Procter and Gamble has exploited innovations and creativities among the company that could be a pioneer in the market and industry. This study will explore a number of strengths and weaknesses of P&G, as well as threats and opportunities that the company had utilized to go on with its great success and competitiveness. The study is going also to explore a number of characteristics of innovative organizations and the reason of they have chosen to be innovative organizations.
William Procter, and James Gamble, established the company in 1837. Headquarter of Procter and Gamble is located in Cincinnati, Ohio. William and James, these two founders were from respectively from England and Ireland; they have chosen Cincinnati area to establish their company for some reasons. The P&G Company manufactures a broad variety of consumer products including household, health, beauty and wellness products. In accordance with the announcement of CNNMoney in 2007, Procter & Gamble was the 25th largest American Company by revenue, 10th in Fortune's Most Admired Companies list and 18th largest by profit.
The corporate watchword of the company has been "Touching Lives, Improving Life" which is typified globally among 138,000 employees and also the loyal customers. The global demand for Procter & Gamble's products and services has forced the company's management to concentrate on global marketing and innovation. As a consequence this worldwide marketing and innovation achievement was accomplished by making certain that their products must be produced with the highest quality and also based on the customers need. Procter & Gamble is very flexible to shifting customers' demands through defining of innovative strategies cautiously and with a high awareness; nevertheless, P&G lost its market domination in the mid of 80's because it hadn't had the aggressive play-to-win strategy. P&G's managers confessed that the company had not had any breakthrough innovation since year of 1985. The play-to-win innovation strategy helped P&G to recover its business leadership.Innovation strategies into the company
Management planned for creating a nimble organization and increasing the quality and speed of innovation. Management also focused on improvement of the velocity of commercialization of company's products. Moreover, they intended to force the company's center of attention to get a higher growth, accordingly obtaining a higher margin as well.
Another innovative play-to-win strategy which P&G management adopted was the attainment of its foreign and domestic rivals. P&G obtained several other companies which they could help in diversifying of P&G's product line and also they could increase the profits considerably. In order to support this aggressive strategy, P&G's management reorganized and unified all the manufacturing processes of those companies which they acquired. The mentioned unitizing of processes of manufacturing in companies like Folgers Coffee, Richardson-Vicks Inc (RVI), Shulton's Old Spice, Noxell and many others were applied.
The management style in Procter & Gamble has been focused on participatory moreover, delegation and empowerment. Management of the company has decentralized decision-making method in such a way that middle level management most of the times do not have to wait for approval of the headquarters and funding.
Because of the empowerment which has been given to mid and senior level management inside this multinational corporation, thus it is much easier for the company's management to customize its products and customer services internally. Undoubtedly it is obvious that, the success of this enormous corporation can be tied strongly to its management and leadership style. This is an obvious and comprehensible customer focused strategy and leadership and management style of Chief Executive Officer who was brought to the inside of the corporation to reinforce employee's morale and also to refocus employees' attention about providing the needs and wishes of customers in such as this changing global market.
P&G's management has demonstrated that its success all mainly depends on three factors: customers, people, and innovation. Therefore the entire employees have been brought together by the company's goals, values and culture. The company recognized its variety and strong point as a unique characteristic; accordingly it's been able to take full advantage of the creativity and talents from these people. The company has also demonstrated that it is not only in business for maximizing shareholders' wealth, but it is as well a social responsible company.Characteristics of InnovativeOrganization
Understanding of customers' needs and having a mutual relationship are two important factors in helping an organization to innovate a new idea. Businesses innovate through those customers' needs which have not been fulfilled yet. It means that customers state their wants, that have not been fulfilled and then organizations should innovate new ideas to meet those needs. That is why P&G Company is still the leader of domestic product industry in view of the fact that; it listens to not fulfilled customers' needs and then innovates insistently to meet those needs of customers. For example, while babes were wearing cloth diapers, in fact they were incredibly leaky and were difficult to wash; consequently, mothers wanted an innovative product to help them and ease these difficulties in relation to washing the cloth diapers and the leakage problem. Hence P&G responded this innovative demand by introducing and then distributing of a revolutionary product into the market which has been called "Pampers". This is a good example of being considerate about customers' needs.
