84 Part One Organizations, Management, and the Networked Enterprise
INTERACTIVE SESSION: MANAGEMENT
PILOTING PROCTER & GAMBLE FROM DECISION COCKPITS
Procter & Gamble (P&G) is one of the biggest show ways that P&G can adjust pricing, advertising,
consumer goods companies in the world, with and product mix to respond to the predictions.
127,000 employees across 180 countries, 300 brands, For example, when CEO Bob McDonald meets
and $82 billion in revenues in 2011. P&G is regu- with his executive committee each Monday, they
larly ranked near the top of lists of “most admired examine the top categories of products and coun-
companies” for its ability to create, market, and sell try markets (such as Italy and hair care) that are
major consumer product brands. A major reason responsible for 60 percent of sales. Data visualiza-
for P&G’s success has been its robust information tions show changes in sales and market share.
technology and willingness to pursue new IT inno- Executives may want more detailed data: Is the
vations to maintain a competitive advantage in its sales dip in detergent in Germany because of one
industry. large retailer? Is that retailer buying less only in
To that end, P&G has made it its goal to digitize Germany or across Europe? Did a rival take away
its processes from end to end and to fundamentally market share because P&G raised prices or cut
change the way it gathers, reports, and interprets promotions, or is the product category overall losing
data. While P&G is trimming costs from other areas sales?
of the business, its Global Business Services division P&G’s Business Sphere is an interactive system
is building analytics expertise and undertaking new designed to reveal insights, trends, and opportu-
analytical solutions such as Business Sufficiency, nities for P&G’s leaders and prompt them to ask
Business Sphere, and Decision Cockpits. focused business questions that can be addressed
These solutions eliminate time spent debating with data on the spot. Two giant 32-foot by 8-foot
different data sets, and instead use a system that concave display screens physically surround these
allows leaders to focus on immediate business managers with the data on sales, market share, and
decisions using the most accurate data available at ad spending required to make actionable decisions.
that precise moment. Thousands of algorithms and analytical models
The solutions are based on a transformation in aggregate data, organizing it by country, territory,
the way P&G uses data for decision making across product line, store level, and other categories, and
the company, from executives, to brand managers, monitor trends like response to advertising and
to lower-level employees. P&G’s old decision-making consumer consumption within individual regions
model was to figure out what reports people wanted, and countries. Everyone in the meeting sees the
capture the data, and then deliver them to the key same information.
decision makers days or weeks later. The new The program analyzes 200 terabytes of P&G data,
model is more instantaneous, with people huddling equivalent to 200,000 copies of the Encyclopedia
together in person or via video and pulling in the Britannica, and displays information quickly and
right experts to fix a problem the moment it arises. clearly. The Business Sphere allows top executives to
More real-time data and analytics expertise are answer their own specific business questions, and to
required. visualize data in a more intuitive way than a simple
The Business Sufficiency program, launched in report allows. The Business Sphere was envisioned
2010, furnishes executives with predictions about as a kind of command center, where top managers
P&G market share and other key performance met- gather either in person or via high-quality videocon-
rics six months to one year into the future. It is based ferencing technology like Cisco TelePresence, and
on a series of analytic models showing what’s occur- immediately determine the biggest problems facing
ring in the business right now (shipments, sales, the business and who can fix those problems as soon
market share), why it’s happening, and what actions as they arise. P&G now has more than 50 Business
P&G can take. The “why” models highlight sales data Spheres around the world.
at the country, territory, product line, and store lev- P&G can now obtain the same data about point of
els, along with drivers such as advertising and con- sale, inventory, ad spending, and shipment data that
sumer consumption, factoring in specific economic it did years ago—it just obtains that data much faster
data at the regional and country levels. The “actions” and at more frequent time intervals. The improved
Chapter 2 Global E-business and Collaboration 85
analytics tools at the company’s disposal means and taking note of the exceptions, such as regions that
that the same information is presented with more are losing market share the fastest, or areas that are
granularity and specificity than ever before. booming and require more resources, P&G can devote
The Business Sphere is mostly used by upper-level time and energy where it is most needed.
P&G managers and executives, but the company was Managers and employees are now able to make
determined to extend the same principles deeper faster and better decisions than were previously
within the business. That’s where the Decision possible. Other benefits of the project have been the
Cockpits come in. P&G has started to give more of its reduced complexity involved in generating a statisti-
employees access to the same common data sources– cal report, as well as cost reductions from maintain-
over 58,000 employees now use the technology. ing one standardized set of data across the enterprise
These cockpits are dashboards displaying easy-to- instead of duplicated, redundant data. P&G has seen
read charts illustrating business status and trends. the number of e-mails generated by employees drop
The cockpits feature automated alerts when impor- sharply, as more workers can answer their own
tant events occur, control charts, statistical analyses questions and obtain their own information using
in real time, and the ability to “drill down” to more Decision Cockpits. Better messaging and video will
detailed levels of data. help employees pull in anyone needed to make a
One of the major goals of the Decision Cockpits decision. The company is also able to better antici-
was to eliminate time spent by P&G employees debat- pate future events affecting the business and more
ing the validity of competing versions of data found quickly respond to market stimuli.
in e-mails, spreadsheets, letters, and reports. By
Sources: Shirish Netke and Ravi Kalakota, “Procter & Gamble —
providing a one-stop source of accurate and detailed A Case Study in Business Analytics,” SmartAnalytics, March 5,
real-time business data, all P&G employees are able 2012; Chris Murphy, “Hard Calls, Big Risks, and Heated Debate,”
to focus instead on decisions for improving the busi- Information Week, August 13, 2012; Brian P. Watson, “Data Wrangling:
How Procter and Gamble Maximizes Business Analytics,” CIO
ness. Both the Business Sphere and Decision Cockpits
Insight, January 30, 2012; Chris Murphy, “Procter & Gamble
encourage P&G employees and managers to “manage CIO Filippo Passerini: 2010 Chief Of The Year,” InformationWeek,
by exception.” This means that by looking at the data December 4, 2010.
C A S E S T U DY Q U E S T I O N S
1. What management, organization, and technology 3. How are these systems related to P&G’s business
issues had to be addressed when implementing strategy?
Business Sufficiency, Business Sphere, and
Decision Cockpits?
2. How did these decision-making tools change the
way the company ran its business? How effective
are they? Why?
customer an invoice. Customer service representatives track the progress of the
order through every step to inform customers about the status of their orders.
Managers are able to use firmwide information to make more precise and
timely decisions about daily operations and longer-term planning.
Supply Chain Management Systems Firms use supply chain management
(SCM) systems to help manage relationships with their suppliers. These
systems help suppliers, purchasing firms, distributors, and logistics companies
share information about orders, production, inventory levels, and delivery of
products and services so they can source, produce, and deliver goods and
services efficiently. The ultimate objective is to get the right amount of their
products from their source to their point of consumption in the least amount of
time and at the lowest cost. These systems increase firm profitability by
