P&G Essay Example | Topics and Well Written Essays - 1750 words

P&G - Essay Example It is equally important, if not more so, that innovation is cost-effective, aligned with consumer demands and addresses a perceived gap in the market. In other words, not only is the strategy for corporate survival continued product development and innovation, but the cost-effective development of innovative products which market research indicates will attract the consumer market. Proctor and Gamble has resolved the seemingly complex equation of cost-effective continued product development and equation through its "connect and develop" strategy. Indeed, P&G's approach to product development and innovation has the potential to serve as a critically valuable lesson to corporations across the world. The hurdles to new product development are cost and innovation. As Huston and Sakkab (2006, p. 60) write, "Most companies are still clinging to what we call the invention model, centered on a bricks-and-mortar R&D infrastructure and the idea that their innovation must principally reside within their own four walls." Confining product development to the company and to individuals working in the company often means that development will be a costly and time-consuming process. The reason, as Huston and Sakkab (2006) illustrate through reference to a case study, is that when a company begins the R&D process with an idea for a new product or an innovation to an existing product, it may not have the technology to translate the idea into a reality. The company's in-house Research and Development team will then have to experiment with several technologies to bring the idea to life and, of course, may and may not succeed. Even if they succeed, success comes at high financial cost. Furthermor e, as Brown and Eisenhardt (1995) argue, because the process is often a length one, there is always the risk that a competitor may beat them to the market with the technology and product. In this case, the return on the new product research and development investment may not be realized. Hence, a financial risk factor enters into the equation. Proctor and Gamble stumbled across a high radical approach for new product development and innovation when it found itself confronting numerous technological obstacles to the manufacturing of their innovative Pringle line of imprinted chips. Initially relying on in-house talent for the development of the required technology, Proctor and Gamble soon found the process excessively costly, unrealistic and unfeasible in terms of implementation. It was at this point that P&G decided to look outside its walls for a solution and, with that in mind, developed and circulated a technology brief which outlined the problem. The response was positive and the company was approach by a baker in Italy who had already developed the technology in question. Proctor and gamble obtained the rights to the use of the technology, developed it to suit their specific needs and were, as a result, able to successfully produce their new line of Pringle chips at a fraction of the cost they would have otherwise run into. Huston and Sakkab (2006) concede to the fact that the approach adopted by Procter and Gamble is a radical one. As new product development, inclusive of research and development, often functions as a firm's competitive edge, corporations generally tend to prefer to keep all research, development and product