Pampers helped and eased the diapering method by resolving and making ease the labor intensive washing and as well as the leakage. Innovation precisely means change and for changing, businesses must know why they should change; in fact businesses ought to understand the advantages and disadvantages of the change process.Moreover, they must be aware about the characteristics of any innovation or change.
The reasons for going through change among organizations are:
- Make things easy
- The extent of information technology
- Worldwide competition
The entire of these factors have increased competition and also they've increased the necessity of change for the reason of maintaining competitive advantage. Undoubtedly organizations have been obliged to be faster, and also produce the goods with a higher quality and more responsive. In these days, management of P&G accept as true that there is much more pressure on everyone than before, for being able to change. All the previous issues which mentioned should be considered as the primary features for changes that P&G management has recognized them.
Sometimes, employees do not understand the impacts of these kinds of changes on their family and also their professional lives. Management is the responsible to communicate with employees about the both positive and negative impacts. Mostly, management overstresses on the positives impacts and pays less attention to the negative impacts.
however when companies don't consider compatibility of these changes with employees , and want to force these changes to the employees who aren't prepared yet to handle new changes, consequently those companies take risk for estranging their workers, wasting money and, at the end, those superior strategic changes will fall flat.
This is a kind of communication strategy which P&G has been successful in implementing of it among its group. The company guarantees that all of P&G's units comprehend the impact and necessity of any change typically at the professional and skilled level. Management makes certain that each person involved is interested in the change process. The most significant factor here is motivation. Accordingly management has to let employees observe a win-win situation in the company on the subject of changes process.
It is not possible to concentrate on all the characteristics of innovation but; the most important features will comprehensively be discussed. Culture into organizations should be nurtured for accepting changes at the all levels. Hence the nurturing of the culture in organizations relies on the primary responsibility and consciousness of management for planning, motivating, directing and controlling the operations of organization in a daily basis. Innovative cultures have to be built and supported enough by management.
Characteristic of innovation is the main issue which brings a competitive advantage for organizations; the importance of this case is more over than other things. Lots of companies are described as the first movers into any specific industries and when they get in, these companies make the conditions very difficult for others to enter into the market. This consequence is because of existence of a specified/unspecified characteristic of innovation among industries. It might be innovation in technology, innovation in customer service, innovation in financial management and what have companies. The major innovation characteristic of Procter & Gamble is to shift innovation to commercialization more rapidly than the other competitors in its market and industry.Secondly, everything that could create conditions that people would be obliged to deal with them is another characteristic of innovation. While innovation is implemented, attitude of people will be changed in the direction of the new process.Therefore it makes people thinking and acting differently from the method they used to. Also it creates dissimilar vision that people have to focus on; in addition it gives increase to changing attitudes and behaviors. All these things are because of innovation. When P&G Company introduces any new product line, this alters behaviors and situations. Anything that could create a trouble or resolves any possible problem should be considerate as a characteristic of innovation. For instance while Listerine mouth wash product was introduced into the market by P&G, it could solve the problem of bad breath however than people must deal with a much burning sensation.
Innovations might have both positive and negative effects. A few years ago, people werethinking about the "revenge of technology". At the present there are a few people which are warning us on the subject of the "pursuit of technology". Whatsoever the experts say, the future is almost certainly going to happen anyway. Therefore here is the initial list of characteristics of innovations which might change the world:
- Whatever thing which provides a service or can solve a problem in a considerably better way.
- Those things which could change how society plays or works
- Anything which eliminates a main problem for people and or organizations.
