Proctor Innovation Strategy for Innovation at Proctor

Proctor Innovation

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.

Core Competencies:

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.

Industry Dynamics:

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 have been demonstrated in the buying public's desire for sustainable products. This helps to demonstrate the balance of causes which incline specific firms such as Proctor & Gamble to take the path toward constant innovation. It is thus that we refer to some research on the basic implications of innovation from an economic and organizational perspective.

This may certainly be said of Proctor & Gamble, which has historically and explicitly declared itself as a firm with a clear orientation toward this entrepreneurial thrust. But it is interesting to note that P&G has recently taken on some internal innovation strategies in such as a way as to more ably approach such previously overlooked goals as sustainability. As noted we may identify P&G as being inherently entrepreneurial insofar as it has generally demonstrated a willingness to continue pushing the bar forward voluntarily in all product categories. And to the point, Huston & Sakkab report that the firm has historically operated one of the largest research & development departments in the corporate world, indicating that much of its innovation has come from within. But in light of the changing technology and trade schemes that are demanding for companies to open up increasingly to external partnerships, P&G has altered the course of its innovation model concordantly. According to Huston & Sakkab, who identify themselves in the article as employees of the firm in question "we knew that most of P&G's best innovations had come from connecting ideas across internal businesses. And after studying the performance of a small number of products we'd acquired beyond our own labs, we knew that external connections could produce highly profitable innovations, too. Betting that these connections were the key to future growth, Lafley made it our goal to acquire 50% of our innovations outside the company. The strategy wasn't to replace the capabilities of our 7,500 researchers and support staff, but to better leverage them." (Huston & Sakkab, 1)

Product Development Strategy:

As the discussion hereafter on its Ariel Excel Gel will demonstrate, Proctor & Gamble is dedicated to pursuing a path of innovation that is shaped by the conditions of sustainability. The Ariel Excel Gel, officially approved by the FDA for sale in 2009, is P&G's response to the need for sustainability in such key areas as in-home water-usage. According to its own informational website, the product is a concentrated, cold-water laundry detergent formula which significantly reduces the amount of water and energy which are used for each load of laundry. P&G reports of the Excel Gel that this "uses 40% less water and 30% less energy to make; and 20-50% less energy used for in-home washing." (P&G, 2) The marketing of the Ariel Excel Gel demonstrates the continued commitment of Proctor & Gamble to pushing forward the capacity of its products to improve the lives of their users. In this case, there are clear environmental and economic imperatives for end-users.

Moreover, the innovative 'cold-water' approach to formulating the detergent in question demonstrates a continuity of research & development as well. In recent years, the transition in focus toward more sustainable innovations would cause P&G to explore the implications of such products and methods as might reduce the strain placed on our energy economy by personal water-powered appliance usage. On that point, P&G would use two of its marquee brand names in order to explore the prospect in 2005. Accordingly, using by its Tide laundry detergent and Gillette shaving solution, P&G introduced the sustainability innovations which have now emerged through the Ariel Excel Gel. P&G (2009) describes this process, disclosing that "looking at the 'energy profile' of P&G's fabric care category, researchers saw that heating water to do laundry had the greatest environmental impact. If every household in just the U.S. adopted cold water washing, the total energy savings would equal 70-90 billion kilowatt hours/year." (P&G, 2) It is thus that Proctor & Gamble has worked to integrate this development into a line of products and goods that meet with the increasingly stringent environmental expectations of consumers.

Strategy to Protect Innovations:

Proctor & Gamble's strategy for protecting its innovations has largely centered on product development for long-term viability. This is to note that the company had begun a new phase in its life-cycle in which both product and process were to represent a new model driven toward innovation. That the focus of such current innovations as the Ariel Excel Gel is on improved sustainability is particularly illuminating, denoting that the priorities and processes of innovation may be imposed from outside of the organization, even as the organization remains internally and inherently driven toward innovation. In this case, we can see an intercession between a history of product innovation and a response to external patterns relating to sustainability demands. Here, the McKibben (2007) text indicates that certain changes in both lifestyle and economic orientation will be necessary if we are to achieve an ecological stasis as opposed to maintaining our current lifestyle of excess and waste. McKibben's argument in favor of sustainability is an important one in the context of this discussion because it targets the sensibilities and ambitions of business leaders, often the most egregious abusers of sustainability but simultaneously those in the position to effect the widest and most immediate change. Compellingly, McKibben makes the case that such demographics are also in a position to experience some of the greatest benefits of sustainability. The author denotes that "shifting our focus to local economies will not mean abandoning Adam Smith or doing away with markets. Markets, obviously, work. Building a local economy will mean, however, ceasing to worship markets as infallible and consciously setting limits on their scope. We will need to downplay efficiency and pay attention to other goals. We will have to make the biggest changes to our daily habits in generations." (McKibben, 2)