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Strategy for Innovation at Proctor & Gamble
It may seem self-apparent to speak of Innovation as an aspect of a business process or of business process re-engineering. Indeed, it is perhaps a common misconception that innovation is a standard part of every business organization's internal structure and approach to its goals. However, patterns of innovation suggest this to be a specialized approach to business, reserved only for those organizations that are structurally and culturally suited to the adoption of new approaches, whether through technology, philosophical orientation, customer service or employee treatment. Indeed, some organizations may be better suited to improving existing models or finding ways to make existing models function at lower costs to the consumer. However, in the manufacturing, retail and service industries, there is a distinct movement toward innovation amongst many organizations seeking to remain abreast of changing patterns relating to global trade, technology and corporate ideology. Particular among the patterns which are driving innovation, sustainability is one of the most prominent effectors. So is this demonstrated by the current focus of an organization which is distinctly identifiable by its focus on constant innovation. Proctor & Gamble (P&G) is the 6th most profitable corporation in the world and specializes in an extremely wide array of consumer products, with a particular focus on household goods. (Wikipedia, 1) Indeed, this is an area where P&G has experienced massive success because of the enormity of its focus on Research & Development. As the research hereafter will show, the organizational priorities of R&D and innovation drive the retail outlook for the leading domestic product firm in question. And given the tenor of most industries today, the priorities of efficiency, cost-effectiveness and progress in line with consumer expectations have all had the effect of driving innovation through sustainability. Therefore, the strategic plan presented here for Proctor & Gamble centers on its product development with sustainability objectives in mind.
At the outset, it is important to identify the core competencies which my be said to relate to the goal of improving sustainability through product development innovation. Research & Development skills align with the core competencies sought by P&G. Namely, the scientific, procedural and creative wherewithal which are required to pursue the internal development of product innovations must be reflected in personnel. For a company such as P&G, said personnel will be distributed across many departments and responsibilities. However, with respect to the plan in question, any recruitment, hiring or training would center on improvement of 'green' education. In other words, a new focus is increasingly being cast on bringing in or developing personnel with an understanding of the sustainability initiatives that must be at the core of all future projects.
This often calls for the integration of a sustainability leader or manager, who will possess these core competencies as well as the ability to instill these competencies in others. An effective sustainability manager will also be competent in bridging the functional gaps between departments. Accordingly, a sustainability manager is asked to serve as an accountant and financial prognosticator as well as an HR expert and an operations official. As the Leipnik (2008) source denotes, the sustainability manager should be able to provide "specialised audits, professional energy and resource conservation recommendations, follow up re-audits, and supply of marketing materials in the form of hang tags, certificates and general promotion for companies who meet the programs' various levels of reduction in resource use." (Leipnik, 1) These detailed analytical instruments are central to providing corporations with the data to realistically reduce practices that are simultaneously wasteful in an environmental and economical sense. The sustainability leader is increasingly being taken seriously for his or her ability to provide a company with money-saving strategies. Speaking realistically and without cynicism, a sustainability manager can help to make a company look good while saving money, resource and labor. This underscores the permeating value of sustainability-driven competencies to all elements of P&G's operations.
The pressure felt by P&G to channel its energies toward sustainability-driven innovations is not unique to the selected firm. This is true throughout the retail and consumer product design industries. According to the Woods (2003), "the culture of innovation has promoted new ways of organizing the global economy, new forms of capital exchange, and new ways of working and consuming. . . The roles of economic actors, and of market relationships, appear to be constantly transforming." (Woods, 2) This observation may be considered a theoretical centerpiece to the plan presented here, identifying the subject of innovations as part of a grander scheme for manufacturing companies as well. For a company that specializes in production such as Proctor & Gamble, it has not just been the internal engine which has driven innovation. Indeed, the improvement of its operation from a sustainability perspective is rooted in yet broader operational realities.
Accordingly, we find that technology has allowed a more dynamic approach to stocking clients and improving production cost. Internet technology allows for automatic supply chain communication and shipping and, simultaneously, global trade innovations have allowed production companies to operate in markets which allow for distinctive cost reduction. This is the claim underscored in the research by Huston & Sakkab (2006), which in its identification of Proctor & Gamble's general proclivity toward ongoing innovation, denoted that technology developments have played a key role herewith. Accordingly, Huston & Sakkab report that "Procter & Gamble has operated one of the greatest research and development operations in corporate history. But as the company grew to a $70 billion enterprise, the global innovation model it devised in the 1980s was not up to the task. CEO A.G. Lafley decided to broaden the horizon by looking at external sources for innovation. P&G's new strategy, connect and develop, uses technology and networks to seek out new ideas for future products. 'Connect and develop will become the dominant innovation model in the twenty-first century,' according to the authors, both P&G executives." (Huston & Sakkab, 1)
That said, to some extent, we find that there is a mixed outlook in innovation for both large and small firms, with company structure and industry lifecycle playing a part in determining the proper orientation to be taken. This mixed outlook might be characterized as the pattern of innovation which should, if properly understood, help the prospecting organization shape its own approach such as has been the case for enormous retail operations such as P&G. Here, innovations in terms of the customer's personal experience with particular products have been foundational.
Here, it is clear that there is a correlation between technological advancements, global trade changes, general sustainability and company innovation. In an article by Miller et al. from 1982, our research finds something of a balance on the discussion of innovation. The authors determine that the orientation of the organization, categorized as either a 'conservative' or an 'entrepreneurial' model, will play a significant part in its approach to and conception of innovation. Specifically, the authors note that innovation, to the conservative firm, is a process only undertaken where passivity will result in a competitive disadvantage. Innovation is only prompted, in this case, as a response to market conditions; a solution to a problem, as it were. To the entrepreneurial firm, the positive correlation between the obviation of market indicators inclining innovation and organizational opportunity is not equally present. To the contrary, the entrepreneurial firm will consider clear market indicators pointing the way to innovations for the collective a problematic equaling of the playing field. Therefore, it is appropriate for the entrepreneurial firm to remain continually aggressive in its pursuit of opportunities for positive transformation. Certainly, this describes P&G, which is an aggressive player in its industry. Therefore, we denote with respect to P&G's strategy moving forward that its participation in broader entrepreneurial activities is predicating on the industry-wide thrust toward sustainability innovations.
Technology Sourcing and Internal Innovation:
Proctor & Gamble's technological sourcing is generally internal and strategies in moving forward center on continuing to cultivate its in-house R & D. efforts. To the point, the Proctor & Gamble website features some distinct references to the achievement of sustainability as being one of its foremost ambitions where innovation is concerned. Since July 2007, the point at which it declared sustainability to be among its most essential priorities, Proctor & Gamble reports that it has achieved over $13.1 billion in cumulative sales in areas of sustainability product development. This places the company well on the way to its own stated goal. Proctor & Gamble report that it is a top directive to "develop and market at least $50 billion in cumulative sales of 'sustainable innovation products,' which are products that have an improved environmental profile. (P&G1, 1)
Here, we can see that in many ways, the motive for pursuing innovation is two-fold. In the case of P&G's sustainability product lines, this innovation is clearly derived at least in part by the ambition to improve the environmental soundness of its products and, perhaps in bigger part, by the financial imperatives which…[continue]
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