World’s Most "Technologically-enabled Company"

Barbara Hodge
Posted: 07/09/2012

Robert McDonald, P&G’s CEO, in a recent interview with McKinsey, said he wanted P&G to become the "the world’s most technologically-enabled company." A tall order for some – not for P&G, whose path we’ve been charting for 10 years, and whose embrace of automation, and now digitalization, is blazing the way for what’s possible.

Barbara Hodge, SSON's online editor, asks Filippo Passerini, Group President, Global Business Services and CIO, what challenges McDonald’s ambition poses to him.

"Large-scale application of digital technology and advanced analytics [are] impacting R&D labs, relationships with retailers, manufacturing products, building brands, and interacting with customers. The prize: better innovation, higher productivity, lower costs, and the promise of faster growth."

"As P&G gets bigger and bigger, the tendency is to become more hierarchical, more bureaucratic, more apt to only focus on the things that made us successful in the past. We don’t want that, and digital technology enables us to flatten the organization and help avoid those problems."

Robert McDonald, CEO, P&G

McKinsey Quarterly

Filippo, Robert McDonald, CEO of P&G, was recently quoted as saying that he wants to make P&G the world’s most technologically enabled company. How is that strategy manifested at P&G today and what challenges does it pose to you, as CIO?

Bob and I have been working on this strategy for a number of years, even before his appointment as CEO, and we’ve had lots of opportunities to see what technology – particularly upstream technology – can do to transform the way a business is run. This is really about a new business model, as we recognized a unique opportunity for P&G to leverage its scale. In addition, we wanted to be able to operate what is today an $80 billion company with the same agility as a $10 billion company. Agility is a very important concept for us, as a business – the ability to adapt quickly to market changes, to come up with new products, etc. Digitizing was the key enabler to achieving that, as it’s all about making better decisions, faster.

The way this manifests itself is in automating; standardizing processes and systems; and eliminating unnecessary touch points and unnecessary interfaces so that information can flow faster. As part of that, our employees become more productive. We believe this is how we will fulfill our purpose-inspired growth strategy to touch more lives, in more parts of the world, more completely.

So let’s look at this idea that you want to make every employee more productive. I've read a bit about your PC "cockpit" interfaces. Could you explain what those are and how they help to encourage the kind of culture P&G needs today?

The "cockpits" were our original move towards digitization. You may recall, Barbara, four or five years ago, we determined that the three strategies that would create breakthrough change for us were: virtualization, digitization and simulation. And, as you may recall from previous conversations, we’ve applied these in various ways. For example, we no longer do physical mock-ups for about 90% of our business. When it comes to consumer feedback on our packaging, this is now almost completely virtual, which has enabled us to dramatically accelerate time to market, reduce costs, and faster drive innovation.

The cockpits, which sit on the PC desktops, are an expression of the other strategy around visualization. We have transferred virtually all our standard reports into cockpits, which allow for control charting, automatic alerts, drill-down, intuitive color-coding, etc. It’s a way to bring visualization and a one-stop-shop kind of environment into the business. There is now one version of the truth, so when it comes to "what is happening, why is it happening, how is it happening, and how can we improve what we are doing?" there is now no debate on the what because the what is the same for everyone; the whole focus is on the why.

This is very, very critical, because it’s how we are creating a different culture at P&G – one where everybody has access to the same business information, at the same time; from the CEO down to operations, and across all management levels. Most significant, perhaps, is the ability to manage the business by exceptions, instead of being inundated by data, not all of which is relevant.

When you implement a far-reaching strategy such as this one, Filippo, you're building on some pre-defined infrastructure, I imagine. What are your core pillars? And how are you encouraging your employees to embrace this new digitalized P&G?

We have divided our "Going Digital" program into four dimensions. One is "business intelligence," or analytics, where we created immersive environments for our teams to get together and make better decisions, faster. The second dimension is the "digital value chain," where the aim is to eliminate unnecessary delays in the supply chain, starting in the R&D lab and ending with the retail customer. Given all the touch points and inner handoffs, our intent is to eliminate the idle time in between any two steps. The third area is about "aligning" to the world of our consumers – creating better bonding and building stronger relationships with them, eventually being able to communicate one-to-one with consumers world-wide. Clearly, we are not there yet, but the world is very obviously moving towards one-to-one relationships as opposed to mass communications, and we believe we’ll be uniquely enabled to build those relationships. The fourth focus area is to "increase productivity" in everything we do, particularly on the employee side. We have effective collaboration tools, which enable teams that are geographically dispersed to work on the same initiative: R&D done in China, for example, and marketing plans developed in the US, for commercialization in Europe or Latin America. Today, our business teams can come together much faster because of these collaboration tools. So that's another way to increase employee productivity and efficiency, as well as enable better and faster decisions.