That is the reason that leadership's interest is significant for innovation, change and also creativity among an organization are two things which are happening all the time in P&G from top to down. This could indicate a clear message to employees that if the leadership has changed entirely to develop an innovation, this is the time for them as well to change themselves (employees). Company's management makes employees innovative and creative by injecting innovation's idea and making it as a priority among company. For encouraging innovation and creativity into an organization, management ought to hype it; establish a reward system for compensating creative employees and also extent the relation between creativity and innovation to the wider vision and mission of the business.Procter and Gamble SWOT Analysis (Strength, Weaknesses, Opportunities, and Threats)
One strategic management instrument that P&G applies to stay forward of its competition is the usage of SWOT analysis in an efficient and effective way. It involves identifying of the goals and objectives of the business and also identifying the external and internal factors which are favorable and unfavorable in obtaining the goals and objectives. Precisely these kinds of analyses are based on P&G's case study and also the industry tendency. Because of the size and also segmentation of the company, Procter & Gamble faces with lots of foreign and domestic threats and also distribution systems where foreign competition attempts to copy P&G's brand name to mislead consumers for self profit.
P&G's strength contains: strong financial situation which both of them are clear in the foreign and also domestic markets. The P&G was the 25th largest American company from the aspect of revenue in the early of 2007, and the 18th largest by its profit. That is why the P&G Company is one of the most well-liked companies in the US. Also, the company has had excellent capability and ability to move forward innovation into commercialization faster than other competitors in the industry; however it faces rivalry from Johnson & Johnson (J&J), Unilever and also Kimberly Clark, it has been capable to push its products and also services from the phase of innovation to commercialization faster; Procter & Gamble has efficient and effective manufacturing processes that include overall quality management and also in time inventory systems; accordingly this has permitted the company to save appreciable amount on inventory costs. This cost saving is munificently passed on to the P&G's consumers from the aspect of offering high quality products and services with a lower prices.
Another unique potency of P&G is the pool of skilled employees. P&G's director of innovation mentioned that, the company has 9,000 R&D associates that include 1,100 PhDs. This issue clearly could explain the wonderful success of the company. The P&G's pool of well skilled employees into the industry has made it the capable to lead in the innovation of more than 40 product kinds for which it holds over 27,000 patents. Director of innovation cited that P&G's development organization and research is confident in a wide range of competencies including many aspects like materials science, mathematics and calculations, medicine, engineering, biological sciences and chemistry.
Also, P&G Company has a track record for producing high quality products that is very complicated to match or beat. It is obvious that consumers wish for products with a high quality at reasonable and inexpensive prices, so this is the most important reason that P&G is the pioneer in the consumer product industry. Procter & Gamble's innovative products and services have facilitated consumers to save a large amount of money on dental hygiene and on also the other health care products. As long as everyone wants to have a bright healthy smile, and it's clear that not everyone could spend $500 for the dental visits needed to get whiter teeth, hence P&G has solved this problem easily by offering effective products with a low price. Undoubtedly a lone P&G scientist didn't unintentionally slip onto the Crest White Strips formula within one night at the laboratory. What P&G did, was working backward from the consumer want and need for finding a convenient and affordable solution to whiter teeth. P&G brought together a dissimilar team of experts across the company's technology centers that were at the leading level of their fields from flexible films group, dental experts from oral care organization, adhesive group and bleaching experts from laundry business. Accordingly throughout solution focused R&D, the company delivered Crest White strips to market with a level of tooth whitening and price of only $35 which surpassed other available and similar products in the retail market.
Some weaknesses of Procter & Gamble include: There is Lack of a forceful distribution system in a number of segment like some poor locations in few foreign countries and also high cost of investment and inputs. One more area of weaknesses is the foreign employment; it talks about managers who don't have any international business experience. Hence this makes cooperation with headquarters a little bit complex because of inexperienced managers in the global business field.
Procter & Gamble's opportunities include: Just in time technology of producing, , well defined market niche , the removal of trade blockades in some foreign countries and wide range of demography. Precisely the removal of trade blockades in some foreign countries could make the company able to operate and drive competitively without much intervention of the government. Trade blockades historically has been identified to be one of the most important threats for most international businesses because of some unfriendly behavior which takeovers by a few foreign governments, corruption and dishonesty along with government's officials and moreover unhealthy business environment, bribery and complicatedness of entry.
