Introduction
Owing to mounting global competition and rapidly shifting market conditions, business organizations throughout the world are increasingly realizing the value of entrepreneurship and innovation as critical factors in attempts to spur productivity and achieve competitive advantage (Lassen & Nielsen, 2009). However, as suggested by Morris, Kuratko, and Covin (2011), organizations still experience huge challenges in being continuously entrepreneurial and innovative due to different agendas and lack of identifiable patterns of practices. In an attempt to address these challenges, the first part of this report aims to explicitly describe and analyze entrepreneurial strategies related to Procter and Gamble (P&G), while the second part compares the entrepreneurial and innovative strategies/decisions of P&G with Unilever, a major competitor in the United Arab Emirates (UAE) market.
Procter & Gamble
Dimensions of Entrepreneurship at Proctor & Gamble
The three main dimensions of entrepreneurship include:
- Innovativeness, or the tendency of an organization to engage in and encourage novel ideas, experimentation and creative processes, thus departing from traditional norms in favor of new practices and technologies,
- Proactiveness, or the tendency of an organization to be proactive in responding to promising market opportunities,
- Risk-taking, or the tendency of the organization to engage in high-risk projects and managerial preferences for bold versus cautious actions with the view to realizing set objectives (Erasmus & Scheepers, 2008).
P&G encourages innovativeness through adopting non-traditional market research tools such as customer observation to develop new products, encouraging cross-division exchange of ideas to foster collaboration, adopting an open mind in considering novel ideas from outside sources, and increasing designer involvement. It can also be argued that the company is proactive in acquiring new technologies to reinforce product development and in encouraging employees to develop new products from the customers’ perspective. Lastly, the risk-taking dimension is well illuminated at P&G owing to the company’s versatility to take full advantage of the full pool of resources at its disposal to develop new products that are in sync with existing customer needs and market opportunities (Morris et al., 2011).
Entrepreneurial Intensity/Orientation at Proctor & Gamble
Extant literature demonstrates that the “entrepreneurial and strategic research links the growth and performance of the firm to the degree of its entrepreneurial orientation (EO), or its willingness to innovate, take risks, and tendency to be proactive relative to marketplace opportunities” (Liu, Manolava, & Edelman, 2009 p. 1). Consequently, the notion of entrepreneurial intensity (EI) is perceived as a function of the level and frequency of entrepreneurship as embedded in the supposition that organization-wide entrepreneurial behavior may vary particularly in terms of the firm’s level of innovativeness, proactiveness and risk-taking attributes (Erasmus & Scheepers, 2008).
From the case study, therefore, it can be argued that P&G has a high EI as it makes use of all dimensions of entrepreneurship to develop customer-oriented products aimed at satisfying existing and potential market opportunities. It is safe to argue that EI at P&G leans more toward the innovativeness dimension, as available literature demonstrates that, in 2006, the company’s radical strategy of open innovation through the “connect and develop innovation model” was generating more than 35 percent of its innovations and billions of dollars in revenue (Huston & Sakkab, 2006).
Nevertheless, the level and function of P&G’s EI is also high in risk-taking as the organization expends in excess of $2 billion annually on R&D – roughly 50% more than it closest competitor, and more than most other competitors combined –, not mentioning that it invests huge sums of money in foundational consumer research with the view to developing new products (Brown & Anthony, 2011 p. 66). Lastly, P&G has a high frequency of entrepreneurship in proactiveness, particularly in the development of novel slogans and brand extensions to drive revenues.
Entrepreneurial Grid
Available literature demonstrates that the entrepreneurial grid “combines different levels of entrepreneurial of frequency of entrepreneurial events (from periodic to continuous) and a different level of entrepreneurial activities (from incremental to revolutionary)” (Singer, Alpenza, & Balkic, n.d. p. 2). Consequently, the levels of entrepreneurship achieved by P&G across the three dimensions of entrepreneurship cannot be documented as revolutionary as the company has only been able to achieve moderate success over the years (2004-2007 revenue growth was 16 percent, profit margin growth was only 4 percent) (Shukla, 2009), and depend substantially on brand extensions as demonstrated in the case study; however, the company’s frequency of entrepreneurship is at an all time high due to heavy investments in R&D as well as the adoption of a radical open innovation strategy (Huston & Sakkab, 2006).
