“Game-changing innovation comes not just from disruptive, “big-bang” product innovations but also from leveraging what your business does best to create a competitive advantage.”(Lafley, 2008)

COLLABORATION AND INNOVATION AT PROCTER & GAMBLE
CASE STUDY

Prepared by: xxxxxxxxx Lawrence Technical University
Management Information Systems, MIS-6013
Professor Patrick Mach Evans
February14, 2012

Table of Contents Introduction 3 Analysis 6 Conclusion 16 References 17

Introduction
When the typical consumer hears the name Procter and Gamble they might think of Ivory Soap, Tide, Pantene, Pampers, or possibly Swiffer. The reason being is that these are a just a few of the everyday household products that have been contributors to the huge success of Procter and Gamble. But when another consumer product company hears the name Procter and Gamble – they think of innovation, leaders on the cutting edge of technology, and one of the front runners in globalization.
Procter and Gamble, also known as P&G, has been a key element of American business for over 150 years. In 1837 a small soap and candle company formed in Cincinnati, Ohio. This little business, named after brother-in-laws, Procter and Gamble, has since grown to a global giant with 138,000 employees working in more than 80 countries. (P&G Revolutionizes Collaboration with Cisco, 2008) P&G is the largest manufacturer of consumer products in the world and one of the top 10 largest companies in the world by market capitalization. (Laudon & Laudon, 2012) p.75.
Proctor and Gamble realized strong growth from the mid 1940’s to 2000 on both a national and international level. By 1980, the company had a presence in 23 countries world-wide. Their initial global philosophy was described by Walter Lingle, Executive VP “We have decided that the best way to succeed in other countries is to build in each one as exact a replica of the United States Proctor and Gamble organization as it is possible to build. We have decided that the best way to succeed in other countries is to replicate that of the United States Proctor and Gamble organizations. We believe the exact same policies and procedures which have given our company success in the United States will be equally successful overseas.” (Bartlett & Ghoshal, 1989). Procter and Gamble has been an industry leader in innovation and global business solutions for decades but “In the spring and summer of 2000, P&G experienced one of the most demanding challenges in its history. After missing earnings commitments, the Company's stock declined dramatically, resulting in a loss of nearly $50 billion in market capitalization.” (P&G Revolutionizes Collaboration with Cisco, 2008) A.G. Lafley became CEO in June, 2000. He recognized that there were significant shortcomings in the way the company was doing business. These shortcomings were contributing to the decline of new, innovative products, which is one of the three main focal points of Procter and Gambles business units; Functional Innovation, Governance, and Capability. Lafley’s vision was to bridge the gaps between core competencies and potential outside resources through the use of progressive collaboration tools and Information Systems. Without this revolutionary approach Procter and Gamble’s growth would have become stagnant, allowing other consumer product companies to capitalize on the reduced competition, ultimately resulting in lost market share.
One unique approach utilized by Joe Schueller, Innovation Manager for Procter and Gamble’s Global Business Services division, was to modify internal/external communications. He surmised that email is not the most collaborative way to share information (Laudon & Laudon, 2012) p.75. Procter and Gamble now utilizes an array of programs that are available through the Microsoft Office Suite and SharePoint to minimize emails and maximize an open dialogue, efficient and effective communication, and the transfer of information to anyone within and external to the company, anywhere in the world.
Other significant systems that improve collaboration and innovation include the Virtual Collaboration Studios that provide real-time virtual meetings without the technical difficulties of a traditional Audio/Visual feed and InnovationNet which is an intranet that provides resources to researchers.
The systems listed are evidence that Procter and Gamble is committed to its global strategy and long term growth. Along with the capital investment, there is evidence that the company is structured to foster cultural changes from the top down.
Analysis
In September, 2009, Procter and Gamble announced a new business strategy. The focus is a "purpose-inspired growth" strategy of "touching and improving more consumers' lives in more parts of the world... more completely" states new CEO Bob McDonald. "We will provide branded products of superior quality and value that improve the lives of the world's consumers, now and for generations to come.” (Kanter, 2011)
The business structure is comprised of 4 pillars: * Global Business Units (GBUs) focus solely on consumers, brands and competitors around the world. They are responsible for the innovation pipeline, profitability and shareholder returns from their businesses. * Market Development Organizations (MDOs) are charged with knowing consumers and retailers in each market where P&G competes and integrating the innovations flowing from the GBUs into business plans that work in each country. * Lean Corporate Functions ensure ongoing functional innovation and capability improvement. * Figure [ 1 ] – Global Business Services
Figure [ 1 ] – Global Business Services
Global Business Services (GBS) utilizes P&G talent and expert partners to provide best-in-class business support services at the lowest possible costs to leverage P&G’s scale for a winning advantage (see figure 1) (www.pg.com/PG_GBS_Factsheet.pdf)
Innovation is a key element in the foundation of Procter and Gamble’s business structure. Three of the four pillars list innovation specifically in the definition and Global Business Service provides the collaborative mechanism that links the pillars together.

