PROCTER AND GAMBLE

ANALYSIS OF INFORMATION SYSTEM IMPLEMENTATION

Abstract: Innovation at Procter and Gamble

A Case Procter and Gamble has capitalized on innovation and creativity to lead the
consumer and household product industry. This case will explore some strengths and
weaknesses, as well as opportunities and threats that Procter and Gamble had utilized to
sustain its success and competitiveness. This case will also explore some characteristics of
innovative organizations and why they have chosen to be innovative. It tells how innovation
can result to huge profits with greater customer satisfaction. P&G started using technical
advancements when they found out that these advancements would fasten their work by
making decisions faster due to implementation of information system which makes
information readily available for usage.

OVERVIEW
P&G is a global leader in fast-moving consumer goods, focused on providing branded
consumer packaged goods of superior quality and value to our consumers around the world.
Our products are sold in more than 180 countries and territories primarily through mass
merchandisers, grocery stores, membership club stores, drug stores, department stores,
distributors, baby stores, specialty beauty stores, e-commerce, high-frequency stores and
pharmacies. We have on-the-ground operations in approximately 70 countries. Our market
environment is highly competitive with global, regional and local competitors. In many of the
markets and industry segments in which we sell our products, we compete against other
branded products as well as retailers' private-label brands. Additionally, many of the product
segments in which we compete are differentiated by price tiers (referred to as super-premium,
premium, mid-tier and value-tier products). We are well positioned in the industry segments
and markets in which we operate, often holding a leadership or significant market share
position.

P&G AND INNOVATION

William Procter, a candle maker, and James Gamble, a soap maker, formed this global and
Fortune 500 Corporation in 1837 (corporate profile). Procter and Gamble (P&G) is
headquartered in Cincinnati, Ohio. These two entrepreneurs and inventors were immigrants
from England and Ireland respectively; who have chosen for some reason to settle in the
Cincinnati area. The company manufactures a wide variety of consumer goods including
beauty, household, health and wellness products. According to CNNMoney.com “in the early
parts of 2007, P&G was the 25th largest U.S Company by revenue, 18thlargest by profit, and
10th in Fortune’s Most Admired Companies list”. “Touching Lives, Improving Life” is the
corporate motto which is exemplified in their 138,000 employees and loyal customers
worldwide. The worldwide demand for P&G’s products and services has forced management
to focus on global marketing and innovation. This worldwide marketing and innovation
success was achieved by making sure that what they produce is of highest quality and most
importantly is what customers need. P&G is very adaptable to changing customer demands
by carefully and clearly defining its innovative strategies; however, it almost lost its market
dominance to competition in the mid 80’s had it not been its aggressive play-to-win strategy.
“Senior P&G management admitted that they had not had a breakthrough innovation since
1985, and the company’s continued market dominance in the years ahead was in question”
The play-to-win innovation strategy had helped P&G to regain its industry leadership as
stated by (Davila et al.,) in the company’s case study:
Management had planned to create a nimbler organization and to increase the speed and
quality of innovation. They also focused on improving the speed of commercialization of
new products. In addition, they wanted to move the company’s focus to higher growth,
higher margin businesses such as health care and personal care.
Another innovative play-to-win strategy that P&G management had adopted was the
acquisition of its domestic and foreign competitors. P&G acquired a number of other
companies that helped diversified its product line and increased profits significantly. In order
to foster this aggressive strategy, management had integrated and reorganized all the
manufacturing processes of the companies they acquired. Manufacturing processes of
companies like Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks, Noxell,
Shulton’s Old Spice, and many others. “Innovation must be encouraged, carefully
implemented within an organization at all times”

STRATEGIC FOCUS
After P&G aspires to serve the world’s consumers better than our best competitors in every
category and in every country in which we compete, and, as a result, deliver total shareholder
return in the top one-third of our peer group. Delivering and sustaining leadership levels of
shareholder value creation requires balanced top-line growth, bottom-line growth and strong
cash generation.

