P&g Case Study
- What lessons pertaining to Corporate Entrepreneurship have you learnt from the case?
For large corporations, creating new businesses is the challenge of the day. After many years of cost cutting measure and downsize operations, senior management have to realise that shrinking is not way to success. In order to stay competitive, tradition operations like tweaking existing offerings, acquire rivals’ companies, or moving into developing countries is no longer sustainable. In order to survive in the ever-changing landscape; must create new values, develop new technology, and sustain innovative new businesses.
Corporate entrepreneurship is, however, a risky proposition. Corporate New Ventures introduced by Procter and Gamble to target the problem of innovation within the corporate structure as the company’s sale and revenue has stagnated over the past few years. There was a need for re-structuring in the company in 1994 and developed a supporting unit that having a sole function of incremental innovation, and exchanging of ideas between the different business units within P&G.
Firstly, Corporate New Ventures has established a highly effective team in both discharging its tasks and function together. The team has identified opportunities from the unmet market that did not fit neatly into the sector category of business. The ideas they developed has proven the process of innovation can be more scientific, predictable and efficient. In order for the team to gain a better understanding of pre-market predictors and product success, they have done extensive researches and surveys and bring technology to fill up the missing gap.
Secondly, communication across the different business units and sharing of ideas is important for the new development in the company. Hence, the team has created the P&G Brand Database where mistakes can be make reference for future improvement but not to repeat or penalise it. In particular, CNV shares all its information with the other business units with their detailed reports that records all their innovations, and other sector venture groups approaching it for help. CNV also created a sharing culture in the workplace by inviting all other employees of P&G to its penthouse to improve communication, and in the process create cross-pollination of ideas.
Thirdly, Personnel development and executive engagement are also critical. P&G spends an extraordinary amount of time and effort on recruiting. Through my interview with Mr Edwin Ong, future employee of P&G (Singapore) in their management trainee programme, he thinks that style of management should be the type that gives employees quite a bit of autonomy. His past experiences and expectation of the company provided P&G the right combination of “entrepreneurial DNA,” broad technical talent and intellectual agility. Executive engagement is essential for people to trust that the process of corporate entrepreneurship is being taken seriously which indeed P&G has demonstrated its commitment in continuing to pursue the development and commercialisation of good ideas from a pool of young talents through its management trainee programme.
- Which model or models of Corporate Entrepreneurship did they adopt?
It was evident that Corporate New Ventures has transformed into a Producer model with given substantiate amount of resources in both funding and staff. Even though CNV is created not a functional business units, it main role is to develop new ideas and handed over to existing business units. With the approval of their senior management, CNV R&D has constantly gaining access to all sector’s technologies and their engineers are encouraged to think of how it can be used across sectors. Hence, it fulfilled its responsivity to identify opportunity within the cracks within the existing business units.
However, in the initial establishment of Corporate Innovation Fund follows an Enable models where centralised fund allowed project teams within each sectors. Many ideas falls outside the purview of sector new venture groups and individual project teams. Hence, there was a need to form Corporate New Ventures led by Craig, two brand managers, Chuck Hong (as a part-time R&D Director), a full time R&D manager, Tom Chorman (finance), a part-time product supply and support individual, a part-time market research manager, and a small support staff. They were definitely the instrumental personals of the successful P&G in the 1990s.