QUESTION
You are required to select an organization from the manufacturing sector and critical evaluate the organization change and innovation strategy.
TASK
Your report MUST include the following:
- A brief description of the organization.
- Discuss the drivers of innovation and change for the chosen organization.
- Discuss how the company has responded to the drivers of innovation and change described above.
- Critically evaluate the impact of the implemented innovation or change strategy on the organization.
Your work must be supported by relevant literature and theoretical frameworks.
SOLUTION
Brief Description of Organisation
With the sales figures touching the mark of $67.9 billion and 135, 000 employees P&G falls in thetopmost Innovativecompanies across the globe according to the Bloomberg Business week. The unique organisational Structure of P&G comprises of wide range of 170 manufacturing facilities spread across more than 40 countries. Moreover there are more than 20 R&D centres in 10 countries to handle change and innovation to be successful(Brown and ANthony, 2011).In the year 2003 Procter and Gamble (P&G) was voted as the world’s largest household and personal products manufacturing company with around 7,500 scientists working in R&D department at various 20 technical centres in four countries(Issac, 2011).
In order to accelerate the process of innovation P&G’s CEO Durk, Jager initiated ‘Organisation 2005’ according to which the new product development and product testing for P&G products was supposed to be more decentralised and should be conducted in both US as well as foreign markets too.Centralisation of business units along with replacement of regional business units by global business units on the basis of product lines was promoted(Issac, 2011).
Drivers of innovation and Change in the Organisation
Mainly there are eight drivers of innovation and change which have been identified for sustained and organic growth in any organisation like P&G and they are listed below:
• Purpose: The purpose of P&G is to improvisethe lives of their customers through their branded services and products and that is why employees viefor a long term career with P&G. So it provides enormous opportunity to the company to innovate and grow(McDonald, 2008).
• Goal: A stretching set of goals is very vital because every critical choice is being influenced or guided by the goals. If the goals are very high and unrealistic it will lead business towards bad financial and strategic decisions. While if the goals set are very low it will lack aspirational power and will lead to losing competition also. The correct setting of goals is a pre-requisite for every innovation.
• Strategies: Few critical choices which are needed by goals are strategies like how to achieve a win or what to do etc. The global growth strategies adopted by P&G are :
-to expand the core business
-get in winning situation in developing markets
– Toachieve growth in more dynamic businesses like beauty care and health.
• Strengths: The next driver is the core of strengths which are leveraged to great extent in P&G and the five main and vital strengths which have been identified in P&G are:
-Branding
-Consumer understanding
– Innovation
-Globallearning and scalability
-Capability of go-to-market
The main point which needs to be noticed here is that a perfect combination of these core strengths leads to competitive decision making which is made with the help of innovation only.
• Structure: For innovation and change it is very important to be organised or to develop a structure and there cannot be fit to all size structure which can be developed for innovation, rather every organisation needs different structures to cater to different innovation needs.” Just-enough” structure is what is needed for innovation to be successful and we need a clear-cut criteria to develop an organisational structure.
• Systems: Mix of systems is the sixth driver for innovation and change which is helpful in creating innovation all through the companyhowever you cannot make a one-size-fit-all system which the companies can just unwrap and implement for success, the set of systems needs to be tailored. However there is one important feature which should bemaintained that is the standardisation and the flexibility of the system, so that it can be replicated and be able to guide the variety of ideas from the level of discovery to the market place.
• Culture: For any Organisation creation of innovative culture is very important. For innovation and change it is very vital that theculturesshould have following aspects like curiosity, courage, connectivity, collaboration and being open-minded. The culture should be such where people are ready to take risks for the identification of game-changing and life-enhancing innovations.
The culture is something which grows upwards from bottom and organically but cannot be imposed. Rather culture can be shaped accordingly and influenced also with the help of external forces and leadership actions.
• Leadership: the final driver of innovation and change is leadership and innovative leaders have to either developed or must possess few unique skills and strengths along with specific responsibilities. Innovative leadership is a challenge in itself and involves a perfect blend of IQ (Intelligence quotient) andEQ (EmpathyQuotient).