Our strategic choices are focused on winning with consumers. The consumers who purchase
and use our products are at the centre of everything we do. We increase the number of users
and the usage - of our brands when we win at the zero, first and second moments of truth:
when consumers research us 14 The Procter & Gamble Company categories and brands,
purchase them in a store or online and use them in their homes. Winning with consumers
around the world and against our best competitors require innovation. Innovation has always
been, and continues to be, P&G’s lifeblood. Innovation requires consumer insights and
technology advancements that lead to product improvements, improved marketing and
merchandising programs and game-changing inventions that create new brands and
categories. Productivity improvement is critical to delivering our balanced top-line growth,
bottom-line growth and value creation objectives. Productivity improvement and sales
growth reinforce and fuel each other. We are driving productivity improvement across all
elements of cost, including cost of goods sold, marketing and promotional expenses and
nonmanufacturing overhead. Productivity improvements and cost savings are being
reinvested in product and packaging improvements, brand awareness-building advertising
and trial-building sampling programs, increased sales coverage and R&D programs.
We are improving operational effectiveness and organizational culture through enhanced
clarity of roles and responsibilities, accountability and incentive compensation programs. The
Company has undertaken an effort to focus and strengthen its business portfolio to compete
in categories and with brands that are structurally attractive and that play to P&G's strengths.
The ongoing portfolio of businesses consists of 10 product categories. These are categories
where P&G has leading market positions, strong brands and consumer-meaningful product
technologies.
We believe these strategies are right for the long-term health of the Company and our
objective of delivering total shareholder return in the top one-third of our peer group. The
Company expects the delivery of the following long-term annual financial targets will result
in total shareholder returns in the top third of the competitive peer group:

• Organic sales growth above market growth rates in the categories and geographies in which
we compete;
• Core EPS growth of mid-to-high single digits; and
• Adjusted free cash flow productivity of 90% or greater.

In periods with significant macroeconomic pressures, we intend to maintain a disciplined

approach to investing so as not to sacrifice the long-term health of our businesses to meet
short-term objectives in any given year.

CHARACTERISTICS OF INNOVATIVE ORGANIZATION

“By describing the landscape of unmet customer needs and analyzing where new offering has
worked before, you can chart a path that will produce successful innovations time after time”
(Anthony, Eyring, & Gibson p.104). Understanding customer needs and building lasting
relationships are important in helping an organization innovate. Businesses innovate through
unmet customer needs. Customers express their needs that have not been met and
organizations innovate to meet those needs. This is why P&G is still leading the domestic
product industry because, it listens to customers’ unmet needs and innovates aggressively to
meet those needs. For instance, when babies were wearing cloth diapers, they were very
leaky and labor intensive to wash; at that time, mothers needed an innovative product on the
market to help fix the labor-intensive part of washing the cloth diapers as well as the leakage.
P&G answered this innovative call by introducing a revolutionary product called “Pampers”
into the market.

Pampers helped simplified the diapering process by resolving the leakage and the labor-
intensive washing. Innovation means change and to change you must know why you are
changing, that is to say you must understand the pros and cons of the change process. In
addition, you must understand the characteristics of innovation or change and its implication
organization wide. According to Kinicki (2007);
Why are organizations going through change? Simple. Globalization. International
competition. The spread of information technology. All of these factors have escalated
competition and the need to change in order to maintain competitive advantage.
Organizations have to be faster, more responsive, and produce higher quality. All told, there
is more pressure than ever, on everyone, to be able to change.

The aforementioned are the primary features of change and P&G management has
recognized that. Sometimes, what employees do not understand is the impact of change on
their professional and family lives; and it is the responsibility of management to
communicate this impact to employees both positive and negative; but mostly, management
overemphasizes on the positives and pays little attention on the negative impact. Kinicki
mentioned further:

Managerial changes viewed as good and necessary can be seen by employees intimidating
and even terrifying. But when companies don't take this into account, and force changes that
employees aren't prepared to handle, those companies risk alienating their workers, losing
money and, in the end, seeing those great strategic changes fall flat.