So it's really about harnessing the data and the technology that has evolved in recent years. There has been an incredible leap in this whole understanding of data – it seems as if data and technology are driving a revolution of sorts, with shared services at its center. Has GBS taken ownership of pushing through this new way of operating?

Yes, it has. We've been working on this entire process with Bob, who’s a real visionary – but the entire program has been crafted by GBS. A few years ago, we integrated shared services and IT, and that was critical. It has been a great business model for us because shared services brought accountability to the business results, and IT brought the innovation that comes with new technology. The two together have been instrumental, in my opinion, in getting us to where we are now.

Of course, we also collaborate with our business partners and the operating business units, but we are held accountable, and we consider ourselves responsible for this program.

What have been some key priorities to get this initiative going?

The challenge is to create an incentive for the business units to want to get on board. We’ve done many things to support this. For example, we have developed joint plans with each one of our business partners to make sure we're fully relevant to their purpose and business goals. That includes bringing evidence of the value the Going Digital program will deliver. We tend to make it very personal, very relevant, to each one of them. There is a lot of one-to-one work with the presidents of the operating units, based on delivering concrete value in terms of better productivity and faster decision-making.

I've also been meeting personally with all my counterparts ¬– more than 24 presidents – in the business units, one-to-one. Again, it’s about detailed planning, analysis, tracking, and reporting of value, validated by financial results, so the business sees a clear correlation between the work of the Going Digital program and business value.

Filippo, you mentioned earlier how important it was that IT and shared services were combined at P&G. Many practitioners I speak with are still focused on a single-function approach. Do you think that in doing so, they are limiting the potential of the kind of digital strategy that you have taken on?

I believe that the role of an IT professional is becoming more and more one of transforming the way business is run. This is what we've been working on for a number of years now. I don't think the role of an IT professional should be focused on deciding whether Cloud computing is the next best move; rather, it should be about deciding how to leverage the technology-enabled new business models to transform the way business is run.

This is how I see my mission at P&G, and I believe Bob McDonald would say that that's exactly what he wants me to do. It’s what we’ve been delivering for a number of years. I think the term "IT" itself is in need of an overhaul, because, really, it’s about much more than that. In fact, that is why we changed the name of our function from IT to IDS, which stands for Information & Decision Solutions; we thought the name had to be reflective of what we stood for, what we wanted to be. And what we want is to drive information to enable better decisions through solutions. So we don't talk systems, we don't talk technologies … we talk solutions.

The ability to look at the world in a more holistic and integrated way – rather than just from an IT perspective – has been fundamental. Part of our model is also external relations and communications, which I consider extremely strategic to our model. The diversity in competencies within GBS is delivering tremendous value. If we operated our IT organization in isolation, I'm not sure that we would be able to do what we are doing.

I know that you work very closely with external partners. To what extent are you getting some of this innovation from those partnerships? And to what extent are your partners willing to keep up with you as you push forward?

A few years ago, I was still assuming that one of our very strong partners would bring a lot of innovation to us. In fact, I've now come to the conclusion that they do bring innovation but that we are the ones who have to orchestrate and lead that process, because our partners oftentimes miss the context for what we need and don’t completely understand what is important to us.

The better model is that we take the lead, and work with our partners, some of which are niche players, who specialize in a given area or technology. But we are the ones who need to lead this process and our partners will then bring innovation.

You've applied a lot of innovation on the operations and manufacturing side. I’ve read about some interesting uses of iPads, for example, to stream data, which links into what you said earlier. Do you envisage that one day you will be able to do the same thing for services delivery? In other words: tracking the cost of a service, or quality, or time, in the same way that today you are tracking the more obvious data, on the manufacturing end?

Again, this is an example of automating some of the processes and bringing information up from the source, real time. It’s not important that it’s an iPad – what’s important is that we embrace whatever tool is most current, most useable, to collect and to use information, real time.

So, to your question: Yes, we will continue to look at each and every area which allows us to eliminate unnecessary delays or touch points, and with that we will continue to streamline the process with the intent to accelerate and increase the speed of our innovation to market. This is all part of the same concept, the same "umbrella," if you like; it's one single execution of that idea.

Thank you, Filippo, for taking the time to speak with me, today.

Barbara Hodge
Posted: 07/09/2012

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