Aspects of Design Thinking

Running head: INNOVATION AND COMPETITIVE ADVANTAGE: CHANGING ENVIRONMENTS 0

Innovation and Competitive Advantage: Changing Environments

In the modern business environment, business organizations are faced with many risks in as much as the market environment is unstable and unpredictable. The increasing uncertainty levels have forced businesses to adopt varying strategies to ensure that they are able to operate within a highly competitive and dynamic environment. Due to high uncertainty levels, businesses are forced to develop strategies that will enable them to survive in the market. Majority of the business organizations and the managers’ decisions are affected by various forces such as globalization, growing innovation, and technological advances, which have increased the volatility of the business operations in the global market (Soliman, 2013). This paper provides an analysis of P&G Company to determine how they have managed to meet the concepts of competitive advantages in the global market. This is achieved through the evaluation of the firm’s innovation philosophy, activities to create sustainable competitive advantage, and research and development initiatives that have enhanced the creation of a competitive advantage.

P&G Leadership Philosophy on Innovation

Given the competitive nature of the global market, firms are always looking for ways to maintain a competitive advantage, mainly using innovation to enhance their sustainability. Over the years, Procter and Gamble (P&G) has successfully operated in the market through its ability to develop and sustain a culture of innovation. The leadership within the company has promoted the development of innovation as an integral part of the firm, which has led to the development of the new and better household products (Hisrich & Kearney, 2014). The goal of the company has been to offer the consumers with product options across all pricing tiers to initiate preference of the company’s brands and ensure that they are able to gain meaningful value from the product offerings. P&G has been able to generate a competitive advantage by producing and offering their customers with products and services that are marketable and of greater value than those offered by competing firms (Brown & Anthony, 2011). This ensures that the firm can sell their products at competitive prices and maintain a high volume of sales. The leaders in the company, such as A. G Lafley, have actively promoted a culture of innovation by ensuring that the people within the company accept innovation in their daily routine. P&G has been able to promote the development of research and development capabilities among its people. As a result, the company has been able to harness the insights and skills of their employees, enabling them to focus on the needs of their customers while developing these innovative products (P&G, 2017).

Activities to Sustain Competitive Advantage within P&G

The achievement of a sustainable competitive advantage in the market ensures that the firm is able to promote a culture of innovation and entrepreneurship. To achieve this, the organization should be able to adapt to the changes in its external environment, focus on the needs of their customers, and develop flexible processes and strategies to cater to the varying needs and demands of their stakeholders (Hisrich & Kearney, 2014). At P&G, innovation has been developed as part of the organization’s culture ensuring that they are able to spur growth, minimize costs, and deliver high value of products that are offered to the consumers (Brown & Anthony, 2011). P&G has relied on the consumers as a key driver to their innovations by determining what they need and what is possible thereby being able to offer varying product options. These products include Downy, Pampers, Gillette, Crest, Swiffer, Tide, Olay, and Pantene among other products that have defined the company as a household name. The company has always ensured that their employees are actively engaged in research and development across various innovation centers. The organizational culture is rooted in productivity, learning, and concern for their customers. This has helped the firm to maintain an ongoing history and culture of innovation (P&G, 2017).

R&D Initiatives in the Organization

In order to create a long-term competitive advantage, P&G has focused on continuous research and development, which is meant to increase the level of innovation output. This has been achieved by pursuing different approaches to innovation within the company. P&G does not separate innovations that have been designed before in order to create and offer new ones in the market. Instead, the company has emphasized on transformational-sustaining approach to innovation, which seeks to deliver more benefits in its product categories that are already in existence (Brown & Anthony, 2011). This has enabled most of their products to gain control of the market over competing products such as Crest brand over the competitor’s Colgate. Through disruptive innovations, various company’s products have been improved to ensure that they are able to suit the needs of their customers. P&G has also focused on strengthening its support for businesses that promote transformational-sustaining innovations and disruptive business models. This has offered the firm with more opportunities as they are able to cater for the varying needs of their customers such as beauty, personal care, household, family, and baby care products. The FutureWorks and LearningWorks business model adopted by the company has provided the company with greater sustainability by facilitating partnerships with firms such as Healthpoint Services in India in as much as they support decision making in the global market through research (P&G, 2017). In addition, P&G has made efforts to revamp its development strategy and review process within the organization to ensure that strategy and innovation are integrated and handled together to enhance the competitiveness of the firm and increase the opportunities that arise from innovation.

References

Brown, B., & Anthony, S. D. (2011). How P&G tripled its innovation success rate. Harvard Business Review, 89(6), 64-72.

Hisrich, R. D., & Kearney, C. (2014). Managing innovation and entrepreneurship. Sage Publications.

P&G, (2017). Our Approach to Innovation - Who We Are. Us.pg.com. Retrieved 22 March 2017, from http://us.pg.com/who-we-are/our-approach/our-approach-innovation

Soliman, F. (2013). Does innovation drive sustainable competitive advantages? Journal of Modern Accounting and Auditing, 9(1), 130.