Abstract - WordPress.com Conference & Carnival on Management Systems (InCaMS) 21 Sources of Innovation in the Industry Dynamics of Technological Innovation Case of Procter & Gamble’s

International Conference & Carnival on Management Systems (InCaMS) 21

Sources of Innovation in the Industry Dynamics of Technological Innovation

Case of Procter & Gamble’s

Mulyaningrum

Universiti Teknikal Malaysia Melaka

[email protected]

Abstract

Innovation can arise from many different sources. The general sources of innovations are

different changes in industry structure; in market structure; in local and global demographics; in

human perception, mood and meaning; in the amount of already available scientific knowledge,

etc. Innovation can also come from research efforts of universities, government laboratories and

incubators, or private nonprofit organizations. One primary engine of innovation is firms. Firms

are well suited to innovation activities because they typically have greater resources than

individuals and management system to marshal those resources toward a collective purpose.

Firms also face strong incentives to develop differentiating new products and services, which

may give them an advantage over nonprofit or government-funded entities. Procter & Gamble‟s

(P&G) is a global company that has a successful innovation for their products that consuming by

most people in the world. This company consistently innovates in every area business sector

where they brands touch consumers‟ lives: the package and product, the shopping experience,

the in-home product usage experience, and every aspect of communication. P&G also create

innovative business models and organizational structures whereby making the competitive

advantages among the competitors. By innovating so broadly, P&G get to see more innovation

opportunities and to leverage more innovation resources than more narrowly focused competitors.

Keywords: innovation, industry dynamic, technological innovation, innovation management

1. INTRODUCTION

Innovation is a beautiful thing. It is a force with both aesthetic and pragmatic appeal. It unleashes

a creative spirit, opening minds to hitherto undreamed of possibilities, while simultaneously

accelerating economic growth. The purpose of innovation is to create new business. In industry,

methods and tools are developed on how to organize and manage innovation process with the

objective to better control added-value, cost and risk. Employees, supplier and customers are

principal actors in the process of innovation. Moreover, within industrial organization it is

individuals in the role of managers who decide what activities should be undertaken, the amount

of resources to be deployed and how they should be carried out.

mailto:[email protected]


For industrial organizations, innovation is the primary engine which provides both

exceptional opportunities and steep challenges. While innovation is a powerful means of

competitive differentiation, enabling firms to penetrate new markets and achieve higher margins,

it is also a competitive race that must be run with speed, skill, and precision. It is not enough for

a firm to be innovative - to be successful it must innovate better than its competitors. Innovation

has generated many insights about how innovation affects the competitive dynamics of markets,

how firms can strategically manage innovation, and how firms can implement their innovation

strategies to maximize their likelihood of success.

Innovation can arise from many different sources. It can originate with individuals as in

the familiar image of the lone inventor or users who design solutions for their own needs.

Innovation can also come from the research efforts of universities, government laboratories and

incubators, or private nonprofit organizations. One primary engine of innovation is firms. Firms

are well suited to innovation activities because they typically have greater resources than

individuals and a management system to marshal those resources toward a collective purpose

(Schilling, 2010). Firms also face strong incentive to develop differentiating new products and

services, which may give them an advantage over nonprofit or government-funded entities.

In many industries, technological innovation is now the most important driver of

competitive success. The increasing importance of technological innovation is due in part to the

globalization of markets. The advent of advanced technologies that enable more rapid product

design and allow shorter production runs to be economically feasible. Foreign competition has

put pressure on firms to continuously innovate in order to produce differentiated products and

services. Introducing new products help firms protect their margins, while investing in process

innovation help firms lower their cost. Firms in a wide range of industries rely on products

developed within the past five years for almost one-third or more of their sales and profits. For

instance, at Procter and Gamble (P & G), products developed within the last five years account

for over 90 percent of sales, and more 90 percent of profit from products developed within the

past five years at 3M have hit in recent years.


Innovation process is of a complex nature and often poorly understood. Virtually all

innovations, certainly major technological innovations such as pharmaceutical and other

products, occur within organizations. The management of innovation within dynamic industry

forms the focus of this study. The identification of the source of innovation and issues that affect

the management of innovation within Procter and Gamble Company is addressed.

2. PROBLEM STATEMENT

In the world, P&G‟s company is widely recognized as the industry‟s global innovation leader.

Nearly all organic sales growth over the past decade has come from new brands and or improved

products. They invest more than $2 billion a year in Research &Development where by nearly

twice the level of their closest competitor. In order to achieve the main goal of P&G„s company,

what are the strategic innovation for improving the profile of Company‟s products and

operations?

