Collaboration and Innovation at Procter & Gamble Case Study Questions
1 What is Procter & Gamble’s business strategy and business model? How do these relate to collaboration and innovation within this company? 2 How is P&G using collaboration systems? Describe each of the systems and technologies, what processes were carried out previously, and discussing the benefits of each. 3 Why were some collaborative technologies slow to catch on at P&G? What management efforts are required to reduce the effects of resistance to change such as these? 4 Compare telepresence to video conferencing. Why is telepresence such a useful collaborative tool for a company like P&G? Collaboration and Innovation at Procter & Gamble
Source: Laudon, K. C. & Laudon, J.P. 2012. Management Information Systems. Managing the Digital Firm. 12th Ed. Prentice Hall NJ Look in your medicine cabinet. No matter where you live in the world, odds are that you’ll find many Procter & Gamble products that you use every day. 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 capitalisation. The company is known for its successful brands, as well as its ability to develop new brands and maintain its brands’ popularity with unique business innovations. Popular P&G brands include Pampers, Tide, Bounty, Folgers, Pringles, Charmin, Swiffer, Crest and many more. The company has approximately 140,000 employees in more than 80 countries and its leading competitor is Britain-based Unilever. Founded in 1837 and headquartered in Cincinnati, Ohio, P&G has been a mainstay in the American business landscape for well over 150 years. In 2009, it had $79 billion in revenue and earned a $13.2 billion profit. P&G’s business operations are divided into three main units: Beauty Care, Household Care and Health and Well Being, each of which are further subdivided into more specific units. In each of these divisions, P&G has three main focuses as a business. It needs to maintain the popularity of its existing brands via advertising and marketing; it must extend its brands to related products by developing new products under those brands; and it must innovate and create new brands entirely from scratch. Because so much of P&G’s business is built around brand creation and management, it’s critical that the company facilitate collaboration between researchers, marketers and managers. And because P&G is such a big company, and makes such a wide array of products, achieving these goals is a daunting task. P&G spends 3.4% of revenue on innovation which is more than twice the industry average of 1.6%. Its research and development teams consist of 8.000 scientists spread across 30 sites globally. Though the company has an 80% “hit” rate on ideas that lead to products, making truly innovative and groundbreaking new products is very difficult in an extremely competitive field like consumer products. What’s more, the creativity of bigger companies like P&G has been on the decline, with the top 5 consumer goods companies accounting for only 5% of patents filed on home care products in the early 2000s. Finding better ways to innovate and develop new ideas is critical in a marketplace like consumer goods and for any company as large as P&G, finding methods of collaboration that are effective across the enterprise can be difficult. That’s why P&G has been active in implementing information systems that foster effective collaboration and innovation. The social networking and collaborative tools popularised by Web 2.0 have been especially attractive to P&G management, starting at the top with former CEO AG Lafley. Lafley was succeeded by Robert McDonald in 2010, but has been a major force in revitalising the company. When Lafley became P&G’s CEO in 2000, he immediately asserted that by the end of the...
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