great products come from R & D.
When something great came out of the lab and people wanted it, the blockbuster was born.
"During his six years in managing Gillette, the company has launched about 20 new products each year, most of which have been successful.
The main reason is that his company will spend $0. 153 billion, or a lot of money.
Sales of R & D accounted for 3% this year.
Gillette's technical ability is an integral part of his image and has even become a joke.
Humorous writer Dave Barry joked: "One day soon, Gillette
It will be announced the development of a razor that, thanks to the presence of computer microchips, can actually travel ahead of time and shave off even non-existent beards.
The two Zeien strategies, according to consultant Gertz, are "true contributions to the innovative art of the Enterprise ".
"First of all, Zeien encouraged Gillette to eat young people by cannibalizing existing products," he said.
"They know that other people will if they don't push out the new zinger.
"Second, Zeien assured executives that their prototype was on hold and would never go public and that they would not be punished.
"In most companies, executives think, 'If I don't get this kind of nuclear
"The electric shaver is broken and my career is doomed to fail," Gertz said . ".
"Zeien's approach gives the project leader an objective opportunity.
He is nurturing a group of people who know how to lead projects from creativity through successful product launches.
"Another powerful weapon is Gillette's generous support behind the new product.
Zeien believes that the initial product needs full advertising and promotion to thrive.
He designed a formula that required R & D, capital investment and advertising spending ---
He called it growth driver"-
At least increase as fast as sales.
In 1995, spending on growth drivers increased by 16%. 12% for sales.
With the acquisition of Duracell, this continued focus on innovation is designed to expand the company's consumers --
Products except razors and blades.
For a long time, Gillette's advantage has been mainly derived from a blockbuster product launched in 1990: The razor and blade sensor series.
Hundreds of millions of dollars of Sensor razors and billions of blades have been sold, enough to provide 68% of Gillette's products in the United States. S.
73% in Europe and 91% in Latin America.
While early hit products like Atra and Trac II are swallowed up by sensors, Gillette is booming.
The reason is: the sensor and the improved 1993 version of the SensorExcel command are lucrative.
Harvard Business School professor Pankaj Ghemawat, who wrote a case study on sensors, said: "This product has achieved amazing success and has driven Gillette's overall performance
There is nothing better in consumer goods than this.
Emission sensors are so complex and expensive-
The company obtained 29 patents and spent $0. 275 billion in the design and development process-
No competitor even tried to imitate. Bic and Warner-
Wilkinson of Lambert claims a large one-time stake.
Razor market and Warner
Lambert's Shick, Philips Electronics's Norelco and Remington products compete effectively with Gillette's Braun division in electric shavers.
But with sensors, Gillette dominates the rapidly growing ink cartridge industry.
Constance manatti, an analyst at Bear Stearns, commented: "Basically Gillette swam around the world without any competition.
"Of course, this market dominance is not a pure blessing.
It builds nerves.
Stomach-
Stir expectations.
Analysts, investors, competitors, and even company managers are constantly questioning whether Gillette can sustain its performance and reproduce the miracle of sensors.
The company's chances of doing so largely benefit from its proximity
Everywhere in the world.
From Kashmir to the Island of Fire, the company has won the loyalty of more than 0. 7 billion Shavers around the world, and the company can be in fast-
The global market is growing.
Ghemawat of Harvard University said: "I don't think Gillette has any other companies around the world.
"More than 70% of sales and profits come from overseas operations in 200 countries.
The company's technology is to build shaving products in a new market and then continuously deliver other Gillette products through the same retail pipeline.
Rosabeth Kanter, a professor at Harvard Business School: "Gillette does what every company should do in the world.
"Zeien rewards Duracell for being able to go directly into the system.
"The product is small and focused --of-
"The purchase drive," he said.
"We will have a strong impact at the checkout counter.
"Of course, the most elegant theory in the world is just abstract, and there is no passionate leader driving his vision throughout the organization.
Lack of charm-
A banker in Boston called him the marble mouth"-
But he's focused on long-term interests.
Semester Study, the results of boffo made him
The respected commander of Gillette's global business.
Zeien does not seek guidance from consumers
"While introducing new products, pharmaceutical companies have also harvested products for 10 years.
At the same time, the future products are still in the testing stage.
"He used a similar technique to keep Gillette's pipeline open: the company refused to approve the prototype for production before the model of the next large project was ready for testing.
It's a legend that Zeien is completely immersed in Gillette.
Although he did not waste his time in small talk, he was passionate about the smallest aspect of the company.
For example, plaque, the harmful gas between our teeth and gums.
Zeien likes to describe Braun and Oral of his company-
Researchers have developed an electric dental tablet.
Take out the toothbrush: "We found that the effect of the toothbrush is the opposite.
Scrub nothing.
Dental plaque only falls off when the toothbrush is upside down and the bristles are thrown away.
We said, my God!
It's not hard to do electric now! ' " The Braun-Oral-
B. partnership sales will reach $0. 7 billion this year.
The land is littered with mines that could set off Gillette's plans.
Ghemawat, for example, suspects that although Zeien bravely talks about the introduction of quantum shaving next year, it is more likely to be 2002 before the technology develops enough to form a big winner like a sensor.
Even with a stable new home-
As the product continues to evolve, the company will have to successfully integrate Duracell into its portfolio and continue to expand overseas to maintain its momentum.
Perhaps the most difficult obstacle ahead is the smooth succession of energetic Zain after his retirement.
Since he has been older than his normal retirement age for one year, the board will renew the contract every year.
Zeien declined to disclose when he resigned and did not identify the heir.
But whenever that day comes, his strong focus on fundamentals may be missed.
When McKinsey's three advisers came to Gillette a few months ago to announce a plan to motivate employees, the CEO's strong belief in the correctness of Gillette's path surfaced.
Zeien recalled: "After about three minutes, I suggested that they go to the factory in South Boston and ask the first three people they met separately, what is our stock price at 10.
I told them that if you don't get the right answer from these three questions, you will come back.
The consultants never came back.