3. OBJECTIVE OF STUDY

The purpose of this study is explained the meaning and nature of innovation management in

Procter & Gamble Company with specific analysis as below:

a. What are new innovations of P&G Company?

b. What is strategy of P&G‟s company to deliver innovation as the Long Term

Environmental Sustainability Vision?

c. How is management of technological innovation in P&G‟s company as an excellent

performance along with the efficient management?


4. METHOD OF STUDY

The study is based on a qualitative approach that serves of the following purposes (Leedly, 2005):

1. Description; data can reveal the nature of certain situation, settings, processes, relationship,

systems, or people that related to the objectives of these study.

2. Interpretation; data enable to gain new insights about a particular phenomenon on sources of

innovation in the industry dynamics of technological innovation, and discover the problems

that exist within that phenomenon.

3. Evaluation; data provide a means through which a researcher can judge the effectiveness of

particular policies and practices of technological innovation sources regarding the industry

dynamics.

Data collected by exploration that serves purposes of study as well. The exploratory phase search

strategy usually comprises of the following (Cooper, 2011):

1. Discovery and analysis of secondary sources, that can be done through:

a) Published studies, usually focused on the result of surveys or on case studies featuring

one or a few incidents

b) Document analysis

c) Retrieval of information from organization‟s databases

2. Group discussion with individuals involved with the problem or its possible solutions,

including informal groups, as well as formal techniques such as focus group or brainstorming

among student in the class of Strategic Management of Technological Innovation at Faculty

of Technology Management and Technopreneuership _ Universiti Teknikal Malaysia Melaka

(UTeM).

The exploratory study begins with a literature search – a review of books as well as articles that

relate to the problem statement. This review should include high-quality Web-published

materials. Exploratory study may save time and money. However exploration is sometimes


linked to old biases about qualitative research such as subjectiveness, nonrepresentativeness, and

nonsystematic design (Cooper, 2011).

5. LITERATURE REVIEW

1. The Importance of Technological Innovation to Industry

Most writers distinguish innovation from invention by suggesting that innovation is concerned

with the commercial and practical application of ideas or invention. Invention, then, is the

conception of the idea, whereas innovation is subsequent translation of the invention into the

economy. The conception of new idea is the starting point for innovation, so that innovation can

be the practical implementation of an idea into a new device or process. If the push for

innovation has raised the competitive bar for industries, its net effect on economic growth is

more clearly positive. Innovation enables a wider range of goods and services to be delivered to

people worldwide. It has made the production of food and others necessities more efficient.

Industry must be able to adapt and evolve if they wish to survive. Businesses operate with

the knowledge that their competitors will inevitably come to market with product that changes

the basis of competition. The ability to change and adapt is essential to survival. Today, the idea

of innovation is widely accepted. It has become part of culture. But even though the term is now

embedded in our language, to what extent do we fully understand the concept? Innovation has

long been argued to be the engine of growth almost regardless of the condition of the larger

economy. Innovation has been a topic for discussion and debate for hundreds of years.

Nineteenth-century economic historians observed that the acceleration in the economic growth

was the result of technological progress. However, little effort was directed towards

understanding how changes in technology contributed to this growth.

Joseph Schumpeter in 1934 was the founder of modern growth theory and is regarded as

one of the world‟s greatest economist to emphasize the importance of new products as stimuli to

economic growth. It was Karl Max who first suggested that innovations could be associated with


the wave of economic growth. Kondratieff was unfortunately imprisoned by Stalin for his view

on economic growth theory, because they conflicted with those of Marx. Kondratieff argued that

they would experience waves of growth and decline. Abernathy and Utterback in 1978

contended that at the birth of any industrial sector there is radical product innovation which is

then followed by radical innovation in production process, followed by widespread incremental

innovation. This view was once popular and seemed to reflect the life cycles of many industries

(Trott, 2008).

Technological innovation is the act of introducing a new device, method, or material for

application to commercial or practical objectives. Sometimes technological innovation results in

negative externalities. Production technologies may create pollution that is harmful to the

surrounding communities; agricultural and fishing technologies can result in erosion, elimination

of natural habitats and depletion of ocean stock. However, technology is, in its purest essence, to

solve our problem and pursue our goals. Technological innovation is thus the creation of new

knowledge that is applied to practical problems. Sometimes this knowledge is applied to problem

hastily, without full consideration of the consequences and alternatives, but overall it will

probably serve us better to have more knowledge than less.

The practical impact of technology innovation on industry is illustrated by the fact that as

recently as ten years ago information, including pricing on many different types of machinery

and commodity products, was highly inefficient. It was difficult to know exactly what each firm

would charge for its product and what the price for that product. There was widely different

prices were charged for the same products. Purchasing agents spent a lot of time looking for the

best price. However, changes in technology communications have all but eliminated this

inefficiency. Internet availability has resulted in more transparent and efficient pricing for both

capital good and commodity product today. Thus, technology leads to better prices. For a firm to

make a profit, it must be more efficient.


