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Running head: INNOVATION STRATEGY 1

Innovation Strategy Paper

Learning Team B

Alexandria Smithey, Ora Grooms

Cynthia Powell, Linda Artis

STR 581

March 14, 2011

Dr. Andrew Carpenter


INNOVATION STRATEGY 2

Innovation Strategy Paper

Proctor and Gamble (P&G) provides branded products and services of superior quality and

value for consumers worldwide and unify common cause and growth strategy (P&G, 2011).

P&G serves 4.2 billion consumers, employees 127, 000, owns 50 leadership brands, and invest

350 million dollars to understand consumers worldwide (P&G, 2011). The organizational goal is

for the new open innovation call to generate $3 billion toward P&G’s annual sales growth

(P&G, 2011). The purpose of this paper will evaluate P&G’s open innovation approach,

Connect + Develop with the use of Security and Exchanges Commission (SEC) filings and

introduce new products available to consumers. The conclusion will describe how P&G’s

innovation strategy will continue the growth and focus of organization to remain viable and

increase profitability.

Innovation Strategy

Pearce & Robinson (2011) states, “Innovation is the initial commercialization of

invention by producing and selling a new product, service, or process” (p. 371). The mark of a

successful innovation strategy is the ability to turn the invention or ideas into profits. P&G has a

site where consumers may sign up to stay abreast of the happenings and views of P&G. P&G is

highly visible in the public’s view. P&G is also on social network sites, as Facebook and

Twitter. The organization is well recognized as a leading global company and a company

committed to creating diversity in the workplace (P&G, 2011).

The P&G website recognizes everyone as a person who has innovative ideas. P&G’s

unique innovation strategy, Connect+ Develop, Sourcing the Creativity of the World, embraces

six basic steps to the organization’s innovation strategy, which are 1) Ideas are everywhere -

therefore including customers, consumers, suppliers, etc. because P&G believes people can do

more together as partners than by themselves, 2) Ideas need acceleration - therefore the
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organization has a superb R & D department and partners externally to shorten product cycles,

3) A clear customer benefit- reaching out to understand the desires and needs of customers to

produce products to delight and improve consumers’ lives, 4) Growth opportunity - by applying

R & D to promote manufacturing, marketing, and purchasing capabilities thereby giving all

involved an innovation scale and brand advantage that otherwise may not be achieved 5)

Creating mutual benefits – every innovation is seen as a three-way win, wherein P&G gains

efficiency and growth, partners gain scale and distribution, and consumers worldwide gain

breakthrough benefits 6) Innovation comes full circle – over ¼ of the innovations includes ideas

or technologies from outside P&G, improves consumers’ lives in small ways and bring those

improvements to consumers faster by embracing partners and the creativity from “all” partners

(P&G, 2011).

SEC Filings

P&G has up-to-date filings submitted through the Security and Exchange Commission

(SEC). An independent company, Deloitte & Touche LLP audits the filings. J.P. Morgan Chase

Bank manages the stock options for employees and investment options. During the years ended

June 30, 2010 and 2009, the recorded P&G dividend income from common stock was $890,339

and $913,312, respectively (P&G, 2011). The fiscal years ending June 30, 2010 and 2009, the

investment in P&G common stock, including gains and losses on investments bought, sold, and

held during the year, appreciated (depreciated) in value by $4,853,763 and $(5,747,757),

respectively (P&G, 2011).

P&G announced quarterly earnings of $1.11 per share from operations and net sales

increased two percent driven by volume growth (P&G, 2010). The company continues volume

and market growth. The net assets available for benefit was 53, 720,994 in 2010, up from
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51,791,343 in 2009, based on the Profit Sharing Retirement Plan (P&G, 2011). This shows the

organization is recovering with the economic growth, innovation of new products, and

continuing community services and interactions. Bob McDonald, President of P&G states "We

are expanding market shares by touching and improving the lives of more consumers in more

parts of the world, more completely through our innovation and expansion plans.” "This is

driving strong volume and sales growth ahead of market levels” (PRNewswire, 2011). With this

statement, P&G’s innovation strategy for new products will present the strong volume and sales

growth as forecasted.

New Products

P&G is the largest producer of consumer goods in the entire world. P&G’s main purpose

in business is to touch and advance the lives of as many consumers worldwide through the

introduction of innovative products and services that improve each day’s living. Although Tide

has been around for over 60 years, the product continues to make life better through the

inception of inventive products such as Tide Stain Release, Tide Natural, Tide ActiLift, Tide

Liquid, and Tide Coldwater (P&G, 2011).

Tide has introduced a new dry cleaning service with added features such as its concierge

drive through, 24- hour drop-off, and tailoring. Tide also delivers humanitarian aid to areas hit

by disasters such as earthquakes and hurricanes through “Loads of Hope.” The program delivers

clean clothes to those people lacking clean water (P&G, 2011).

Gillette has developed a brand community to spark awareness and introduce more thick-

bearded men in India and around the world to shaving, by bringing attention to dialogue

regarding whether or not women find beards attractive. A re-launch of Pantene hair shampoos

and conditioners took place in 2010. Pampers essentially cover all aspects of products,
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entertainment, services, and acting platforms. The brand has inspired purpose and creativity

through commercials worldwide. In 2010, P&G launched its new Wella hair color line in India.

Even though Crest, Pringles, Bounty, Charmin, Febreeze, Fusion, Downy, and Mr. Clean have

yet to be introduced to the India market; the world can expect to see a series of new launches in

India going forward (P&G, 2011).

Conclusion

P&G is a growing organization with a focus on innovation, known as Connect +Develop.

This innovation strategy allows consumers, suppliers, and employees to submit ideas and

innovations to partner together to create the best products for use worldwide. The growth seen

through the SEC filings, P&G’s techniques and innovation strategy is building the organization

for strong sales and growth. New products variations of Tide washing detergent, re-launches of

Pantene, introduction of Gillette, and Wella internationally is leading the way for other product

innovations and current products to be introduced worldwide. This innovation strategy of P&G

allows the organization to remain viable and profitable as consumers continue with ideas and

feedback to P&G.

References
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Deloitte & Touche LLP (2010). Proctor and Gamble Company (PG). [Electronic Version].

Annual report of employee stock purchase, savings and similar plans. Retrieved March

13, 2011 from http://www.pginvestor.com/phoenix.zhtml?c=104574&p=irol-sec.

P&G. (2011). P&G Company. Retrieved from www.pg.com.

P&G. (2011). P&G latest innovations. Retrieved from

http://www.pg.com/en_US/index.shtml#/connect_develop.

Pearce, J. A. II, & Robinson, R. B. (2011). Strategic management: Formulation,

implementation, and control (12th ed.). Boston, MA: McGraw-Hill/Irvin.

PRNewswire, (n.d.). “P&G Delivers Broad-Based Volume and Market Share Growth”, New

York, Jan. 27, 2011, Retrieved on March 12, 2011 from

http://investor.pg.com/phoenix.zhtml?c=104574&p=irol-newsarticle&ID=1520695.