Company’s response to the drivers of innovation and Change
The two fundamental reasons why innovation matters the most in P&G is firstly innovation is the key to improving the quality of life all across the globe for all the people and secondly innovation acts as the prime driver for economic, business and financial growth(McDonald, 2008).
P&G has realised that in order to manage the change successfully and be the market leader they need to innovate and change from the grass root level(Lim, 2010). They have tried to implement successfully all the drivers of change in innovative leadership style. P&G has incorporated all the drivers of change innovation and change as can be seen below:
Purpose:The purpose for innovation in P&G is not just financial gain or competitive advantage rather it includes rational approach with emotional component too and the clear-cut example of innovation in P&G is the Home Health diagnostics which they launched in cooperation with Swiss Precision Diagnostics to do home pregnancy test.
Goal: That is why the few main goals set by P&G are 4-6% organic sales growth, earnings-per-share growth in double digit and better or 90% free cash flow in productivity as these are very realistic goals but demanding too at the same time.
Strategies: Since the start of this decade it has been seen that these strategies have helped in providing a clear and consistent performance which is focussed in P&G. The decisive factor which differentiates these strategies from the competitors of P&G is the innovation.
Structure: The corporation innovation fund has been used at P&G to develop variety of innovative and creative structures which create high-reward ideas and high-risk specialised too.The ‘Future works’ team in-house manages and creates innovations exclusively to create new business ideas at P&G. Every global business unit has a new-business development team which mainly focuses on creation of new categories of products which are aligned with the existing category of products.
Systems: The innovation Process in P&G can be broken into Four Phases:
-Search and Discover Phase
-Select and Resource Phase
-Design and Qualify
-Launch and Leverage Phase
This whole process of innovation called as ‘SIMPL’ is the simplest system which is used for creatively developing and launching an innovative product in P&G. The whole system is quite clear and standard however it needs elements which need proprietary knowledge starting form methodologies needed for consumer understanding to Tools for virtual qualifications. This overall clear and standard system is being used in all the markets across the globe and in every part of the company also.
Since innovation is said to be a social process but it does have the element of discipline in it thus P&G selects all the projects which involve innovation and do the resource allocation so that finally the best innovation comes in front to the customers in the market. This is done with the help of processes and systems which are highly disciplined and innovative at the same time.
Culture:Few characteristics of innovative culture at P&G are:
-Agile and flexible
-Collaboration
-Should possess sense of purpose strongly
-Trustworthy
– should flourish on the reapplication of good ideas and with pride.
Leadership: Innovative leaders have to unlock and unleash the leadership, productivity, creativity of the innovators in the organisation. It is not just about ‘feel good’ leadership it entails a charismatic aspect and should be able to create conditions which are able to motivate the topmost performers to attack the problems in the best way and seize the best available opportunities. This can be best done with the help of cultivating creative techniques using tools like training and development, personal coaching, quoting examples etc.
The impact of implemented innovation or change strategy on the organisation
At P&G Innovation is not just an invention rather it is the task of converting the new idea developed into a customer delight and finally which results into profits and revenues. The main Objective of P&G was to raise the profitability by chaining the work culture, because innovation and change has always been the key strategy which has been followed by P&G to stay ahead in the game. The play-to-win strategy followed for innovation by P&G helped it in attaining the industry leadership which it lost in mid 80’s. The play-to-win strategy required a change in leadership style and approach and differentstyle of management also(Lim, 2010).
In P&G the pre-dominant style of leadership which was witnessed was of delegating, participatory and empowering style, however the decentralisation of the decision making process by eth management has lead to quick decision making because now the middle level management does not have to wait for headquarters approval and funding when they want to embark any new and vital innovative project. Due to this empowerment of the middle and thesenior level of management in this multinational company it has become very easy for the management to deliver best customer services and to customise the products internallyThus we can very well analyse that eth success of P&G in past decade is being credited to the change in the management and theleadership style(Lim, 2010).
“He restored focus on leading brands and reminder everyone in P&G that measure of success was not innovation per se, but the consumer”.(Davila, Epstein and Shelton, 2006)
The clear and focussed style of leadership involving the customers in P&G has helped in boosting the morale of the employees and refocusing the employee’s attention in fulfilling the needs and the requirements of the customers in this continuously changing global market.