2. Types and Patterns of Innovation

Different types of technological innovations offer different opportunities for organization and

society, and they pose different demands upon producers, user, and regulators. While there is no

single agreed-upon taxonomy to describe different kinds of technological innovations, these

dimensions are useful for understanding some key ways that one innovation may differ from

another. Different dimensions have been used to distinguish types of innovation. Some of the

most widely used dimensions include product versus process innovation, radical versus

incremental innovation. The explanation of that type of innovation is below (Schilling, 2010;

Bruton & White, 2011; Trot, 2008):

Product innovation:

Product innovations are embodied in the outputs of an organization- its good or services. For

most organizations, product innovations are center of their research and development (R&D)

efforts. Although R&D can occur in a separate unit of the organization, today it is more often

spread throughout the firm. For instance, Honda‟s development of a new hybrid electric vehicle

is a product innovation.

Process innovation:

Process innovations are innovations in the way an organizational conducts its business, such as

in the techniques for producing or marketing goods or services. The purpose of process

innovation is to increase the efficiencies or the effectiveness of an organization. Changes in

processes require the organization to adapt to the innovations and this can lead to opposition in

the organization. However, process innovations offer the organization opportunities to improve

the output-input ration of the firm. For example, a process innovation at a biotechnology firm

might entail developing a genetic algorithm that can quickly search a set of disease-related genes

to identify a target for therapeutic intervention. In this case, the process innovation can speed up

the firm‟s ability to develop a product innovation.


New product innovations and process innovations often occur tandem. New products may

enable the development of new process. For example, the development of advance workstations

has enabled firms to implement computer-aided-manufacturing processes that increase the speed

and efficiency of production. Product innovation for one firm may simultaneously be a process

innovation for another, like United Parcel Service (UPS) help a customer develop a more

efficient distribution system; the new distribution system is simultaneously a product innovation

for UPS and a process innovation for its customer.

Radical innovation:

Radicalness of innovation might be conceived as the combination of newness and the degree of

differentness. Radical technology could be new to the world, new to an industry, new to a firm,

or new merely to an adopting business unit. A technology could be significantly different from

existing products and processes or only marginally different. The most radical innovations would

be new to the world and exceptionally different from existing product and process. Radical

technology development causes a dramatic change in the way things are done. For instance, the

initial introduction of computers altered the way information was processed and stored in

organizations and by individuals. The automobile was a radical technology when introduces. It

provided an extreme change in modes of transportation. IPhones and Blackberries are widely

changing many industries by speeding complex information to other locations such as heart

monitor information instantaneously to multiple doctors and medical centers. These radical

technologies established a new functionality and a new way of doing things in business and

society.

The radicalness of innovation is also sometimes defined in term of risk. Since radical

innovations often embody new knowledge, producers and customers will vary in their experience

and familiarity with the innovation, and in their judgment of its usefulness or reliability. The

development of third generation (3G) wireless telecommunications service required a significant

investment in new networking equipment and an infrastructure capable of carrying a much larger

bandwidth of signals. Its require managers to assess several different risk simultaneously,


including technical feasibility, reliability, cost, and demand. Finally, radicalness of an innovation

is relative, and may change over time or with respect to different observers.

Incremental innovation:

Incremental or continuous innovation might not be particularly new or exceptional; it might have

been previously known to the firm or industry, and involve only a minor change from existing

practices. An example of continuous technology development is the personal computer. It seems

personal computer become lighter and more mobile every year. These changes in technology are

not a constant progression; instead, they happen over relatively short period of time. Therefore,

they are viewed as continuous improvement in the technology by consumers because there are no

major changes that occur at one time. The progression is designed to change an existing

technology but not to change its functionality. The innovation is aimed at improving

performance, function, and/or quality at a lower cost.

In between on radical and continuous technology, is a next-generation technology. These

changes in technology and their impact on society are more than the small step experienced in

continuous change, but they are not revolutionary either. For example, before the silicon chip,

computers used tubes for connectivity and then wires and contacts. These were awkward and

much less dependable than the silicon chip.

Both the rate of technology‟s performance improvement and the rate at which the technology is

adopted in the marketplace repeatedly have been shown to an s-shape curve.

Figure 1. S-curve of technology performance


Figure 1 exposes, when a technology‟s performance is plotted against the amount of effort and

money invested in technology, it typically shows slow initial improvement, then accelerated

improvement, then diminishing improvement. Performance improvement in the early stages is

slow because the fundamentals of the technology are poorly understood, then accelerates as

understanding increases. Furthermore, tapers off as approaches limits.