INFORMATION SYSTEMS USED AT P&G

WEB 2.0 for online activities and websites. Web 2.0 is a term that describes the changing
trends in the use of World Wide Web technology and Web design that aim to enhance
creativity, secure information sharing, increase collaboration, and improve the functionality
of the Web as we know it (Web 1.0). These have led to the development and evolution of
Web-based communities and hosted services, such as social- networking sites (i.e. Facebook,
MySpace), video sharing sites (i.e. YouTube), wikis, blogs, etc.
Although the term suggests a new version of the World Wide Web, it does not refer to any
actual change in technical specifications, but rather to changes in the ways software
developers and end-users utilize the Web. Web 2.0 is a catch-all term used to describe a
variety of developments on the Web and a perceived shift in the way it is used. This shift can
be characterized as the evolution of Web use from passive consumption of content to more
active participation, creation and sharing.

Web 2.0 Websites allow users to do more than just retrieve information. Now users can build
on the interactive facilities of Web 1.0 to provide "network as platform" computing, allowing
users to run software-applications entirely through a browser. Users are able to co-author the
data on a Web 2.0 site and exercise control over it. These sites have an "architecture of
participation" that encourages users to add value to the application as they use it. This stands
in contrast to traditional Websites, which limit visitors to passive viewing and whose content
only the site owners can modify.

Web 2.0 Websites typically include some of the following features/techniques:

• Search: the ease of finding information through keyword searching.
• Links: guides to important pieces of information. The best pages are the most frequently
linked to.
• Authoring: the ability to create constantly updating content that is co-created by users. In
wikis, the content is iterative in the sense that the people undo and redo each other’s work. In
blogs, it is cumulative in that posts and comments of individuals are accumulated over time.
• Tags: categorization of content by creating tags that are simple, one-word descriptions to
facilitate searching and avoid having to fit into rigid, pre-made categories.

• Extensions: automation of pattern matching for customization by using algorithms (i.e.

Amazon.com recommendations).

• Signals: the use of RSS (Real Simple Syndication) technology to create a subscription
model which notifies users of any content changes.
Web 2.0
BLOGS for sharing information with others.

- Open for all interested parties

- Attract comments from interested users.
CUSTOM SEARCH ENGINE start-up connect beam.

- Allows employees to share bookmarks and tag content with descriptive words that
appear in future searches
- Facilitates social networks of coworkers to find and share information more
effectively.
A COMPLETE COLLABORATION SYSTEM led by suite of Microsoft products.
Service provided includes

· Unified communications (Voice transmission, Data transmission, IM, Email, E-

Conferencing)

· Microsoft Live Communications Server functionality,

· Web conferencing with Live Meeting

· content management with SharePoint

Microsoft Corp. and Procter & Gamble Co. announced that they have successfully piloted the
first phase of a supply chain solution that can contribute up to a 50 percent reduction in
inventory while delivering a 25 percent improvement in retail out-of-stock conditions.
Combining the strength and supply chain experience of Procter & Gamble with the technical
reach and experience of Microsoft, this highly collaborative process delivers seamless
integration of disparate systems and processes within and outside the retailer’s organization.
The end result is an offering that leverages intelligent information delivery to increase the
speed of the supply chain — all through the use of standards-based solutions that benefit
retailers of any size.

With demand data as the catalyst and the key to the solution, the ultimate aim is to create a
system that captures real-time data at the point of sale and that is able to automatically trigger
the necessary restocking, resupply and manufacture responses in the supply chain. From an
implementation standpoint, the solution will deliver value for all members of the supply
chain, with an easily supportable installation that is seamless and compatible with existing
infrastructure investments, requires little or no management, and is cost effective and able to
deliver data throughout the supply chain continuously and in a customized manner.

As part of its collaboration with Procter & Gamble, Microsoft has delivered a set of
Microsoft® BizTalk™
Server 2000 adapters that enable connection to the various point-of-sale systems used by
grocery, drug and mass merchant retailers to collect near-real -time transaction data. The data
is aggregated and transmitted for processing by a set of intelligent algorithms that identify
potential out-of-stock items on a store-by-store basis. The detected out-of-stock information
is transmitted back to store personnel using customized content rules. This approach offers
significant flexibility by enabling notification via wireless communication devices, Pocket
PC-based devices or existing retailer mediums.

