October 25, 1999

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Culture Change:
Lessons From A Cultural Revolution
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Culture Change:

An Alternative Culture: Reflect.com's Unique Approach Come Together: The Idea Behind Collaboration Rooms Supply-Side Economics: P&G's Ultimate Supply System The Big Picture: P&G's SourceOne Global Data Warehouse

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E-Transformation Hot To Get There From Here When Customers Are King

Still, P&G is reacting to market forces. Consolidation among big retailers--Procter & Gamble's main customers--is putting pressure on consumer-product companies such as P&G because the larger retailers become, the more demands (i.e., volume discounting) they make on their suppliers. Procter & Gamble, like other consumer-goods companies, is being forced to develop new products and bring them to market more quickly while reducing operating costs, Hughes says.

"There's only so much laundry detergent that you and I will ever use. So P&G needs to expand the world to which they sell, and most important, more quickly innovate new products to sell," says M. Victor Janulaitis, president of Positive Support Review, an IT management consulting firm. "Investments in technology are needed to do that."

One area in which Procter & Gamble is investing heavily is in collaborative technologies, such as E-mail, intranets, and videoconferencing (see story, "Come Together: The Idea Behind Collaboration Rooms "). P&G had been infamous in the consumer-goods markets as "the one-page memo company." That's because, until the use of collaborative technologies, the company's employees presented most of their ideas and business plans on one-page written memos that were circulated among multiple managers, who would make their own changes and return them, until a final plan--and memo--was accepted.

A recent example of the increased use of collaborative technology is a product called Swiffer, a dust sweeper with disposable cloths electrostatically charged to attract dust, dirt, and other household allergens. Swiffer, which was introduced to the market in August, represents a collaboration among multiple P&G product groups, including paper and chemicals.

Swiffer also represents another strategy change at P&G. Swiffer took just 18 months from test market to global availability. In the past, when a product was introduced, it might have taken years for it to be available worldwide. That's because global management in each region was responsible for the product's launch in his or her geography, including everything from test marketing to getting the products onto retailers' shelves. "P&G was a highly structured company that made it slow to react," says analyst Hughes. "Product rollouts were bureaucratic processes that could take five years in different parts of the world." Hayes characterizes P&G's previous product strategy as "ready, aim, aim, aim, aim, aim, fire." Now it's "ready, aim, fire, adjust," he says. "P&G is much more willing to move quickly, take risks, and make needed adjustments later."

Collaborative technologies, including chat rooms on the company's intranet, are also transforming the company's polite, conservative, play-it-safe culture to one that encourages employees to be candid, test boundaries, and take chances. Earlier this year, while P&G was preparing its Organization 2005 plans, the company launched a dedicated internal Web site for worried employees to sound off, vent, and pass along rumors anonymously. Employees are also encouraged to E-mail questions directly CEO Jager, who writes a weekly column on the intranet called "Durk's Corner." Says Jager, "The intranet is becoming an integral part of doing business at Procter & Gamble and has become our primary forum for discussing culture change."

Jager is also encouraging employees to use the company's technology tools to communicate. In July, in preparation for talking with employees about Organization 2005, P&G's 300 senior managers needed to download PowerPoint presentations and other information from the company's intranet. This forced some of those managers and executives to visit the site for the first time, company insiders say. Since it was launched, thousands of employees have visited the Organization 2005 site.

Collaboration via the Internet is also being used by P&G to improve communications with its largest shareholders. That includes programs to brand the Procter & Gamble name--as opposed to brand-name products such as Ivory soap--as well as including shareholders in marketing and new-product tests.

Procter & Gamble is also addressing cultural change through aggressive use of technology in its supply chain. The company is looking to change its relationships with its suppliers and with its customers, from one of passive market acceptance to one of proactive sharing of knowledge and data (see story, "Supply-Side Economics: P&G's Ultimate Supply System ").

Part of P&G's supply-chain related work is its evolving Key Account Replenishment System (Kars)--a Microsoft Access application that generates demand-driven orders from small and midsize retailers, those not large enough to be supported by the company's electronic data interchange IBM mainframe replenishment system. With Kars, orders are automatically placed into Procter & Gamble's billing system via the Web from the retailers' point-of-sale or inventory systems. Kars replaces the need for these smaller retailers to place orders manually or take inventory counts using handheld devices, David says.

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Photo by Jim Callaway

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