How tripled its innovation success rate harvard business review
Case3
Case study on Proctor & Gamble Co Proctor & Gamble Co. is a
Cincinnati-based consumer products producer that deals with production
of fabric & home care products, baby care, feminine & family
care, batteries, pet food, health care and grooming products among
others. The company posted a 4% year-over-year increase in organic sales
in the competitive markets and an 8% organic sales growth in emerging
markets in the year 2014. The company’s fabric and home care segment,
this includes baby, feminine and family care part each indicating
organic sales growth in surplus of 5% year over year, its beauty,
grooming and healthcare sections performing not as expected with only
0-1% increase in organic sales. Despite the poor performance, 25% of the
company’s revenue is generated from beauty products sales that has
brought forth highly innovative product under the leadership of A. G.
Lafley as the CEO. Under his first tenure (2000 to 2009), P&G
undertook various creative innovations that saw to double increase of
its products sales. As the CEO, A. G. Lafley has come up with various
measures that are aimed at propelling the company’s profitable sales of
its products. The company has been pruning some of its production
segments which include the selling of pet food producing segment to the
Candy Bar and Pedigree-maker Mars Inc. for $2. 9 billion which is enough
cash to undertake innovations and reinvest in the growing shaving, baby
care, beauty and fabric segments (Brown, Bruce, and Scott D. Anthony
42-56).
In 2010, the company revealed a sustainable program to drive 20%
reduction in energy used for every unit of production by the year 2020.
This has cut down energy consumption by 8% per unit, and also continues
to introduce energy management systems at new locations that will help
the company save millions of dollars. Moreover; P&G has engage
momentous mechanisms to enhance productivity, counting a five-year cost
savings initiative that will last through 2016. Through this, Proctor
and Gamble CO. Targets to save $10 billion in costs related to goods
traded, marketing expenses and non-manufacturing expenses. This program
helped the company save $1. 2 billion in cost of goods sold in the
fiscal year 2013. The company has also incorporated a reshuffling
process of its worldwide sales operation, combining Eastern and Western
Europe into the single transaction. While the other combination is for
India into its African and Middle East operations aiming at organizing
the sales distribution in parallel geographical location and cutting
cost (Brown, Bruce, and Scott D. Anthony pg 69-72).
The company is also investing in expansion in new and emerging markets
such as Brazil and also has also pledged to track its palm oil
procurement and also cutting of the suppliers who produce it by
destroying rainforest in a bid to defusing conflicts with environmental
groups.
Works Cited
Brown, Bruce, and Scott D. Anthony. ” How P&G tripled its innovation
success rate.” Harvard Business Review 89. 6 2011: 64-72.