3. Source of Innovation

Innovation sometimes originates with individual inventors. The most prolific inventors tend to be

trained in multiple fields, be highly curious, question previously made assumptions, and view all

knowledge as unified. The most well-known inventors tend to have both inventive and

entrepreneurial traits. Innovation can also originate with users who create solutions to their own

needs. The rise of snowboarding industry provides a rich example. An even more important

source of innovation, however, does not arise from any one of these sources, but rather the

linkages between them. Networks of innovations that leverage knowledge and other resources

from multiple sources of innovation as composing a complex system wherein any particular

innovation may emerge primarily from one or more components of the system or the linkages

between them, was shown on Figure 2 (Schilling, 2010).


Figure 2. Source of innovation as a system

Individual creativity:

An individual‟s creative ability is a function of his or her intellectual abilities, knowledge, and

style of thinking, personality, motivation, and environment. The most important intellectual

abilities for creative thinking include the ability to look at problems in unconventional ways, the

ability to analyze which ideas are worth pursuing and which are not, and the ability to articulate

those ideas to others and convince others that the idea are worthwhile. Individuals are more

likely to be creative if they work on things they are genuinely interested in and enjoy. To fully

unleash an individual‟s creative potential often requires an environment that provides support

and rewards for creative ideas.

Organizational creativity:

The creativity of the organization is a function of creativity of the individuals within the

organization and a variety of social processes and contextual factors that shape the ways those

individuals interact and behave. An organization‟s overall creativity level is thus not a simple

aggregate of the creativity of the individuals it employs. The organization‟s structure, routines,

and incentives could thwart individual creativity or amplify it. Google, for example, utilize an


idea management system whereby employees e-mail their ideas for new products and processes

to a company-wide database where every employee can view the idea, comment on it, and rate it.

Research and development by firms:

One of the most obvious sources of firm innovation is the firm‟s own research and development

efforts. Studies show that firms consider their in-house R&D to be their most important source of

innovation. This perception also appears to be supported by evidence on R&D spending and firm

sales has strong positive correlation with its sales growth rate, sales from new products, and

profitability.

Universities and government-funded research:

Many universities encourage their faculty to engage in research that may lead to useful

innovations. Typically the intellectual property policies of a university embrace both patentable

and unpatentable innovations, and the university retains sole discretion over the rights to

commercialize the innovation. If an invention is successfully commercialized, the university

typically shares the income with the individual inventors. To increase the degree to which

university research leads to commercial innovation, many universities have established

technology transfer offices.

Governments of many countries actively invest in research their own laboratories, the

formation of science parks and incubators, and grants for other public or private research entities.

The U.S government was the main provider of research and development funds. The U.S Small

Business Administration manages two programs that enable innovative small business to receive

funding from federal agencies such as Department of Defense, Department of Energy, and others.

Under these programs, agencies award grants of up to $850,000 to small business to help them

develop and commercialize a new innovation.

Private nonprofit organization:

Many nonprofit organizations perform their own research and development activities, some fund

the activities of other organizations but do not do it themselves, and some nonprofit


organizations do both in-house research and development and fund the development efforts of

others. Private nonprofit organizations, such as private research institutes, nonprofit hospitals,

private foundations, professional or technical societies, academic and industrial consortia, and

trade associations, also contribute to innovation activity in a variety of complex ways.

There is a growing recognition of the importance of collaborative research and

development networks for successful innovation. Such collaboration include joint venture,

licensing and second-sourcing agreements, research associations, government-sponsored joint

research program, value-added networks for technical and scientific interchange, and informal

network. Collaborative research is especially important in high-technology sectors, where it is

unlikely that a single individual or organization will posses all of the resources and capabilities

necessary to develop and implement a significant innovation.

6. ANALYTICAL FRAMEWORK

Improving a firm‟s innovation success rate requires a well-crafted strategy. A firm‟s innovation

projects should align with its resources and objectives, leveraging its core competencies and

helping it achieve its strategies intent. A firm‟s organizational structure and control systems

should encourage the generation of innovation ideas while also ensuring efficient

implementation. A firm‟s new product development process should maximize the likelihood of

projects being both technically and commercially successful. To achieve these things, a firm

needs to do an in-depth understanding of the dynamic of innovation, how innovation occurs in an

industry, and why some innovations rise to dominate others. It will be looked at the source of

innovation, where does great idea come from.

The next step will review models of types of innovation, such as radical, incremental, etc.

and the pattern of innovation. It will address on question such as why are some innovations much

harder to create and implement than others. What factors influence the rate at which a technology

tends to improve over time? Familiarity with these types and patterns of innovation will help us


distinguish how one project is different from another and the underlying factors that shape the

project‟s likelihood of technical or commercial success.

