InformationWeek
Defining The Business Value Of Technology
October 25, 1999
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Lessons From A Cultural Revolution
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Technology-based ordering is freeing the company's sales staff to spend more time on customer and product issues rather than traveling to handle mundane paperwork with customers such as Kroger and Wal-Mart, David says. "Salespeople are doing more category management now to help retailers get better assortments of products," he says. "The Internet allows us 24-by-7 communication with retailers."
P&G is also focusing on improvements in retail sales technology beyond its immediate operations. In August, the company said it was working with Eastman Kodak, Johnson & Johnson, and the Consumer Products Manufacturers Association to develop standards for product security tags in an attempt to reduce retailer shoplifting losses.
While Procter & Gamble is busy equipping its supply chain to work on the Web, it's also expanding its consumer-related business on the Web. In September, P&G unveiled its first consumer-oriented E-commerce effort. The unit, called Reflect.com, will be located in Silicon Valley and will leverage P&G's manufacturing and supply-chain technology to create a unique retail effort (see story, "An Alternative Culture: Reflect.com's Unique Approach").
Back at headquarters, P&G Interactive Marketing is an internal "center of excellence" that helps the company's product units jump-start their Internet-based business-to-consumer initiatives. Vivienne Bechtold, head of P&G Interactive Marketing, says the group is the company's "poster child" for cultural change. "The Internet allows us to treat individuals as a consumer market of one, as opposed to a mass market," Bechtold says. The multifunctional group has 12 full-time and six part-time employees, including IT, marketing, and business people, who help the various brands launch Internet marketing programs. As an incentive, the group offers to match the funds spent by product units on their Internet projects.
Procter & Gamble is as wary of disintermediation as any channel-oriented supplier, and is therefore reticent to discuss detailed E-commerce plans or specific strategies. Business-to-consumer E-commerce is "the gold mine in the Internet" that hasn't yet been found, says CIO Garrett. Company executives involved in Internet strategy still aren't sure how E-retailing will affect their market. "Customers aggregate demand," says Mark Schar, VP of P&G's eVentures unit. "The Wal-Marts of the future may not be Wal-Mart--they may be Yahoo." So far, Procter & Gamble's sales over the Internet are almost zero, admits Schar--but he isn't ignoring the Net's potential. "In the future," he says, "brick-and-mortar and Internet will need to flourish side by side."
While Procter & Gamble has a multitude of ambitious IT plans, the company also has the challenge of staffing these projects. P&G's ongoing global SAP implementation, for example, is being done almost exclusively by P&G staff. That's because, as a policy, P&G uses very few consultants. Also, with the exception of the outsourcing of 22,000 workstations to IBM Global Services, P&G does very little outsourcing. To get the expertise it needs, P&G depends heavily on knowledge transfer by very skilled experts--from inside and very selectively from outside the company--to P&G's staff. "We want the experts internally," says CIO Garrett. "We do a lot of strategic development of staff."
Because Procter & Gamble prefers to develop its own talent rather than hire expertise from the outside, the company lacks agility in filling IT talent vacancies, experts say. P&G "has no bench strength," says Paul Daversa, president of IT executive recruitment firm Resources Systems Group, which has placed a number of former P&G IT executives at other companies during the last few years. "When key IT people leave or the company deploys new technology, there are serious organizational problems in getting over the hump."
P&G doesn't use headhunters or promotions to solicit IT talent. Instead, managers do most of the recruiting themselves--mainly of college students who are hired with the promise of building long-term careers at the company. It's one cultural legacy Procter & Gamble is anxious to hold onto--for good reason. Longtime IT employees tend to be unusually loyal and not easily lured away, Daversa says. "Many people there are interested in hearing about new opportunities elsewhere," he adds, "but in the end, they don't want to leave the company or move from Cincinnati."
One way the company is trying to inject fresh blood and new ideas is its 2-year-old internship program. It's a multidiscipline summer program in which youthful participants help address questions related to the the company's future, particularly in relation to new media and the opportunities it presents for bonding with consumers. "We look at how technology can improve consumer life," says Sara Young, an analyst for digital brands in P&G's marketing department. She ought to know--Young started at P&G as a summer intern. "We can learn a lot from new hires," she says.
There's no doubt that Procter & Gamble's savvy use of technology over the years helped the company evolve from a Midwestern maker of wax candles to a diversified consumer-products giant with more than 300 brands worldwide. The company hopes technology will again help bring about more change and growth. But the battle between change and growth may be a vicious circle. That's because the corporate culture that IT is trying to help change is the same culture that has at times stymied P&G's implementation of new technologies.
"Procter & Gamble has excellent people and excellent technology," says a former P&G IT manager. "But it's very methodical, very formal, and very bureaucratic. This has made implementation of new technology very slow."
But without those changes, Procter & Gamble may find that meeting its loftier goals of double-digit growth and faster product innovation can be as slippery as a wet bar of soap.
return to page 1, 2
go on to the next story, "An Alternative Culture: Reflect.com's Unique Approach."
Photo by Jim Callaway
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