Procter and Gamble has a commitment to its shareholders, customers and employees. Part of that commitment is the goal to be recognized as the “most technology-enabled company in the world.” (P&G 2011 Annual Report) The company has established specific areas that will improve with the use of advanced collaboration technologies. 1. Procter and Gamble wants a relationship with customers, business partners, and suppliers around the world 2. Immediate business intelligence to assist and improve decision making time 3. Faster information sharing from Research and Development 4. Expanded ability to use data across multi-functional disciplines 5. Collaborate more effectively and efficiently, inside and outside the company (P&G 2011 Annual Report)
Procter and Gamble expects to achieve the goal of being the most technological company by implementing full utilization of a digitization strategy. The improvements are evident through quicker business decisions and more collaboration with the key players needed in the decision process. Examples of the major tools currently being utilized to improve collaboration are: Microsoft Office, SharePoint, TelePresence, InnovationNet, Virtual shelving and displays, Computational Modeling, and from the Global Business Services division “Connect and Develop”.
Microsoft products include a collection of compatible systems that enable communications through various methods. Included are services for voice and data transmission, instant messaging, e-mail, and electronic and Web conferencing. Microsoft Outlook is an information manager that is compatible with SharePoint. It provides a system that organizes email and calendar information into a single location. Approximately 80,000 workers at Procter and Gamble utilize Outlook. (Laudon & Laudon, 2012) p. 76.
Image 1- Microsoft SharePoint Logo
Image 1- Microsoft SharePoint Logo Microsoft SharePoint is a collaborative web based tool that provides a platform for information sharing at an enterprise level in a single location. (Laudon & Laudon, 2012) p. 64. It has the capability to manage and share documents and files, manage tasks, and create workflows. SharePoint has search functionality to allow users to find documents based on key words or phrases. It is a common server that can be accessed from any global location.
GBS introduced Video Collaboration Studios in 2008 which incorporates TelePresence technology. TelePresence will be discussed in detail on page 14 of this paper.
A major contributor to improved product performance has been the Connect + Develop Innovation Model that captures innovative ideas from outside the “four walls” of Procter and Gamble. There are currently 8000 scientists in the Research and Development division. The Connect + Develop strategy “wasn't to replace the capabilities of our researchers and support staff, but to better leverage them. Half of our new products,” Lafley said,” would come from our own labs, and half would come through them. With a clear sense of consumers' needs, we could identify promising ideas throughout the world and apply our own R&D, manufacturing, marketing, and purchasing capabilities to them to create better and cheaper products, faster.” (Hustun & Sakkab, 2006)
Procter and Gamble's “Connect + Develop” is taking advantage of collective online resources. It's a network in excess of 80,000 independent, self-selected "solvers" in 173 countries who gang-tackle research problems for the likes of Boeing Co. DuPont, and 30 other large companies. (The Power of Us, 2005)
P&G also encourages entrepreneurs to submit ideas directly to the Connect + Develop website (see Figure 2.)