Figure 3. Analytical framework of the study

The further step is the basic strategic analysis tools managers can use to assess the firm‟s current

position and define its strategic direction for the future. What are the firm‟s sources of

sustainable competitive advantage? To analyze the internal environment, firms often begin by

identifying strengths and weaknesses in each activity of the value chain. For the next study, the

firm can then identify which strengths have the potential to be a source of sustainable

competitive advantage. Firm identifies its core competencies. Core competencies are integrated

combinations of abilities that distinguish the firm in the marketplace. Several core competencies

may underlie each business unit, and several business units may draw upon the same sore

competency.

7. FINDING AND DISCUSSION

Innovation is at the heart of many companies‟ activities. But to what important is this true of all

business? And what is meant by innovation? These are question that will be addressed in this

study. As firms like P&G produce new product and increase their pace in innovation, they also


raise the speed of innovation for competitors, triggering an industry wide shift to shorten

development cycles and more rapid in new product introductions.

a. New innovations of Procter & Gamble (P&G) Company

For P&G, management innovation has been an important driver of its enduring success. It

pioneered brand management in the 1920s, it was one of the first companies to implement a

transnational organization in the late 1980s in R&D, and it is now leading the world in its

approach to open innovation. And the beauty of such innovations is that they are sufficiently

deep-seated that competitors take a long time to catch up. (http://www.managementlab.org/

files/u2/pdf /case%20studies/procter.pdf). Procter & Gamble seeks to make the most meaningful

impact possible in five target areas, such as: products, operations, social responsibility,

employees and stakeholders.

Sustainable Product Innovation:

P&G‟s packaging innovations have proven that small changes add up fast. The company has cut

back on waste through surprisingly simple packaging makeovers, like producing an ultra-

concentrated liquid laundry detergent, eliminating bulky “clam shell” cosmetic packaging and

fitting more pills into a single blister pack. In fact, simply altering the design of the pump on

Olay Total Effects anti-aging moisturizers is expected to save 800,000 pounds of plastic per year

– the weight of a Boeing 747.

Making Procter & Gamble Plants Greener:

P&G set out to improve its resource management in four key areas of its manufacturing

processes: energy usage, CO2 emissions, waste disposal and water usage. Since July 2002, the

company has made remarkable progress, reducing all four environmental footprints by an

average of 50 percent. All of these efforts are contained within P&G‟s systematic Product

Supply Sustainability approach. For example where waste materials like wood pulp and outdated

mascara end up. Instead of just tossing them in a landfill, P&G works with external partners to

find incredibly creative reuses for these materials. Thanks to this approach, there have been such

creative solutions as using scrap feminine pads to fuel kilns at a Budapest cement factory.

http://www.managementlab.org/%20files/u2/pdf%20/case%20studies/procter.pdf




Improving the Lives of Children:

P&G‟s Live, Learn & Thrive initiative has reached more than 135 million children, helping them

gain access to medical care, clean drinking water and education. Through P&G brands like

Tampax, Pampers and Safeguard, this initiative has built sanitation facilities in rural China,

provided puberty education to girls in the developing world and much more. The Children‟s Safe

Drinking Water (CSDW) program uses P&G‟s PUR water purifying technology to turn

potentially deadly water into clean, drinkable water. Since the program began in 2004, 1.6 billion

liters of clean water have been delivered in more than 50 countries, saving more than 8,300 lives.

Helping Employees Think Green:

Of course, for P&G‟s sustainability to be truly successful, every employee must be dedicated to

making greener choices both at work and at home. P&G drives employee engagement with the

“Take the R for Tomorrow” program, urging each individual to take responsibility for the next

step. A weeklong Earth Day celebration in 2008 was just the beginning. Employees aren‟t just

taught about opportunities to go greener or asked to participate in recycling programs; they‟re

encouraged to take an active role in meeting P&G‟s sustainability goals. An Idea Challenge

produced 130 great proposals for reducing energy, water and paper while the Employee

Sustainability Challenge translated the green actions of employees into a two-million-liter

donation through P&G‟s Children‟s Safe Drinking Water program.

Transparency with Stakeholders:

P&G isn‟t keeping its environmental practices behind closed doors. Its annual sustainability

report is just one way in which the company seeks to engage in an ongoing conversation with its

stakeholders about important issues like climate change, animal welfare and the responsible

procurement of resources like wood pulp and palm oil. P&G invites stakeholders to play a part in

finding answers to these pressing issues, and provides assurance of the many ways in which

sustainable action can benefit the company financially.

As well as known that P&G Company manufactures wide range of consumer goods,

therefore this company always keeps running innovations through all of their consumer goods.