Through proper management of stretch P&G has witnessed greater economies of scale. It has been able to utilise the best technology through wider level of adaptation of innovation. The company strategy has been fulfilled and achieved successfully through efficient coordination and they have developed a proper work plan too.
For regional focus and global coordination P&G has used the tricks like employing strategies which combine high level responsiveness with high economic integration. Product delivery and marketing is being done locally as the strategies which are being developed are implemented also both locally and regionally. Thus using and managing the innovation and change effectively P&G has been able to develop economic efficiency and did localisation of the organisation. The R&D department of P&G has been both centralised and decentralised at the same time. The local market also now has its own R&D division in P&G.This has helped in the customisation of the products as per the local needs and requirements. This has finally helped organisation to develop and enhance its core competencies(Issac, 2011).
This has finally led to reinvention of the Supplier Network in P&G where:
Figure 1: Earlier Supplier Network at P&G
Figure 2: New Supplier Network at P&G
Thusthe supplier network at P&G changed from chain, long and slow, forecast based, internally focussed, cost-reducing, manufacturer driven to a network which is fast and flexible, demand based, consumer driven, externally focussed, value and growth creation driven. This reinvention of supply chain has lead to better in-store experience for the customer as they get best quality and freshest product on-shelf and new products which have been innovated as per their needs. The winning position so customer has resulted in lesser inventory for P&G and more cash with a simultaneous drop in OOS. Except for more than 2-3 times SKU’s the costs are lowered, volume has growth in terms of business and inventories are reduced to a great extent.
Thus implementation of innovation in case of P&G clearly indicates that leadership is very important for successful implementation of innovation. Thus if an innovative person is put in an environment which does not promote innovation or creativity, it would be impossible for them to be innovative on an ongoing basis(Davila, Epstein and Shelton, 2006).
For organisational effectiveness and enhancing the performance of the employees and organisational level satisfaction it is very important to create a well balanced leadership and innovation in an organisation(Jing and Avery, 2008). Thus there have been numerous researches to find the importance of leadership with the innovative process(Berson and Sosik, 2006).Because it is the leader who sets the examples of openness and imagination for any organisation and teaches them to live in a constructive manner and with eccentricity(Hesselbein, Goldsmith and Somerville, 2001), this clearly indicates that leaders are eth backbone which are needed for successful implementation of change in companies like P&G.
Bibliography
Berson, Y. and Sosik, J.J. (2006) ‘The Relationship Between Self Other Rating Agreement and Influence Tactics and Organizational Processes’, Group Organization Management, pp. 675-698.
Brown, B. and ANthony, S.D. (2011) ‘How P&G Tripled Its Innovation Success Rate’, Harvard Business REview, June.
Davila, T., Epstein, M.J. and Shelton, R. (2006) Making innovation work: How to manage it,Measure it, and Profit from it., Pennsylvania,: Wharton school publishing.
Hesselbein, F., Goldsmith, M. and Somerville, I. (2001) Leading For Innovation, New York.
Issac, J. (2011) Managing Cultural Changes, 16 June , [Online], Available: http://www.slideshare.net/JeayIssac/pg-8327169 [5 March 2012].
Jing, F.F. and Avery, G.C. (2008) ‘Missing Links in Understanding The Relationship Between Leadership and Organizational Performance’, International Business & Economics Research Journal, vol. 7, no. 5, pp. 67-78.
Lim, N.A. (2010) Innovation at Procter & Gamble, 02 November, [Online], Available: http://www.miniworkshopseries.com/highlights/?p=1330 [5 MArch 2012].
McDonald, B. (2008) ‘Touching Lives, Improving Life: Why Innovation Matters and How to make it work’, Presented at the Innovation Institutes of India Global Conference, 1-15.
IG63
But you can order it from our service and receive complete high-quality custom paper. Our service offers “Marketing” essay sample that was written by professional writer. If you like one, you have an opportunity to buy a similar paper. Any of the academic papers will be written from scratch, according to all customers’ specifications, expectations and highest standards.”