P&G and Unilever in UAE
Background
Owing to the fact that P&G has interests in a vast range of FMCGs, it experiences stiff competition from numerous companies interested in the same market and customer spectrum (Brown & Anthony, 2011). The Anglo Dutch retailer Unilever has been competing with P&G for existing market opportunities not only in the UAE but also globally (Decter & Garner, n.d.). In this light, this section not only compares the entrepreneurial and innovative strategies/decisions of P&G with those of Unilever in UAE, but also analyzes the impact of these companies in the kingdom.
A Comparison of Entrepreneurial and Innovative Strategies
According to the case study, one of the innovative strategies being employed by P&G to increase market share is investing heavily in one-on-one consumer research intended to meet the less obvious consumer needs with novel products (Morris et al., 2011). Owing to the increased use of non-traditional market research tools such as customer observations, P&G has been able to increase the frequency of entrepreneurship in the UAE market by developing innovative products customized to the needs and preferences of consumers. Unilever is also engaged in comprehensive consumer research with the view to developing proven breakthrough innovations which can then by designed further in its R&D facilities to come up with fully formulated products with capacity to satisfy prevailing consumer needs (Unilever, 2014).
In its UAE operations, Unilever has continuously expanded the consumer research function owing to the higher expectations that unbridled “research would lead to innovation and so provide a source of growth and new business” (p. 106). This strategy has paid dividends to Unilever operations in UAE by fueling the capacity for incremental innovations of products, hence enabling the company to achieve double-digit growth in market share and trade volume (Eljundi, 2009).
Available literature demonstrates that effective entrepreneurial and innovative strategies are often hatched in “a culture that promotes creativity at the individual and team level” (Shukla, 2009 p. 4). P&G has employed the creative strategy of brand expansions with the view to not only assisting employees to work toward a common objective, but also to spur product innovations in its critical areas of business. In the UAE’s context, P&G has employed the brand expansions strategy to introduce different product categories using its popular brands such as Gillette with the view to leveraging brand equity (Brown & Anthony, 2011). On its part, Unilever has used this innovative strategy to enhance its footprint particularly in the cosmetic and personal care market, hence substantially broadening its product portfolio not only in the UAE but also globally (Jones & Kraft, 2004; Jones, 2005).
Moving on, it is evident that both companies employ an open innovation approach to further their business strategies and improve revenues. P&G no long fully relies on internal R&D processes to drive growth and transformation; on the contrary, the company has come up with an aggressive open innovative approach that ropes in new internet-based technologies and external sources to drive its growth agenda. Although P&Gs best innovations traditionally came from connecting ideas across internal businesses, stiff competition and shifting market trends pushed the company to start relying on external connections for their capacity to produce highly profitable innovations (Huston & Sakkab, 2006 p. 2).
Consequently, it is safe to argue that P&G makes use of external connections in UAE through its open innovative approach to develop highly innovative products with the capacity to satisfy customer needs and preferences. On its part, Unilever uses a similar open innovative approach, with available literature demonstrating that the company’s innovation strategy allows for “the development of strong, fruitful relationships with partners and access to the agile innovation advantages of small companies, whilst maintaining openness to new ideas and a focus on core business and priorities” (Decter & Garner, n.d. p. 1). Consequently, as is the case with P&G, Unilever also sources for innovative and entrepreneurial ideas from external connections, implying it benefits more from innovative individuals, small businesses and partners residing in UAE in attempts to expand market share.
It is clear from the case study that P&G encourages cross-division exchange of ideas and company-wide collaboration to develop innovative products such as new toothpaste flavors and car wash technologies (Morris et al., 2011). The company encourages cross-division exchange of ideas through engaging in activities such as poster shows, internal trade shows, innovation reviews and communities of practice, implying that it values its own employees as innovators and continuously taps into their talents and creative thinking to remain sustainable (Houston & Sakkab, 2006). It is this cross-division exchange of ideas that has seen P&G come up a whole range of innovative products from its Crest brand through disruptive innovation.
In the Crest brand example, cross-division exchange of ideas and company-wide collaborations among P&G’s employees and management led to the development of other toothpaste brands such as Crest Whitestrips (made teeth whitening at home affordable and easy), Crest Pro-Health (brought half-a dozen benefits into one tube, including fighting cavities, plaque, tarter, stains, gingivitis, and bad breadth), as well as Crest 3D White (a line of oral care products, including one that whitens teeth in two hours) (Brown & Anthony, 2011). It is important to note that these brands have found wide usage in UAE, hence propelling the company’s growth agenda forward. On its part, Unilever not only encourages cross-division exchange of ideas among employees and management, but also reaches out to institutions of higher learning to develop models of collaboration intended to advance research and drive the growth agenda (Decter & Garner, n.d.).
