Procter & Gamble

The US shift. During the middle of last century, the US market was very homogeneous with a large and growing middle class of consumers with very similar needs and interests for products. The idea from P&G to satisfy the needs of the American consumers was to create a competitive brand management system based on product divisions containing different brands. Each brand was managed by the Brand Managers who had a full team of sales, R&D, manufacturing and so on working on the brand. Brands under the same product division had to compete in the market place. The problem was that with the advances in technology and the growing consumption capacity of the middle class, the number of brands was growing too fast to maintain that level of resources for each brand. The Matrix organization gave a greater focus on product division rather than individual brands, and centralized functions like sales and R&D which would give a better support to products categories without cannibalizing their own business.
The European Shift. In Europe the market was very different to the one in the US. There was a very heterogeneous market with many different countries, cultures and regulations which translated in different types of consumers with different needs. In order to accommodate that heterogeneous market P&G decided to do geographical organization divided by countries where each country manager had full control over the different teams (sales, R&D,…) and was responsible for the strategy in the country. This model was very expensive and inefficient with R&D teams in different countries working on developing similar products. On top of that, the global launching of any new proven successful product it was taking too long across the European countries allowing competitors to catch up on those countries and diminishing the competitive advantage of the product for being first in the market. The category management approach which created regional divisions and allowed flow of innovation and