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Procter and Gamble Case Study Case Study

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Updated: Jul 14th, 2021

Diamond Philosophy

Procter and Gamble use the Diamond Philosophy to guide its business product innovation efforts. The Diamond is a symbol of all the aspects that come together during the business product innovation process. Indeed, some of the things that are considered during this process include resources, the innovation strategy, the SIMPL™ new product process, and the project selection process. It is important to note that the Diamond Philosophy has four main drivers.

The four drivers are incorporating a product innovation and technology strategy for the business, ensuring resource commitment and portfolio management, investing in the right people to ensure functional and effective teams, and establishing an effective idea to launch process. The company has used these four elements to ensure they remain at the top of the market. Interestingly, these guidelines are applied to the company as a whole and also to individual products. This ensures that the standard is the same throughout the different departments and units in the company.

For example, P&G has the Pampers brand that is recognized all over the world. One can argue that the company has created a monopoly with this product as people refer to diapers as “pampers” (Degen 2009). All other P&G products have the same reputation where the company aims at creating a monopoly. The innovation strategy is very important as it highlights how each innovation in the company is to be developed.

This common strategy ensures that innovations can be done at any level and still be of quality. Resource commitment is also very crucial. This means that each department has some resources that are to be used specifically for innovation purposes. As Lewis et al. (2007) note, many projects fail due to poor resource commitment both in terms of finances and manpower. The third element of investing in the right people ensures that all employees work effectively.

This boosts the ideation process and also makes the working environment that more productive. The last element, the establishment of an effective idea-to-launch process, fits within the organizational culture. A relevant organizational culture will ensure that ideas move from one stage to another since their conception. This process should be simple, easy, and with viable indicators of success.

The SIMPL™ approach is part of the Diamond Philosophy. The approach stands for Successful Initiative Management and Product Launch model. One of the reasons this model is the winning strategy to withstand global business pressure is the fact that it monitors the product from its ideation phase through to its post-launch phase. One of the advantages of this is that it helps improve the product at each stage to ensure a high-quality final good.

Additionally, as Degen (2009) explains, many companies do not significantly monitor the product after its launch. The SIMPL™ approach thoroughly monitors the product to ensure clients benefit from it as promised during the launch. It is also important to note that the approach encourages all the teams involved to do their work effectively. This is due to the fact that any wrong information can lead to the complete overhaul of the product. Mintzberg (2007) also explains that timing is important for any idea to launch an approach. SIMPL™ takes time into consideration all throughout the process. One way it does this is by encouraging the development of precise goals and expectations.

Discussing the organization of Procter and Gamble

There are two things one has to consider when discussing the organization of Procter and Gamble. The first element is that the company uses a product-type approach to organizational structure. The product type approach ensures that teams working on the same products or departments organize themselves as per their work. Lewis et al. (2007) explain that the most important element in the organization is the acceptance of the structure provided by the employees.

In the case of Procter and Gamble, the employees have the freedom to structure their team in the best way at that time. The Management is given a supervisory role in order to not interfere with the process. The second thing to consider is that the organization of the company also embraces a front-back matrix. This matrix gives each individual a role within the organization. In Procter and Gamble, the chief executive officer is the front leader.

This ensures that even though no department is micro-managed, all have to report directly to the CEO. The coordinated approach ensures that everyone is accountable to someone else. Mintzberg (2007) explains that there are various ways leaders can encourage accountability. Procter and Gamble have incorporated digital investments to ensure such accountability.

In regards to motivation, the company has both monetary and non-monetary rewards. The monetary rewards are given in the form of shares in the company or any other company that is linked to Procter and Gamble. The company has identified an elite group that sits in the Committee that determines the shares that will be rewarded and under what conditions those rewards are given. Luca (2016) explains that despite the fact that many companies do not use monetary rewards, it is one of the best ways to motivate employees. As mentioned previously, the company also uses non-monetary rewards to motivate its employees.

One way it does this is through the awarding of a trophy for the Annual Award for Innovation. The Management has made this award very prestigious. A second advantage of the award is that it also creates good competition among the employees, ensuring that they put in significant effort to be recognized at the end of the year. The second way the company motivates the staff through the non-monetary approach is through offering training courses. The training equips the staff with needed knowledge and skills, which are then implemented in the Procter and Gamble workspace.

The controlling aspect of the management functions in the company is executed in two ways. The two ways are bureaucratic and organic controls. Lewis et al. (2007) define bureaucratic control as the use of systems and structures to influence behavior. Indeed, Procter and Gamble have strict structures that shape its human resource and finance departments. The employees are also encouraged to follow basic structural guidelines when working in teams. On the same note, the company also employs organic controls, which use traditional and social norms to influence behavior (Mintzberg 2007).

These cultural and social norms are often defined by the organization through the organizational culture. The organizational culture should be flexible enough to accommodate any changes in these norms in the future. It is important to note that the company also ensures transparency and accountability through its controlling aspect. It does this by presenting yearly reports to both its board and the employees.