Utilizing BizTalk Server 2000 enables the interoperability and integration necessary to
accomplish business objectives across a variety of retailer platforms. In addition, BizTalk can
manage the point-of-sale data feed as well as the customized retailer notification process.
The pilot program, built on BizTalk Server 2000 not only helps to enable P & G’s supply
chain vision, it provides a structure for integrating sales data with core operational systems
such as merchandising and financials as well as business intelligence solutions such as
loyalty, shrink and loss

prevention. This extends retailer benefits without increasing the cost or intrusiveness of the
system.

SHAREPOINT to store all presentations to one location, accessible from every part of the
company.

INNOVATIONNET, a browser-based portal, contains over 5 million research related

documents in digital format.

TELE PRESENCE CONFERENCE ROOM by CISCO. An excellent way to foster

collaboration between employees across not just countries, but continents. With 200 Tele
Presence systems deployed in its own offices worldwide, Cisco firmly believes in the quality
of the technology that creates “in-person” experiences between individuals in remote
locations using life-size high-definition video, advanced audio, and a finely tuned
environment. A longtime strategic partner of P&G, Cisco began to work with GBS to develop
a video collaboration strategy based on the Tele Presence solution.

The initiative began in February 2007 with a visit to Cisco’s office in Virginia where Filippo
Passerini, president of P&G’s Global Business Services Organization and CIO, participated
in a live Tele Presence session with Cisco in San Jose, California. Passerini saw the potential
of the technology and asked Cisco to conduct a 90-day pilot on P&G’s own network. “Cisco
believed in the solution and didn’t blink an eye when we asked them to prove their
technology would work on our network,” Heltsley says. “Cisco stepped up without hesitation
or restriction and got it done within 90 days.”

The Tele Presence solution does not just improve business processes, it also helps improve
employees’ quality of life. With partners and customers, located around the world, P&G’s
employees are often away as much, or more, than they are at home. The Tele Presence
system enables road-weary travelers to conduct business more quickly and effectively,
without leaving the office.

“With Cisco Tele Presence, 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. “We’re scaling our
people, with all the productivity benefits attached.”
Today, savings via Tele Presence meetings are immediate— and significant. P&G estimates
that Tele Presence studios will be a real and viable alternative for travel and will facilitate
travel reduction.

P&G SWOT ANALYSIS

One strategic management tool that P&G uses to stay ahead of its competition is the effective
and efficient utilization of SWOT analysis. This involves specifying the goals and objectives
of the business as well as identifying the internal and external factors that are favorable and
unfavorable in achieving the goals and objectives. These analyses are based
on the company’s case study as well as the industry trend. Because of the segmentation and
size of the company, P&G faces a lot of domestic and foreign regulatory threats and
distribution systems where foreign competition tries to imitate P&G’s brand names for the
sake of misleading consumers for self-profit. This threat of foreign brand imitation is due to
weak foreign business laws and regulations.

P&G’s strength includes: strong financial position both in the domestic and foreign
markets. The company was the 25th largest U. S company by revenue in the early part of
2007, and the 18th largest by profit. This is why the company is one of the most admired
companies in the United States. Also, the company has the ability and capability to push
innovation to commercialization faster than any other competitor in the industry; even though
it faces competition from Johnson & Johnson, Kimberly Clark, and Unilever, it’s been able to
move products and services from the innovation phrase to commercialization faster; P&G has
effective and efficient manufacturing processes which include total quality management as
well as just in time inventory systems; this has enabled the company to save on inventory
costs; and this cost saving is generously passed on to consumers in a form of high quality and
lower prices of goods and services.

Another unique strength of P&G is its pool of skilled labor. In a Congressional briefing
luncheon hosted by the Athena Alliance and the Congressional Economic Leadership
Institute held at the Rayburn House Office Building in Washington DC in June 2006; P&G’s
Corporate Director of Innovation Capability mentioned, “P&G has 9,000 R&D associates
including 1,100 PhDs.” This clearly explains the tremendous success of the company. The
company’s pool of highly skilled employees in the industry has given it the edge to lead in
the innovation of over 40 product categories for which it holds more than 27,000 patents. The
Director of Corporate Innovation Capability added “Our research and development
organization is fluent in a broad range of competencies including chemistry, engineering,
materials science, biological sciences, medicine, and mathematics.”