Figure [ 2 ]
Figure [ 2 ]

“Do you have a promising product, technology, business model, method, trademark, package or design that can help improve the lives of the world's consumers? Or do you have new ideas for existing P&G brands? If so, the Connect + Develop(SM) team at P&G wants to work with you.” (https://secure3.verticali.net/pg-connection-ortal/ctx/noauth/PortalHome.do, 2011)

Game-Changing; From Good to Great; Who Moved my Cheese? These are just a few coined phases used by senior management to describe a new end-all tool that will not only save the company but it will carry the company into the next millennium. Most employees, especially those working in a large corporation, will experience a new program once every five to seven years and in the process become desensitized and cynical that the new end-all tool will work.
People are creatures of habit. If given a choice between a well-known, antiquated system and learning a new one, employees will stay with the old and familiar way of doing business. Executives at Procter and Gamble realized that in order to achieve organizational change, it had to happen on the individual level. Procter and Gamble’s employees were typical in this regard and were resistant to change. They were presented with new collaboration tools using the Microsoft Office Suite to reduce the amount of emails being sent and still improve knowledge sharing and communications. But the employees were opposed to change, claiming the new tools would only increase their workload as it was in addition to and not eliminating emails. People are comfortable with email and there’s significant organizational inertia against switching to a new way of doing things. (Laudon & Laudon, 2012) p. 75.
To persuade people to change, you’ll have to make them unhappy with things as they are – no easy task, since most people prefer the devil they know to the devil they don’t know. (Matejka & Murphy)

Procter and Gamble has established a reputation and a culture that fosters and promotes innovation. Since the days of James Gamble, son of co-founder James Gamble sr., who invented Ivory Soap and founded the first laboratory in Procter and Gamble history, Procter and Gamble has been technology driven.
The current research and development team consists of 8,000 scientists that span 30 sites globally. Research and development results need to be communicated to management, marketing, and other areas of the company to decide if and how the results are to be transformed into a final, marketable product. Before the implementation of the new collaborative tools, the results were printed and glued into notebooks in order to be shared with other business units. (Laudon & Laudon, 2012) p. 76.
After a complete rework of their information sharing process and systems, Procter and Gamble now use business intelligence tools to share results of experiments and new product ideas with the rest of the company. They utilize Microsoft Office SharePoint to provide a platform of knowledge sharing across multiple disciplines. Marketing can now access the information to build ad campaigns. (Laudon & Laudon, 2012) p. 76. Management can review the data and results and make better informed decisions. The ability to transfer information in real time improves the speed-to-market time of any given new product. This is critical to remain competitive in a global environment. SharePoint is also beneficial for executives. It can be designed to provide them with a Digital Dashboard to give them a snapshot of the current status of any given input. It has the functionality to provide them with a repository for presentations, speeches, data etc. that can be shared with business partners, colleagues, and employees’ across the globe.
Another way Procter and Gamble is improving its core competencies is by the use of an intranet called InnovationNet. This collaboration tool connects researchers with others working on similar problems anywhere around the world, joins multiple disciplines and provides a directory of subject matter experts for advice or collaboration on problem solving and product development. (Laudon & Laudon, 2012) p.108.

“You can’t truly collaborate when you are constantly reminded of the technology. Collaboration must happen very naturally, with the technology disappearing into the background." Laurie Heltsley Director Strategic Initiatives, Procter & Gamble
Image [ 2 ]: TelePresence Video Collaboration Room at P&G
Image [ 2 ]: TelePresence Video Collaboration Room at P&G

As stated earlier, Walter Lingle recognized that in order to have successful global locations, the new locations must be created and treated as the United States Procter and Gamble. With globalization comes responsibility and commitment to each location to support the company’s mission statement. In order to provide that level of commitment, Procter and Gamble was spending in excess $50 million annually on travel. (P&G 2011 Annual Report) The company was also using their 300 videoconferencing rooms to collaborate, but the poor technology and the quality of the audio and video signals prevented them from being fully utilized.
Procter and Gamble’s IT team, Global Business Services explored options on what was needed for true collaboration. Procter & Gamble sees technology as an enabler of innovation; it will help create a “supply chain of ideas” that will allow P&G to envision, create, and deliver great brands to market. . (P&G Revolutionizes Collaboration with Cisco, 2008)
In partnership with Cisco, Procter and Gamble have created Video Collaboration Studios with TelePresence technology. Currently there are more than 80 Video Collaboration Studios strategically placed throughout the global locations. Employees are connecting faster through high definition technology and reducing the need for travel by as much as, 20,000 trips per year. Decisions that once took days now take minutes with the use of TelePresence. (Laudon & Laudon, 2012) p. 76. “With Cisco TelePresence, you can be in Rome in the morning and Sao Paolo in the afternoon, and still be home for dinner. That’s priceless,” says Heltsley. (P&G Revolutionizes Collaboration with Cisco, 2008)

