Creating innovation for competitive advantage
A Procter & Gamble case study

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Page 4: How organisation structure supports innovation

Organisations that are designed for innovation have three characteristics:

  • They make it easy for innovation to flow throughout the enterprise.
  • They make it possible to learn quickly from consumers.
  • They make it possible to develop ideas profitably time and time again.

Procter Gamble 6 Image 1For Procter & Gamble the key to faster business growth, transforming existing markets, making inroads into new markets and staying ahead of the competition is ‘innovation’, not just from one part of the organisation, but across the whole business.

Procter & Gamble currently holds more than 25,000 patents world-wide, and is launching more products than at any time in its history. Investment into research and development has provided the business with the unique opportunity to transfer new technological and scientific breakthroughs across a range of product developments in a way that makes sure that it works. At a time of unprecedented change in the marketplace, unleashing innovations at a faster speed than the competition will lead to growth and the further development of the business.

Every time you see an innovative new product on a supermarket shelf, remember that it started as a good idea in someone’s head. Some products may be completely new, whilst others may be extensions, ongoing developments or improvements of existing products. A new product may be one which replaces or extends an old produc;opens up a new market; or broadens an existing market. Ideas for new product development (NPD), whilst all having a clear benefit for consumers, may come from several different sources including:

  • ideas from salespeople, who are close to customers such as retailers and are in a strong position to understand their needs
  • ‘blue sky’ laboratory work in new areas, that creates new product ideas and concepts that have never before been explored
  • combining two technologies or joining products together to develop a single new product, such as shampoo and conditioner
  • transferring technologies from one series of products and processes across to other product ranges and to other processes
  • extensions of existing products which provide goods in better and more convenient forms for the consumer
  • improving existing concepts, so that all products are constantly developing to meet increasingly sophisticated consumer requirements.

Procter & Gamble has innovated by introducing proactive development across the company. This involves making connections between countries, across product ranges, through different markets and by transferring technologies used from one product range to another. A new product may simply be created from a minor change involving an extension, or the development of a totally new product concept.

One key factor is the ability of its people to learn from each other by transferring the expertise or best practice in product innovation, developed in one country through to another. This enables different parts of the group to combine technologies and experiences and is known as technology transfer. Each business unit is involved with product development. Each unit’s research and development is linked to its markets as well as the activities of the other units.

As a result innovation takes place wherever consumer needs can be met by ideas generated by staff. In developing the business in a way that integrates progress with the social development and environmental concerns of a fast-changing society sustainable development is a key element.  Reducing environmental impact and improving manufacturing and product efficiency through better approaches to innovation can both improve products and also help to develop business opportunities.

Procter & Gamble | Creating innovation for competitive advantage
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