Qualities of Lafley

One of the ideal qualities of Lafley is that he is good at decision-making. Luca (2016) explains that a good decision makes not only has the confidence to make changes but also does them (changes) at the right time. Lafley had to make some tough decisions when he took charge of the company. He fired 10,000 employees in an attempt to make the company more professional and also cut down on costs. Despite this, he was confident that the move would save the company, which at that time was going bankrupt.

This trait fostered a healthy organizational culture and enhanced organizational performance in various ways. The first being that it showed the employees that tough decisions have to be made sometimes for the benefit of the whole organization.

Lafley is also committed. Incorporating change is not easy, and it was made that much harder by the fact that he was new at the company. In spite of his situation, Lafley was committed to saving the company and making it a success. He introduced the SIMPL™ approach in the company and was keen to ensure that all employees understood the concept. He also ensured that both the Management and junior staff understood the importance of the approach.

Luca (2016) explains that making staff a part of the change process is critical in their uptake of the same. One can also argue that Lafley was committed to ensuring that employees love working for the company as he also introduced different ways to motivate the employees. Commitment affects both organizational culture and performance as it shapes the way the staff engages with the consumers and the products as well.

One can argue that Lafley is also inspirational. As stated earlier, there were various changes that had to be made when he took over from the previous CEO. It is crucial to point out that the previous CEO of the company had left it nearly bankrupt and in debt. Lafley identified that one of the challenges of the previous Management was that it was made up of significantly old members. The main limitation of such management is that it is not progressive.

Thus, it does not inspire the younger staff to work effectively and efficiently. Lafley fired the older Management and promoted younger and more productive staff. One can also state that he is inspirational as he was able to turn the culture of the organization into a more flexible and accommodating one. The impact of inspiration on staff performance is very important. It ensures that the employees are always motivated to work.

Lastly, one can state that Lafley is a good communicator. Mintzberg (2007) argues that communication is key in establishing trust. It is important to mention that Lafley had to gain the trust of his employees in order to make the changes he did. To do this, he had to communicate well with the staff. Communication is also key in the change process. Also, it is crucial to note that good communication also ensures transparency and accountability, things that helped put Procter and Gamble back to the market’s top position. This characteristic is important for a healthy organizational culture as it assured the staff that the CEO, and the Management, have their best interests at heart. The staff then becomes more motivated and inspired to work effectively and be more productive.

Supply chain management

Sustainability in supply chain management is achievable in various ways. Procter and Gamble have employed four main ways of implementing sustainable practices in their entire value chain. The first is through proper training of its employees. As stated previously, the company has use training and capacity building to motivate its employees. Proper training of all staff on the supply chain management and value process can ensure that the system flows smoothly.

One can argue that sustainability is a learned aspect. Thus, the best way to teach it is through training and capacity building. Mintzberg (2007) explains that staff is often more interested in learning that involves case studies and best lessons learned. This is very active learning, and it breaks the norm. Procter and Gamble have used such innovative learning methodologies to both pass knowledge and make the work environment better.

A second way the company ensures sustainability is through performance improvement. The company already has a reward system in place. It has used the same reward system to appreciate sustainability efforts by both departments and individual employees. It is crucial to point out that due to the organizational structure of the company, teams that work on the same product are also in charge of their own value chain processes.

Due to this, it is important that each of the individual members of the team understand how important sustainable value chain management is and how they can improve the system. Sustainability in value chain management can also be ensured through the use of sustainable materials and products. Over the years, the company has been changing its raw materials to ensure its products are sustainable.

The company addresses gender equality, diversity, and globalization in various ways. In regards to gender equality, the company has used more women in its advertisements for all its products. Initially, women were only involved in women-only products such as sanitary towels and baby products such as diapers. However, the company has increased the role of women in their advertising and media to promote gender equality. Additionally, the company strives to ensure a conducive working environment for both genders. They have also ensured a positive portrayal of women in their creative supply chain processes.

It is important to also point out that the company has taken strides to ensure that it has diversity. For example, it has incorporated supply chain diversity programs. These programs allow minority suppliers to also get linked to the company and offer their products and services. A normal supply chain requires that companies have a lot of experience. However, the Management has taken to giving new suppliers contracts so that they not only build and maintain their businesses but also gain the experience they need to get other contracts. The company has also given various charities based on the same concept of diversity.

In regards to globalization, Lafley identified several strategic partners who would further broaden the company’s rich. The example given in the case study is that of Wal-Mart, which has a large target audience. To attract this target audience, Procter and Gamble packaged its products to the standard of Wal-Mart and then used this to acquire a partnership with the retailers. The company has partnered with other retailers and partners to ensure they reach its target audience.

Reference List

Degen, RJ 2009, , Working Paper, International School of Management. Web.

Lewis, P, Goodman, S, Fanot, P & Mitchlitsch, J 2007, Management: challenges for tomorrow’s leaders, Thomson/ South-Western, Mason.

Luca, F 2016, , Thesis, Business School Laussane. Web.

Mintzberg, H 2007, The structuring of organization, Prentice-Hall, New York.

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