Threats include: New and fresh entrants into the household product market, use of substitute products, increasing in trade blockades in some developing countries, unfavorable business laws and instability in politic issues. Investors undoubtedly do not like insecurity. They want to make certain that there is democracy and also stable government in what country they want to invest and the most important thing is that, investors should be capable to repatriate their earnings without much restriction. Accordingly this has been considered by most businesses as a threat as well as P&G Company. At the time some of innovation systems are now general practices in businesses across America including the brand-management system, wide market research, and employee profit-sharing programs that were first developed at P&G; however, there is a major innovation systems which should be discussed this innovation system has been called "AskMe Enterprise". It is significant to analyze and distinguish this main innovation system inside P&G. Therefore AskMe Enterprise innovation system is going to be introduced, since innovation begins with ideas or brainstorms' sessions, thus AskMe Enterprise innovation system can provide that capability.
Accordingly in July of 2001, P&G Company acquired the 2nd installment of AskMe Enterprise, it was one of the primary providers of enterprise knowledge sharing solutions to strengthen and increase its innovation network. AskMe Enterprise is the most significant innovation systems and also largest in P&G. AskMe is an intranet site that makes easy collaboration between employees and facilitates more consumer-driven innovations. Almost AskMe Enterprise gains 18,000 main knowledge workers in P&G among its departments such as Purchasing, R&D, Engineering, and knowledge sharing.
According to Delphi Group study almost 88% of a company's idea and knowledge reside in the minds of P&G's employees. In fact most companies are suffering from the lack of a well-organized and effective system that could make them enable to utilize that knowledge in the direction of having a strong return on investment. By utilizing of AskMe Enterprise, companies' employees can recognize qualified individuals with any demanded expertness and also employees can submit questions or probably business troubles to individuals and obtain solutions from colleagues, then they could take effective and appropriate actions. Solutions transmitted via AskMe Enterprise are stored in a knowledge database consequently other employees can use again them in the future time. The most remarkable characteristic of this innovation system is that, it is an inclusiveness system. It takes into consideration of all personality forms within the corporation (extroverts and introverts). Extroverts and Introverts can use the system efficiently without any feelings of alienation or intimidation.
The AskMe Enterprise system has been the best innovative matter from the aspect of leadership, groups and individuals because it has challenged staffs at the all levels and position within the organization to make them to think creatively and being innovative, inside or outside of the business. The leadership encourages minds and way of thinking of the employees by inspiring them into the customers' place with the real difficulties and also problems which they need to be solved immediately. That is the reason which the success of each organization depends on a superior leadership. Undoubtedly organizational culture is the main characteristic of the organization, for implementing this innovation system, the most important thing for the leadership is to have a better comprehension of the culture and how to consociate the system with the culture. As a fact the culture in P&G is totally unlike from the culture at other its competitors.Conclusion
As a conclusion, for being success into businesses, having a wide knowledge about innovation steps for implementing it among organizations is an essential issue. Accordingly first of all, innovation begins when individuals/groups convert problems into ideas. It means that new ideas are the consequence of questions about problems and obstacles. Precisely the process of innovation comes from those problems which are not solved and they surrounded organizations. Second, innovation needs to have a system. Some of these systems into organizations are formal and they have been designed by the leadership, and also some of them are informal, it means they take place outside of the established channels. An example of formal innovation system which has been utilized by P&G is AskMe Enterprise. Third principle is the passion which it is the fuel of this system. Ideas do not force themselves, so this is the passion that makes them go. That is why it is vital for teams and groups to persistently work together and they should try and be able to know each other well. P&G Company has made its employees to think innovatively, it's a kind of culture which has been dominated among the company. AskMe enterprise and being considerate about customers' needs are two most significant factors which have made the company unique from the aspect of innovation.