Procter & Gamble (P&G) is one of the largest consumer product firms, operating on a highly competitive market employing over 140,000 people and having one of the largest and strongest portfolio of brands.The company has become an industrial giant producing the greatest brands in history including Ariel Brown, Duracell, Eukanuba, Gillette, Lacoste, Oral-B, Pringles and Puma.
It has been in the top ten list of the wealthiest companies and admired the world over since 2006 and was ranked the 6th most admired company in 2009. In comparison with other companies on the list, P&G scored high in the category "use of capital business," and praised the ability to maintain its 'flagship' brands and develop new products that grow popular, simultaneously.
P&G has invested 3.5% of actual sales in Research & Development (R&D) in 2004/2005 and considers R&D as the major contributor to the success of the company in its market. On R&D, the company has a strong commitment to finding the best researchers, and maintains a work culture that is highly conducive to innovation so that consumer expectations are constantly fulfilled by rolling out new innovative products. The capital allocated to R&D includes 7,500 scientists and researchers in over 71 countries and 25,000 active patents, and an average of 5,000 is added each year.
Innovation at Procter & Gamble revolves mainly around two key concepts: "Open Innovation" and "Connect + Develop" outlined in the following pages. Open Innovation has two main criteria that differentiates itself from traditional models of innovation. The fact that they provide for overflow and treat it as an inevitable consequence of the economic model of a company comes as an advantage, rather than reject them as something superfluous, and they also address it as a new category of capital for the protection of the company.
Tags: Procter & Gamble¸ Ariel Brown, Duracell, Eukanuba, Gillette, Lacoste, Oral-B, Pringles, Puma, Research & Development, innovation
[...] Examine Innovation Products and ideas identified by the P & G networks are initially reviewed within the society. P&G believes that its corporate culture defines its desires and needs, creating a heart of jurisdiction over which products or ideas should be evaluated with the help of innovative leaders and heads of laboratories. The second stage is when a product or idea is found, it must be registered in the P&G's internal catalog "Eureka". The employee who discovered the product or idea further examines the records in the catalog by specifying characteristics. [...]
[...] By the concept of C & D - with improvements in other aspects of innovation - productivity of R&D of P&G increased by almost the success rate of innovation is double the cost of reduced innovation. Accordingly, P&G came to view C + D as a means to win "strategy for the innovation process of the company.” The vision of P&G is simple, it wants to be known as a company that collaborates inside out better than any other company in the world. [...]
[...] Exploring the problem further, the company has come to a conclusion that the innovation landscape had changed the world progressively, while P&G was still using the same strategy of innovation, launched in the 80s. P&G has realized the following facts: The major innovations emanate more and more small and medium enterprises. Universities and government labs had become more interested in forming partnerships between industries and required capital for their research. Internet push promising markets worldwide. Some companies with a more futuristic outlook started trying out new concepts by improving the innovation capabilities of each other. [...]
[...] Figure 1 - The closed innovation paradigm (Chesbrough, 2003) Figure 2 - The paradigm of open innovation (Chesbrough 2003) Description: The model of open innovation decreases the borders of the company and allows it to act more within the environment. The market is somehow magnified because it includes companies and actors from a more distant, rather than just the current market for the company. Open Innovation has become increasingly important over the years. In theory, it is supposed to enable the major players' operations so as to maximize the value creation by sharing resources on a mutually dependent factor. [...]
[...] West and Gallagher identifies three main challenges regarding the success of the Open Innovation: How to maximize the return on investment put into innovation A selection of a popular approach needs to maximize the return on investment in domestic innovation. Maximizing the return should not be interpreted as an opportunity to diversify the product range of the company. The issuance of licenses for intellectual property, patents and technology sharing to stimulate demand for other products must also be taken into consideration. [...]
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