CASE ANALYSIS “Leadership, Innovation and Change at Procter and Gamble” Procter and Gamble has capitalized on innovation and creativity to lead the consumer and household product industry. This paper will explore some strengths and weaknesses, as well as opportunities and threats that Procter and Gamble had utilized to sustain its success and competitiveness. This case study will also explore some characteristics of innovative organizations and why they have chosen to be innovative. I.
Situation Analysis William Procter, a candle maker, and James Gamble, a soap maker, formed this global and Fortune 500 Corporation in 1837 (corporate profile). Procter and Gamble (P&G) is headquartered in Cincinnati, Ohio. These two entrepreneurs and inventors were immigrants from England and Ireland respectively; who have chosen for some reason to settle in the Cincinnati area. The company manufactures a wide variety of consumer goods including beauty, household, health and wellness products.
According to CNN Money, “in the early parts of 2007,P & G was the 25th largest U. S Company by revenue, 18th largest by profit, and 10th in Fortune’s Most Admired Companies list”. “Touching Lives, Improving Life” is the corporate motto which is exemplified in their 138,000 employees and loyal customers worldwide. The worldwide demand for P&G’s products and services has forced management to focus on global marketing and innovation.
This worldwide marketing and innovation success was achieved by making sure that what they produce is of highest quality and most importantly is what customers need. P&G is very adaptable to changing customer demands by carefully and clearly defining its innovative strategies; however, it almost lost its market dominance to competition in the mid 80’s had it not been its aggressive play-to-win strategy. “Senior P&G management admitted that they had not had a breakthrough innovation since 1985, and the company’s continued market dominance in the years ahead was in question”.
The play-to-win innovation strategy had helped P&G to regain its industry leadership as stated by in the company’s case study: Management had planned to create a more nimble organization and to increase the speed and quality of innovation. They also focused on improving the speed of commercialization of new products. In addition, they wanted to move the company’s focus to higher growth, higher margin businesses such as health care and personal care. Another innovative play-to-win strategy that P&G management had adopted was the acquisition of its domestic and foreign competitors.
P&G acquired a number of other companies that helped diversified its product line and increased profits significantly. In order to foster this aggressive strategy, management had integrated and reorganized all the manufacturing processes of the companies they acquired. Manufacturing processes of companies like Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks, Noxell, Shulton’s Old Spice, and many others. “Innovation must be encouraged, carefully implemented within an organization at all times”.
The pre-dominant leadership or management style in P&G is that of participatory, delegating, and empowerment. Management has decentralized decision making process in such a manner that middle level management most at times do not have to wait for headquarters approval and funding; in order to embark on certain key innovative projects. Because of the empowerment given to mid and senior level management within this multinational corporation, it is much easier for management to customize products and customer services internally.
It is abundantly clear that, the success of this giant corporation can be closely tied to its management and leadership style. “He restored focus on leading brands and reminded everyone in P&G that the measure of success was not innovation itself, but the consumer”. This is a clear customer focus leadership style of a CEO who was brought in within the corporation to strengthen employee morale and to refocus employees’ attention to providing the needs and wants of customers in this ever changing global market.
P&G has demonstrated that its success depends on its customers, people, leadership and innovation. Each and every employee is brought together by the company’s common culture, values, and goals. The company recognizes its diversity as a unique characteristic and strength and it’s been able to maximize the talents and creativity from these people. P&G has also demonstrated that it is not just in business to maximize shareholders wealth but it’s also a social responsible company.
This is illustrated in its summer camp program that is open to community youth. “We developed our Summer Camp program as a way to seek out the best and brightest. But, it’s also a way for us to give these candidates a head start, not only on their schooling, but also their careers. ” II. Problem Definition The problem is about how the P;G will regain the trust of their loyal customers after the decline of the company in the mid 80’s. They have to earn more profits to pay all of their debts. The company has also some problem with their innovation.
Their products have to be more innovative so that it will become more competitive to the global market. Some of their leadership and management styles should be changed for the betterment and success of some certain key innovative projects because they will embark it. They have to be able to sustain the changing needs and wants of the consumers in this modern times and the ever fast changing global market. They have to revise their marketing strategies to be able to improve their services and products for the customers and consumers. III. Decision
P ; G demonstrated that it is not just in business to maximize shareholders wealth but it’s also a social responsible company. So they come up with a decision that to maintain their competitiveness, an innovative play-to-win strategy that P;G management had adopted was the acquisition of its domestic and foreign competitors. P;G acquired a number of other companies that helped diversified its product line and increased profits significantly. In order to foster this aggressive strategy, management had integrated and reorganized all the manufacturing processes of the companies they acquired.
IV. Implementation For better implementation of their decision, one strategic management tool that P;G uses to stay ahead of its competition is the effective and efficient utilization of SWOT analysis. This involves specifying the goals and objectives of the business as well as identifying the internal and external factors that are favourable and unfavourable in achieving the goals and objectives. These analyses are based on the company’s case study as well as the industry trend.