Also, P&G has a track record of producing high quality products which is very difficult to
match or beat. Consumers want high quality products at reasonable and affordable prices, and
this is the main reason why P&G is the driver of the consumer product industry worldwide.
P&G’s innovative products and services have helped consumers save a lot of money on
dental hygiene and on other health care products.

Just about everyone wants a bright healthy smile, but not everyone can spend $600 for the
dental visits needed to achieve whiter teeth. And unlike the stereotypical eureka moment, a
lone P&G scientist didn’t accidentally stumble onto the Crest White Strips formula late one
night at the lab. What we did do was work backward from the consumer need for a
convenient, affordable solution to whiter teeth. We brought together a diverse team of experts
across our technology centers who were at the leading edge of their fields from our flexible
films group, adhesive group, dental experts from our oral care organization and bleaching
experts from our laundry business. And through solution focused R&D, we delivered

Crest Whitestrips with a level of tooth whitening that surpasses anything else available in the
retail market, and consumers pay only $35. (P&G Corporate Director of Innovation
Capability).

P&G’s opportunities include: Well defined market niche, just in time manufacturing
technology, wide range of demography, and the removal of trade barriers in some foreign
countries. The removal of trade barriers in some foreign countries has enabled the company
to operate competitively without much government intervention. Trade barriers historically
has been known to be one of the biggest threats for most multinational businesses because of
hostile takeovers by some foreign governments, difficulty of entry, corruption among
government officials and bribery, and unhealthy business environment.

Threats include: New entry into the household product industry, use of substitute
products, increased trade barriers in some developing nations, unfavorable business laws and
political instability. Investors do not like uncertainty. They want to ensure that there is
democracy and stable government in whatever country they invest and most importantly, they
should be able to repatriate their profits without much restrictions. This has been a threat to
most businesses as well as P&G.

A series of innovation systems that are now common practices in corporations across
America including extensive market research, the brand-management system, and employee
profit-sharing programs, were first developed at P&G; however, two key innovation systems
will be discussed. These include the “AskMe Enterprise” and the “Corporate Standards
System.”

It is important to analyze and contrast these two key innovation systems within P&G. I
have decided to choose the AskMe Enterprise innovation system because innovation begins
with ideas or brainstorming sessions among the subject matter experts, and AskMe Enterprise
innovation system provides that capability.
In July of 2001, P&G acquired the second installment of AskMe Enterprise from AskMe
Corporation, one of the leading providers of enterprise knowledge sharing solutions in order
to increase and strengthen its innovation net. AskMe Enterprise is one of the most important
and the largest innovation systems in P&G. It is an intranet site that facilitates greater
employee collaboration and enables more consumer-driven innovations. “AskMe Enterprise
reaches 18,000 key knowledge workers in P&G as well as in departments such as R&D,
Engineering, Purchasing, Consumer and Market Knowledge, and knowledge sharing.

CONCLUSION
P&G is widely recognized as one of the world’s leading companies and as a great company
for leaders. P&G brands consistently deliver meaningful, relevant innovations to consumers.
This commitment earned P&G eight of the top 25 spots on the IRI New Product
Pacesetters™ Report for the most successful non-food product launches of 2015. P&G is
committed to being a good corporate citizen and always doing the right thing. The foundation
for all our citizenship efforts is good governance, which we define as doing the right thing,
improving transparency, building collaborative partnerships, respecting human and labour
rights, and sourcing responsibly. P&G is a very diverse company, with nearly 150
nationalities in our global workforce. The more we mirror the diversity of our consumers, the
better equipped we are to understand and serve them. P&G is focused on driving positive
change in the areas of climate, water and waste. Our work in this area has been recognized
with inclusion on Corporate Responsibility.