According to target areas of innovation on P&G, it can be defined that innovation means as the

process whereby new and improved products, processes, materials, and services are developed

and transferred to a plant and/or market where they are appropriate. It is important to note that

from those result there are different types of innovations. There can be newness of the product or

process, newness of the usage, or a combination among them. The most innovative approach is

the development of a new product or process to solve a new problem or usage.

b. The Strategy of P&G’s company to deliver innovation as the Long Term

Environmental Sustainability Vision

To achieve the main goal of P&G„s company, this company has their own Long Term

Environmental Sustainability Vision. P&G‟s latest updated vision announced in 2010 are:

Powering company‟s plant with 100% renewable energy

Using 100% renewable or recycled materials in all products and packaging

Having zero consumer or manufacturing waste going to landfills

Designing products that delights consumer while maximizing the conservation of

resources.

In better explanations of Long Term Environmental Sustainability Vision are for

powering company‟s plant with 100% renewable energy, P&G‟s managing and manufacturing

all their consumer goods with 100% renewable energy and also implemented lean manufacturing

system in producing their products. All of these are for preventing environmental pollutions.

Furthermore, P&G‟s company also keep using 100% renewable or recycled materials in all

products and packaging. This is to make sure that company gain a lot of profit and minimize

their investments in producing all the consumer goods. Then, for having zero consumers or

manufacturing waste going to landfills, P&G‟s company always wants to fulfill and satisfy all

their consumer needs. Lastly, for designing products that delights consumer while maximizing

the conservation of resources, P&G‟s company wants to produce consumer goods with

maximizing the conservation of resources. In other words, P&G‟s company always focus on

consumer needs with free pollution on environment. (www.pg.com)

http://www.pg.com/


In order to deliver the environmental vision, P&G‟s company focus on two strategies as

product and operations. The further explanation of the two strategies of P&G‟s Company as

below:

Products:

In the aspects of products, P&G‟s company deliver their products with improved their

environmental profile. The company also used life cycle analysis to understand where the

biggest impact exists.

Figure 4. Life Cycle analysis Assessment (LCA)

By doing this, it makes them easy to focus on innovation of products. P&G‟s also keep deep

understanding of their consumer needs. This is to enables them to develop sustainable products

that will delight the company, without tradeoffs in price or performance. P&G‟s company has

used Life Cycle Assessment (LCA) to guide decision making since the late 1980s. It is a tool

used to evaluate the potential environmental impact of a product, process or activity throughout

its entire life cycle by quantifying the use of resources such as "inputs” like: energy, raw

materials, water and environmental emissions, and “outputs” such as: air, water and soil


associated with the system that is being evaluated. In the last decade, P&G has adopted ISO

14040 standards for LCA. Managers at P&G routinely use LCA approaches to:

Analyses products from a system-wide, functional unit point of view in a consistent,

transparent and reproducible manner in order to: guide choices of raw materials, guide

product innovation and design packaging with lower impact,

Analyses the energy and resource use in the detergent system,

Analyses various emissions, wastes, and resources using environmental themes,

Identify what parameters are most likely to be significant to monitor and control,

Identify opportunities for improving overall system performance, and

Benchmark the product over time and report progress.

Operations:

Then, in the aspects of operations, P&G‟s company improved their environmental profile of their

own operations. The company focused on the environmental performance of entire supply chain,

including their own manufacturing facilities, suppliers and logistics of finished products. The

company also focused on creating efficiencies in energy, water, waste and emissions.

(www.scienceinthebox.com). Throughout P&G‟s history, they‟ve focused on doing what‟s right

and their approach to sustainability is fully consistent with this basic Company principle. They

are accountable for delivering their goals year to year, and committed to improving P&G‟s

sustainability results consistently and reliably over the long term (Procter and Gamble

Sustainability Overview, 2008).

Industrial innovation and new product development have evolved considerably from their

early beginnings. However, establishing departmental functions to perform the main tasks of

business strategy, R&D, manufacturing and marketing does not solve the firm‟s problem. Indeed,

as have seen at P&G, innovation is extremely complex and involves the effective management of

variety of different activities. It is precisely how the process is managed that needs to be

examined.

http://www.scienceinthebox.com/


c. Management of technological innovation in P&G’s company as an excellent

performance along with the efficient management

P&G‟s is a global, publicly traded Fortune 500 company, and the largest consumer packaged

goods in the world. P&G‟s work is driven by a purpose of providing branded products and

services of superior quality and value to improve the lives of the world‟s consumers now and for

generations to come. P&G‟s growth strategy, inspired by their purpose is to touch and improve

more consumers‟ lives in more parts of the world, more completely. For decades, P&G fueled its

consumer products engine from R&D inside its own walls. But as its markets have matured,

P&G has directed its search outward. From Harvard Business Review, P&G has operated one of

the greatest research and development operations in corporate history.

