Proctor & Gamble Competitive Intelligence Case
Tristen Leeder
RES/351
January 14, 2013
Instructor: Steve Roussas

Abstract In this paper I will show the usefulness of corporate intelligence. While this tool

is helpful in making solid business decisions effort needs to go into monitoring of the

gathering process. Intelligence gathered by unethical means does more harm to an

organization then good. The financial repercussions of involvement in corporate spying

are steep, and the damage it does to an organizations reputation can take years to repair.

Management teams must continually monitor how intelligence is gathered to make

corporate intelligence work for their benefit. Proctor & Gamble Competitive Intelligence Case

In spring of 2001 John Pepper, then chair of Procter and Gamble was

faced with a dilemma (Tuck School). It had been brought to light that P&G’s competitive

analysis department had engaged in corporate spying (CNN). An outside firm hired by

P&G had engaged in spying on Unilever, P&G’s main competitor in the hair care

industry. According to Jordan and Finkelstein “the spying operation gathered about

eighty documents detailing Unilever’s plans for its U.S. hair care business over the next

three years, including information on its launch-plans, prices, and margins (Tuck School,

p. 1).”

In April 1999 John Pepper was the keynote speaker at an SCIP CEO

Roundtable, held in Montreal. In his address Mr. Pepper honed in on the growing

importance of Corporate Intelligence, or “Business Intelligence” as he referred to it, in

the shaping of corporate strategy (speech). Competitive Intelligence, in Mr. Peppers

opinion must be a focal point of management. Proper utilization of Competitive

Intelligence leads to swift change; setting the pace, not keeping pace, in the marketplace

(speech).

With such a passion for the evolving industry of Corporate Intelligence, and a

high level of commitment to implementing CI into the business structure of Proctor and

Gamble, what would move John Pepper to admit that Proctor and Gamble had gone too

far? Proper use of a tool is a key to success. A misused tool can lead to harm. This was

the case with Proctor and Gamble. The management team at Proctor and Gamble misused

the tool of competitive intelligence.

Corporate Intelligence

Obtaining intelligence on competition is a key success in the competitive business

environment. Stephen Miller, in his overview of competitive intelligence defined

competitive intelligence as, “a systematic and ethical program for gathering, analyzing,

and managing information that can affect a company’s plans, decisions, and operations

(Miller, p. 1).” Management teams at every level of an organization utilize competitive

intelligence to plan and execute business strategies. Competitive intelligence allows a

management team to rely on action instead of reaction (Miller).

Intelligence Gathering

The ethical dilemmas surrounding the competitive intelligence field are linked to

the gathering process. There is a “fine line between the ‘legitimate’ tactics of competitive

intelligence gathering and the ‘illegitimate’ practice of industrial espionage (Crane, p.

1).” Firms that specialize in competitive intelligence utilize public forums, such as the

Internet, to gather information to analyze. A firm specializing in competitive intelligence

will conduct interviews with the managers of their client’s competitors, as well as

industry insiders. Both methods are universally accepted as legal and ethical

(Tuck).

Dumpster Diving

The methods that the firm that Procter and Gamble hired to gain intelligence

about Unilever’s operations utilized clandestine intelligence gathering methods. The

firm searched through the trash of Unilever, searching for any piece of information that

would shed light on Unilever’s product development and business strategies. The firm

operated a safe house known as the “Ranch” where agents would store gathered

information to analyze later (CNN). Agents of the firm would interview Unilever

employees, misrepresenting themselves as marketing agents, in an attempt to gather

privileged information.

The method of data collection used by the firm hired by Procter and Gamble did

not break the law. However, dumpster diving is considered highly unethical, especially

within the competitive intelligence community. A researcher who misrepresents his or

herself to the person being interviewed is also engaging in an unethical activity (book).

The firm utilized by Procter and Gamble crossed the line from intelligence gathering,

over to corporate espionage.

Ramifications

The clandestine operations carried out by the firm hired by Procter and Gamble

were done without the knowledge or consent of top executives. Once the means used to

gather information about Unilever were discovered by John Pepper and other top

executives the operation was stopped. All intelligence gathered during the operation was

discarded. Three managers directly linked to the intelligence gathering operation were

terminated, and several other managers with knowledge of the operations were reassigned

(CNN).

The executive committee, with John Pepper taking point, approached Unilever

and came clean about the details surrounding Procter and Gamble’s intelligence gathering

operation. Procter and Gamble came forwarded publically and admitted to the mistake,

making assurances that the information gathered was not, nor ever would be, used

(CNN). Unilever threatened to bring a lawsuit against Procter and Gamble. The two

companies settled out of court for a reported 10 million dollars (Carter).

Conclusion

In this paper I have shown the usefulness of corporate intelligence. While this tool

is helpful in making solid business decisions effort needs to go into monitoring of the

gathering process. Intelligence gathered by unethical means does more harm to an

organization then good. The financial repercussions of involvement in corporate spying

are steep, and the damage it does to an organizations reputation can take years to repair.

Management teams must continually monitor how intelligence is gathered to make

corporate intelligence work for their benefit.

References