The foundation and innovation of Proctor & Gamble

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Procter & Gamble (P&G) Company was founded in 1837 by two British immigrants, William Procter and James Gamble, in Cincinnati, Ohio, USA. P&G began as a small family-run candle and soap company,

More than a century later, today, P&G has developed as one of the world's largest consumer product company with wide range of products, such as laundry cleaning, skin care, hair styling, dish detergent, etc in three key areas - beauty, health and, well-being and household care. Their operational branches spread in about 80 countries with more than one million employees. They markets about 300 well-known products in 180 countries among five regions with over $1 billions in annual sales. Besides, they have received a lot of external recognitions, such as top rankings on the Dow Jones Sustainability Index from 2000 to 2009, Ranked number 3 on the "World's Most Respected Companies List" in Barron's, the America's premier financial magazine and Ranked number 6 among the "World's Most Admired Companies" in Fortune magazine.

Evidence of innovativeness

P&G highly values innovation. Since the first innovation product- Ivory white soap in 1879, P&G never stops their efforts in innovation. Innovation is regarded as P&G life blood and the key growth strategy. P&G has five core strengths, which enable them to be the leader in the consumer products industry; innovation is one of the strength (others are consumer understanding, brand building, go-to-market capability, and scale). A report released by Information Resources Inc. stated that P&G had five products to be rewarded as the top 10 of the most successful CPG products in US in 2008. At the same year, P&G landed in number 8 in the World's 50 Most Innovative Companies (

P&G spends investment twice as much as its competitors on strengthening their innovative capabilities, for example, they keep investing more than $2 billion or 4% of worldwide sales a year on research and development (R&D). They set up innovation workshops all around the world with almost 7,000 scientists and engineers. At the same time, they have built up an effective global innovation system to nourish new innovative ideas from the outside world by implementing Connect and Development (C&D) strategy (TIDD, P294). In return, by doing so has yielded lots of remarkable leading products and patents, which contributes back to P&G good reputation and better revenue.

Today, they own 23 billion-dollar brands which contribute about 75 percent of the total sales and produce many "first-class" products. For example, Tide® was the first heavy-duty laundry detergent, Head & Shoulders®, the first well-known effective shampoo against dandruff, Pampers® is the first to open the affordable disposable napkin market, and etc.


Until now, P&G has obtained more than 34,000 patents, which make it "among the world's largest holders of U.S. and global patents". (要跟对手对比)

Strategy and sources of innovation

According to A.G. Lafley, Chairman of P&G Board, new or improved product innovation has contributed largely to their "organic sales growth" in the past nine years, and he also emphasizes that the future innovation strategy should enhance the investment in research and development to develop more new and improved products across more categories by making the best use of current successful and optimal key resources. By implementing these, P&G can keep providing markets and customers with a permanent flow of new breathtaking products; on the other hand, they will launch more popular but improved product to extend their current brand line.

P&G creates more innovations by integrating their two key strengths, consumer understanding and science, which can avoid causing tension between performance and value, and can bring about the combined effective innovation of customer needs and company means.

They has strong purpose that is provide good product and service to 'improve consumers' lives', that motive employee to presents enormous opportunities to innovate. can inspire and motivate P&G people around the world to new

levels of innovation, productivity, executional excellence and

business results.

There are trying to set up clear, stretch and realistic goal, for example, 'four to six percent organic sales growth, double-digit earnings-per-share growth', which provided an explicit and consistent focus for the company and guide its employees to think and behave in the right way.

To develop better product for local market and customer, P&G keeps building up innovation centres in more countries and hiring more elite engineers. This has allowed P&G to make full use of the skills and interests of people across their own portfolio of technologies and businesses to encourage and deliver more innovations.

There have set up 'Futureworks' team to exclusively work on searching in everywhere such as University lab to find new idea and technology.

They have also built up an innovation centres - 'Innovation Hot Zones' to create a suitable simulation environment for some innovation challenges which can ensure some ideas can be converted into reality and capture the benefit from it. At the same time, when there comes out a new idea, I've got a problem I've got to solve, or if I have an idea in an area, I can be in touch with someone somewhere around the globe within 24 to 48 hours who has the answer or idea that I need.

Beside, P&G also have launched its Connect & Develop (C&D) strategy, which aims at collecting new ideas and technologies from creative minds of the outside world to encourage more open innovations. These creative minds can be any individual, who tries to get patent for and commercialize new idea or invention. They can be the small or medium size companies, which possess sophisticated technologies and eager to make profit with such technologies. Also, they can be the university that houses talents and high-tech laboratories.

Organization and process for innovation

P&G carries out the "flexible time"' and "'work from home"' programs, which gives employees freedom and autonomy to choose the most suitable work schedule and work place that can optimize the output of work and provide a suitable environment for the coming of new ideas.

In P&G, there is no door at any office, and the meeting tables are rounds which can created an open environment to encourage the employee to mutually access and share their ideas and materials.

They are trying to periodically relocate employees to different area, position or even different department to give employee the diverse experiences. By doing this, it can further the understanding between employees or departments, can boost the knowledge sharing, and push people think critically which can cultivate innovation.

P&G have an effective reward system to support the innovation, they have corporate innovation fund which specializes in high-risk idea.

They are offering various post-employment benefits such as profit sharing trust, pension plan, by which, employee can feel they have the ownership of the company; they will be more active to the job and concentrate on it without worry behind.

Have great leadership which can influence the organization and lead them to create an innovation climate to facilitate innovation. They have been recognised by Fortune as the #2 in "Top Companies for Leaders" survey.

P&G emphases on "build from within" of an organization with 95% of their employees started from the entry level then grown up together. This can cultivate a harmony of relationship between the fellow P&Gers, and ease the communication barriers at work. They also like to promote employees from within the company rather than head hunting outside of the company.

They have sophisticated hiring and training systems, which enable every employee to have the opportunities and potential to be an innovator.

Every new idea is appreciated and cherished in P&G. Innovation is everyone's job. Every employee should participate, and make constant efforts to capture every chance to create innovative ideas.

P&G are insisting on that an effective system is the most important factor to innovation. They have created a highly disciplined process