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 of P&G Company, 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. "For most companies, the alternative invent-it-ourselves model is a sure

path to diminishing returns." This excerpt from a March 2006 Harvard Business Review article

focuses on the company's assessment of its aging innovation process and the development of

connect and develop (http://hbswk.hbs.edu/archive/5258.html).

Firm, Universities, Individuals, Private Nonprofits and Government-Funded Research

can be any sources which will make Innovation arise. Individuals who is the intelligent inventor,

Firm which can collaborate and make highest successful achievement, collaborations with

Universities around the world to gain the most effective innovation. Both Private Nonprofits and

Government-Funded Research which will gain them advantages from the experienced of facing

strong incentives to develop differentiating new product or services faced by the firms.

http://hbswk.hbs.edu/archive/5258.html


Collaboration with University

P&G signs a Master Collaboration Agreement for Joint Research and Development with the

Hebrew University. Hebrew University was chosen as one of few in the world with whom P&G

set strategic Partnership for joint innovation Creation. This collaboration agreement is the first of

its kind for P&G in Israel and an important next step that follows the Memorandum of

understanding signed in December 2010 between P&G and the Office of Chief Scientist at the

Ministry of Trade & Industry of Israel. “This agreement with Hebrew University allows P&G

scientists and research leaders to partner on a new level with Hebrew University Faculty and

researcher in areas such as biology, chemistry, colloid and surface to drive cutting-edge

innovations that have the potential to impact a wide range of P&G‟s global product categories”,

said Jeff Hamner, P&G‟s Vice President Corporate R&D.

Collaboration with Private Non-Profit Organization:

The Live Well Collaboration Singapore (LWC-S) is an independent innovation centre focused on

revolutionising product design and development for consumers aged 50 and above in Asia.

Brought to Singapore by the Procter & Gamble Company, the LWC-S is an extension of the Live

Well Collaborative in Cincinnati (LWC-C), the breakthrough business-academia partnership

model pioneered by P&G and the University of Cincinnati in the US, based on „P&G‟s Connect

& Develop‟ open innovation model. The „Connect & Develop‟ model promotes the co-creation

of products and services with the best innovators outside the organization. New research centre

led by Singapore Polytechnic to help companies revolutionize product design and development

for consumers in Asia aged 50 and above. It also based on breakthrough business-academia

partnership model pioneered by P&G and the University of Cincinnati. In addition, P&G and

Boeing join as founding members.

The LWC-S is grounded in two unique, but related disciplines, as described below:

1. Consumer-based product research that combines anthropologic and psychological tools to

provide a deep understanding of consumers‟ unarticulated needs. The insight gained from

this deep dive research is used to identify the strongest product and service concepts for

future work.


2. Design Thinking Principles that convert strategy and consumer insight into actionable

products and services.

LWC-S work with industry leaders, experts in the fields of architecture, environment,

design, engineering, business, life sciences, aeronautical, digital media, information

communication, marine and utilize a host of young creative talent.

The Collaboration with Government-Funded Research:

P&G and FLAMAC, a division of SIM (Strategic Initiative Material), announce the start-up of a

strategic collaboration, by the Flemish Government. Its mission is to enhance strategic

collaboration between knowledge institutes and the material & chemical industries in Flanders.

This collaboration aims to develop and use unique high-throughput formulation technologies and

is co-funded by the Flemish government. This will strengthen P&G‟s power for research and

innovation for the different businesses via open innovation collaboration with FLAMAC.

FLAMAC is a research centre in high-throughput methods which supports the chemical and

materials Industries. It offers its services on either collaborative or multi-disciplinary government

sponsored projects as well via bilateral contract research. “FLAMAC and SIM are very excited

to be working with P&G. Within this project FLAMAC will offer its expertise on high-

throughput technologies to accelerate P&G‟s formulation R&D. They are looking forward to

building a long-term relationship between P&G and FLAMAC”, says Johan Paul, Manager of

FLAMAC, a division of SIM.

P&G is the largest consumer good company in the world with a mega-hub in Brussels.

This innovation centre supports the company will end-to-end innovation capabilities for fluid

products. “Innovation via collaboration is a heart of how we touch and improves lives of our

consumers. The “Connect & Develop” capability with FLAMC will enable us to develop new

products at improved productivity with high throughput experimentation” says Charles Bragg,

Director Fabric Care Global Product Design.


The successful innovation management depends on the top management of the

organization committing resources to empower individuals and groups to act on new concepts.

