Collaboration and Innovation at Proctor & Gamble

Proctor & Gamble is the largest manufacturer of consumer products in the world. P&G has a reputation for developing successful brands and maintaining their popularity with unique business innovations. Beauty Care, Household Care, and Health and Well-being are the three main units of business operations at P&G. Each of these business units are further subdivided into more specific units. P&G has three main focuses as a business in each division. First, it needs to maintain popularity of its existing brands. Second, it must extend its brands to related products by developing new products under those brands. Third, it must innovate and create new brands entirely from scratch. Much of P&G’s business is built around brand creation and management. To effectively run P&G’s business operations, it is critical that they facilitate collaboration between researchers, marketers, and managers. This is the reason that P&G has been actively implementing information systems that foster effective collaboration and innovation.

In early 2000, P&G was in disarray and the company’s share price had fallen by nearly 50 percent, wiping out $85 billion in market capital (Lash, 2012). Despite spending heavily on research & development, productivity had plateaued and the company’s innovation success rate was around an unsatisfactory 35 percent (Lash, 2012). When A.G. Lafley became P&G’s CEO in 2000, he recognized that collaboration would be the key to helping P&G recover its value and improve its innovation performance (Lash, 2012). Lafley proclaimed that he was determined to make P&G known as the company that “collaborates, inside and out, better than any other company in the world (Lash, 2012).” Lafley and his team conducted an analysis showing that most of P&G’s most profitable innovations came either from internal collaboration across business units or from external collaboration with outside researchers (Lash, 2012). Determined to encourage both kinds of collaboration, Lafley established 20 cross-functional “communities of practice” within P&G and declared that 50 percent of P&G’s products, ideas and technologies would be developed by external sources (Lash, 2012). This business strategy was a way to develop groundbreaking innovations more quickly and to reduce research and development costs. In order for this strategy to be successful, P&G needed to develop alternatives to the business practices that were not sufficiently collaborative. P&G needed to implement processes and communication tools that would provide a collaborative way to share information, are open to anyone interested in their content, and attract comments from interested users.

P&G launched a suite of Microsoft products and services to enable more effective collaboration. The Microsoft services provided include unified communications, which integrates services for voice transmission, data transmission, instant messaging, e-mail, and electronic conferencing. Other services included were Microsoft Live Communications Server functionality, Web conferencing with Live Meeting, and content management with SharePoint. Microsoft Outlook works with Microsoft Office SharePoint Server to support multiple users with shared mailboxes and calendars, SharePoint lists, and meeting schedules. These tools enable researchers to share the data that they have collected on various brands, marketers can more effectively access the data they need for projects, and managers can easily access the people and data they need to make critical business decisions. P&G also implemented Connectbeam, a new search product, and InnovationNet, a research-related document portal, to help employees find and share information more effectively.

Collaborative tools are only effective if employees use them and grow in usefulness as more and more workers contribute to them. Some of the collaborative technologies were slow to catch on at P&E because people can be resistant to change. Getting some P&G employees to use the newer products was a struggle because many insisted that the newer collaborative tools represented more work on top of e-mail as opposed to a better alternative.
P&G was determined to implement more efficient and collaborative methods of communication to take the place of some of the outdated processes. For example, some researchers used to write up their experiments using Microsoft Office applications, print out their findings and then glue each page into notebooks. Now P&G’s IT department can create a Microsoft SharePoint page where the researchers can post the results of their experiments. SharePoint provides a single location to store presentations and experiments that is accessible to employees throughout the entire company. The addition of InnovationNet, which contains over five million research-related documents in a digital format, makes accessing additional research material easy.

P&G adopted Cisco TelePresence conference rooms at many of its locations across the globe. For a large global company, telepresence is an excellent way to foster collaboration between employees all over the world. Today’s updated telepresence technologies make it possible to hold high-definition meetings over long distances. In fact, since the rollout of Cisco TelePresence technology at P&G, the company estimates that 35 percent of its employees use telepresence regularly. The benefits of telepresence include more efficient flow of ideas, quicker decision making and reduced travel time, which is a significant savings to P&G and personal benefit to their employees who prefer to stay close to home.

Part of A.G. Lafley’s business strategy was for the company to generate half of its new product ideas using sources from outside the company. What better resource to help accomplish this goal than the consumers of their products. Other ways P&G could use collaboration to foster innovation would be to use social networking and various consumer blogs to get feedback on their products. Customers are the best source of their own needs and can provide ideas to build upon existing brands. Many years ago, I was on a flight to Cincinnati and the women next to me worked for P&G. She asked my opinion on a disposable facial washing cloth. I mentioned that I use the product daily but cut each cloth in half because they are too large. This saves me money and I don’t feel as though I am wasting the product. This idea could have tipped P&G of a need for different sizes.

P&G was determined to implement more efficient and collaborative methods of communication to take the place of some of the outdated processes. However, collaborative tools are only effective if employees use them and people can be resistant to change. Senior executives have both the responsibility and the power to encourage and foster a culture of collaboration (Lash, 2012). By implementing the new collaborative systems and technologies, P&G was able to show employees that the main function of these tools was to help them with their work. Employees now had more efficient resources at their fingertips that saved them time and the company money. Because much of P&G’s business is built around brand creation and management, implementing information systems that foster effective collaboration and innovation has played a significant role in effectively running their business operations. These collaboration initiatives paid off handsomely and by 2008, P&G had improved its R&D productivity by nearly 60 percent, more than doubled its innovation success rate, and lowered its cost of innovation (Lash, 2012).

Today, Procter & Gamble is run by CEO Bob McDonald. He is pushing the consumer goods giant for more "discontinuous innovation," meaning products or technologies that create entirely new brand categories or new capabilities, rather than just improve an existing product (Murphy, 2012). Discontinuous innovation is "something we began investing more in and reorganizing more for three years ago," McDonald said (Murphy, 2012). "It takes time, but we'd all like to see more discontinuous innovation." The kind of cross-pollination of ideas that McDonald envisions across products and brands is not an easy task. Companies need to have the right culture and technology to enable that kind of innovation (Murphy, 2012) and P&G has it. P&G uses collaboration systems including extensive video conferencing for executives in order to enable collaboration under CIO Filippo Passerini (Murphy, 2012) and is looking to expand its videoconferencing capabilities to more people in the future.

References

Lash, R. (2012, February). The Collaboration Imperative. Ivey Business Journal. Retrieved on September 12, 2012, from http://www.iveybusinessjournal.com/topics/leadership/the- collaboration-imperative.

Murphy, C. (2012, February 12). P&G CEO McDonald Seeks More Discontinuous Innovation. Information Week. Retrieved on September 12, 2012, from http://www.information week.com/global-cio/interviews/pg-ceo-mcdonald-seeks-more-discontinuous/23260088