Direct-to-consumer upstarts are challenging big brands. Here's how P&G's Marc Pritchard says the company is fighting back

• Direct-to-consumer upstarts are forcing legacy brands to rethink their strategies, and P&G is no exception.
• The consumer packaged goods giant is taking a page from DTC brands' playbooks, its marketing chief Marc Pritchard told Business Insider in an interview at Davos this week.
• Through its Signal Accelerator program, it works with startups to develop innovations and business solutions.
• It has also studied approaches pioneered by Silicon Valley companies and author Eric Reese, among others.
• Lastly, it has acquired several DTC companies in the past few years, such as Native deodorant in the US and Snowberry skincare in New Zealand.

DAVOS, Switzerland - Direct-to-consumer upstarts like Warby Parker and Casper are shaking up everything from retail and advertising to consumer experience, forcing legacy brands to rethink their business strategies.

Procter & Gamble is no exception. And the consumer packaged goods giant has no qualms in taking a page or two out of DTC brands' playbooks, P&G's marketing chief Marc Pritchard told Business Insider in a broader interview at the World Economic Forum in Davos, Switzerland, this week.

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"E-commerce and direct-to-consumer is growing," he said. "We think the small can help the big get faster, and the big can help the small grow faster."

The company has been increasingly trying to operate like a startup, said Pritchard. It does that through its Signal Accelerator Network, a program launched in 2012 where it works with startups to develop innovations and solve business challenges.

"We have access to 275,000 startups through [the network], which allows us to identify a consumer problem, find a startup and then be able to connect that back [to one of our brands]," said Pritchard.

For example, P&G's skincare brand Olay worked with AI startup Neurologix to create the Olay Skin Advisor, an AI-powered engine that tells users the age of their skin. Users would take a selfie, which was actually linked back to a database that would give them their skin's age versus their actual age, plus product recommendations.

P&G has also applied approaches pioneered by Silicon Valley companies and author Eric Reese, among others, Pritchard said.

P&G is applying a startup mentality

A company called Bionic, for instance, helped P&G adopt a startup mentality and apply lean innovation techniques, like inculcating a founder mentality among brand heads and having lean teams of three to four people each. Each team is also taught to prioritize what the consumer pain point and minimum viable prototype is, and to move fast, fail fast, and pivot quickly.

P&G has more than 130 seed-stage experiments underway, said Pritchard. The company's shaving brand Gillette, for example, recently unveiled a heated razor product, by applying such techniques.

"That's allowed us to go faster, while still having our big performance engine working well," he said. "Now we're starting to see some of those things go over into the bigger engine."

P&G also has defended itself against DTC brands through acquiring companies such as Native deodorant in the US and Snowberry skincare in New Zealand.

"That has helped us not only amplify our business in those areas, but also then learn new things like performance marketing," said Pritchard.

P&G's approach seems to be working. The company just reported strong quarterly sales growth, with organic sales rising 4% in the fiscal second quarter and profit rising 28% to $3.19 billion in the second quarter.

Ultimately, the company wants to bring the best of a nimble and agile startup mentality together with the scale of an established brand of its size, said Pritchard.

"We want to operate like a startup, but with the know-how of a 181-year-old company," he said.