This commitment by the top management to innovation, in turn, requires their recognition of

several realities, such as:

i. Management of technology encompasses the management of innovation

ii. It requires fostering an environment where innovative thought and work are encourages.

iii. It involves leading a firm from existing processes and products to something that is

“better” and more valuable.

iv. It is proactive and encourage creativity and risk taking

Within any organization there are likely to be many different functions. Depending on the nature

of the business, some function will be more influential than others. The study from P&G has

identified the function of top management as the most influential in the innovation process.

Effective communication with the external environment also requires encouragement and

support.

8. CONCLUSION AND RECOMMENDATION

Conclusion:

a) Innovation was defined as the application of knowledge. It is noted that lies at the heart

of all innovation, be they product, process or service. It is also worthy of note that many

studies have resulted that product innovation are soon followed by process innovations.

b) Innovation is a management process. It is simply an aid in describing the main factors

which need to be considered if innovation is to be successfully managed.

c) The successful innovation management depends on the top management of the

organization committing resources to empower individuals and groups to act on new

concepts.


Recommendation:

a) However, Procter and Gamble's market is too broad to monopolize the industry and

killing other newcomers. They should provide opportunities for other businesses to gain a

foothold in the industry a long time.

b) In the long term, Procter and Gamble must do more innovation-based product-related

renewable energy. This is because, as was the case in today's world, the sources of energy

available on earth are decreasing.

c) For their efforts, they can have a Green campaign in a big way to give exposure to the

consumer about their product and more sensitive to the environment.


References

Anonymous. (2010). Procter & Gamble and The Environment. Retrieved May 20, 2010 from

http://www.mnn.com/money/sustainable-business-practices/stories/procter-gamble-and-

the-environment.

Bruton, G. D. & White, M.A. (2011). Strategic Management of Technology and Innovation.

International Edition. Canada: South-Western, Cengage Learning.

Huston, L & Sakkab,N. (2008). Harvard Business Review. Retrieved on February 19, 2012 from

http://www.sopheon.com/NEWSEVENTS/inKNOWvationsNewsletter/ReadFul.

Huston, L & Sakkab, N. (2006). Connect and Develop: Inside Procter & Gamble's New Model

for Innovation,". Harvard Business Review, Vol. 84, No. 3. Retrieved March 20, 2006

from http://hbswk.hbs.edu/archive/5258.html.

Huston, L. Business Innovation Factory. (2012). Retrieved February 2012, from

http://businessinnovationfactory.com/iss/innovators/larry-huston.

P&G Annual Report, (2008). from http://www.pg.com/annualreport2008/#/intro/. P&G Herbal

Essence, Latest Innovation. Retrieved February 2012, from

http://www.pg.com/en_US/downloads/innovation/factsheet_FINAL_HE_Enlighten.pdf.

Parraguez, P. (2009). Article of Connect and Develop, P&G‟s big stake in

http://www.openinnovate.co.uk/pgs-connect-and-develop/.

Procter & Gamble, Innovating Innovation. Retrieved February 2012, from

http://www.managementlab.org/files/u2/pdf/case%20studies/procter.pdf.

Procter and Gamble Sustainability Overview, (2008) Dsigned to Innovate Sustainably from

http://www.pg.com/en_US/downloads/sustainability/reports/PG_2008_Sustainability_Re

port.pdf.

Schilling, M. A. (2010). Strategic Management of Technological Innovation. 3rd

Edition.

Singapore, McGraw Hill.

The official website of Proter & Gamble Retrived from www.p&g.com.

Trott, P. (2008). Innovation Management and New Product Development. 4th

Edition. Malaysia:

Prentice Hall.

Ulrich, K. T. & Eppinger, S. D. (2012). Product Design and Development. 5th

Edititon.

Singapore; McGraw-Hill.

http://www.mnn.com/money/sustainable-business-practices/stories/procter-gamble-and-the-environment

http://www.mnn.com/money/sustainable-business-practices/stories/procter-gamble-and-the-environment

http://www.sopheon.com/NEWSEVENTS/inKNOWvationsNewsletter/ReadFul

http://hbswk.hbs.edu/archive/5258.html

http://businessinnovationfactory.com/iss/innovators/larry-huston

http://www.pg.com/annualreport2008/#/intro/

http://www.pg.com/en_US/downloads/innovation/factsheet_FINAL_HE_Enlighten.pdf

http://www.openinnovate.co.uk/pgs-connect-and-develop/

http://www.managementlab.org/files/u2/pdf/case%20studies/procter.pdf

http://www.pg.com/en_US/downloads/sustainability/reports/PG_2008_Sustainability_Report.pdf

http://www.pg.com/en_US/downloads/sustainability/reports/PG_2008_Sustainability_Report.pdf

http://www.p&g.com/

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