Another innovative strategy practiced by P&G, according to the case study, is to significantly reduce test-marketing with the view to shortening the launch time for new product offerings. This strategy is embedded in the premise that “making the best product can come at a cost of being late to market or missing a market opportunity altogether” (Morris et al., 2011 p. 83). Although this strategy is predicated upon valid justifications of possible market loss and late marketing of new products, it may come at a price when applied in market settings where customers look for quality and perfection as is the case in UAE. On its part, Unilever test-markets it’s FMCGs to ensure they are of optimal quality and perfection before roll-out (Jones, 2005).
As a matter of fact, Unilever spends quite a substantial amount of time concept demonstration on a lab environment to prototype demonstration in an operational environment and, finally, to product launch (Hague, 2012). Perhaps this innovation strategy partly explains why Unilever has been able to capture a larger market share than P&G for its FMCGs in the UAE (Brown & Anthony, 2011).
Lastly, it has been demonstrated in the case study that P&G engages in designer involvement in product logos and packaging to satisfy consumer experiences and therefore sustain growth (Morris et al., 2011). In the UAE’s context, it can be argued that such involvement has helped the company to attract customers’ attention in a country that is heavily dependent on cultural and religious perspectives (Cerimagic, 2010). At Unilever, the basic premise is that “packaging designers must constantly inject innovations to attract consumers in a constantly and highly competitive market” (Chopolat, Leech, & Kemp, 2011 p. 2).
These authors contend that Unilever take into great consideration the cultural and religious orientations in demonstrating how the combination of creative design, cutting edge technologies, and comprehensive market research can coalesce to avail the much needed innovation, efficiency, and extremely marketable products in foreign markets such as the UAE. Table 1 below illustrates a comparison table of the entrepreneurial and innovative strategies/decisions used by the two companies
Table 1: Comparison of Entrepreneurial and Innovative Strategies/Practices.
Judgment
Drawing from the above discussion and analysis, it is evident that most of entrepreneurial and innovative strategies employed by P&G and Unilever are similar in spite of their orientation to achieve minimally varied objectives. The similarity of most strategies, in my view, is perhaps due to the fact that both companies deal with fast moving consumer products (FMCGs). As a global competitor to P&G, Unilever has been able to use its innovative and entrepreneurial leverage to sustain growth and competitiveness in key economies around the world, whilst opening new channels to attract innovative ideas not only through collaborative ventures and partnerships with universities, but also through the adoption of an open innovation approach (Jones & Kraft, 2004). In the UAE’s context, Unilever has been able to sustain a double-digit growth in large part due to its innovative capabilities as demonstrated in this report.
It has broadened its product portfolio through successful brand extensions and ensured that it put’s into consideration cultural and religious perspectives of the predominantly Muslim population in the UAE to design products that have the capacity to attract customers and hence improve revenues. Consequently, it is suggested that Unilever’s entrepreneurial and innovative strategies are effective and successful.
Impact of the Companies in UAE
Entrepreneurship and innovation are closely associated with the creation and sharing of wealth, development of institutional and people skills through approaches such as open innovation and collaborative ventures, development of specialized knowledge assets, and transforming national economies through new ideas and technologies (Ebersberger et al., 2011). The UAE has benefited on all these fronts through the entrepreneurial and innovative capabilities of P&G and Unilever. Additionally, the companies continue to serve as a major source of employment for the citizens of UAE, not mentioning that they are a major source of the country’s economic development through tax revenues. Unilever, in particular, continues to build human capacity in UAE through joint partnerships with institutions of higher learning with the view to sustaining the research agenda. It is therefore clear that corporate entrepreneurship and innovation can serve as a major pillar for a country’s economic, intellectual, and social development.
Conclusion
This report has not only explicitly described and analyzed the entrepreneurial strategies related to P&G, but has also undertaken a comparison of the entrepreneurial and innovative practices of P&G and its major competitor (Unilever) in UAE. It is evident from the analysis that both firms follow similar paths to entrepreneurship and innovation though they slightly vary in their drive to sustain a corporate innovative and entrepreneurial environment. The main innovative and entrepreneurial strategies demonstrated by the two companies include investing in one-on-one consumer research, adopting an open innovation approach, undertaking cross-division exchange of ideas and company-wide collaboration, as well as encouraging designer involvement Overall, it has been demonstrated that innovation and entrepreneurship are the bedrock of continued organizational growth and competitiveness, and can also spur the economic, intellectual, and social development of country.
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