Conclusion
Procter and Gamble demonstrated a commitment to innovation by defining it as one of the five Core Strengths. Innovation must coincide with collaboration to be globally successful. Procter and Gamble’s investment in technology sends a bold statement to the competition. They are committed to continued success and expanding global growth.
Technologies and collaborative systems along with their complimentary assets require a significant amount of capital investment. For example one Video Collaboration Studio at Procter and Gamble costs approximately $500,000 to design and build. But even with the monetary commitment, management must address the cultural change that needs to take place before the company will be able to fully utilize the capabilities of the new technology. Collaborative tools grow in usefulness as more workers contribute their information and insights. (Laudon & Laudon, 2012) p. 76. In other words, unless the workers are on board there will not be a genuine, lasting change.
Lafley stated: “We want Procter and Gamble to be known as the company that collaborates—inside and out—better than any other company in the world.” (Procter & Gamble Revolutionizes Collaboration with Cisco, 2008) Procter and Gamble’s willingness to take on this forward thinking approach has allowed them to take advantage of new technologies ahead of their competition. Collaboration and innovation at Procter and Gamble have made the globe smaller and more manageable.

References
Bartlett, C. A., & Ghoshal, S. (1989). Managing Across Borders: The Transnational Solution. Academy of Management Review (Vol. 16, p. 43). Harvard Business School Press. Retrieved February 4, 2012, from http://proxygw.wrlc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=4279037&site=ehost-live

Hustun, L. & Sakkab, N, "Connect and Develop: Inside Procter & Gamble's New Model for Innovation," Harvard Business Review, Vol. 84, No. 3, March 2006. Retrieved February 4, 2012, from http://hbswk.hbs.edu/archive/5258.html
Gibson, R. “Innovation Perspectives - Matching Possibilities with Needs.” (2009) Retrieved February 4, 2012 from http://www.business-strategy-innovation.com/2009/10/innovation-perspectives-matching.html
Kanter, R.M, “Inside Procter & Gamble's New Values-Based Strategy“(2009) Retrieved February 10, 2012 from http://blogs.hbr.org/kanter/2009/09/fall-like-a-lehman-rise-like-a.html
Lafley, A.G., & Charan, R. (2008). [Abstract of the book The Game-Changer: How You Drive Revenue and Profit Growth with Innovation]. Retrieved July 13, 2008 from getAbstract at http://www.getabstract.com, p1-5.

Laudon, K. C., & Laudon, J. P. (2010). Management Information Systems Managing the digital firm. New Jersey: Pearson Prentice Hall.

Matejka, K. & Murphy, A. [Abstract of the book Making Change Happen, On Time, On Target, On Budget] 2005. Retrieved July 13, 2008 from getAbstract at http://www.getabstract.com, p1-5. Davies-Black Publishing © 2005

“The Power of Us, Mass collaboration on the Internet is shaking up business.” Retrieved February 4, 2012 from http://www.businessweek.com/magazine/content/05_25/b3938601.htm

P&G 2011 Annual Report. Retrieved February 4, 2012, from http://www.pg.com/en_US/downloads/investors/annual_reports/2011/PG_2011_AnnualReport.pdf

Procter & Gamble Connect and Develop. Retrieved February 4, 2012 from https://secure3.verticali.net/pg-connection-ortal/ctx/noauth/PortalHome.do Procter & Gamble Revolutionizes Collaboration with Cisco TelePresence. Retrieved February 4, 2012 from http://www.cisco.com/web/about/ac79/docs/wp/Procter_Gamble_Final.pdf, 2008

Procter & Gamble Global Business Services. Retrieved February 4, 2012 from http://www.pg.com/en_US/downloads/company/PG_GBS_Factsheet.pdf Images and Figures:

Figure 1: Global Business Services http://www.pg.com/en_US/downloads/company/PG_GBS_Factsheet.pdf Figure 2: Connect + Develop Web Page https://secure3.verticali.net/pg-connection-ortal/ctx/noauth/PortalHome.do Image 1: SharePoint Logo http://sharepoint.microsoft.com/en-us/Pages/default.aspx Image 2: TelePresence Video Conference Room at P&G http://www.cisco.com/web/about/ac79/docs/wp/Procter_Gamble_Final.pdf, 2008