Proctor & Gamble's Global Product Supply overcomes challenge Featured

8:00pm EDT September 25, 2008

When R. Keith Harrison Jr. took over The Procter & Gamble Co.’s

Global Product Supply operations in 2001, material and energy

prices were declining, and the focus was on keeping costs down

and trying to drive expansion into low-cost or developing markets.

Today’s environment is acutely different. In the past three years,

the division of the $83.5 billion company has seen rising costs for

energy, oil and other commodities, which have added $2 billion to

total costs.

“I have never seen a more challenging business environment for

us and me than the one we have today, where we’re dealing with

the obvious issues of commodity increases ... but beyond that, the

challenges of increased global competition,” Harrison says.

In order to deal with these challenges, Harrison focuses on anticipating the future, helping the 65,000 employees who work under

him understand the business challenges and driving creativity and

energy among them.

“I think part of the role of the leader is to, as best you can, anticipate what’s on the horizon,” he says. “If you’re totally in a reactive

mode, you’re always playing catch-up.”

Only by being proactive and seeking out as much information as

possible about the changing marketplace can you hope to set your

organization up to be ready to handle the changes necessary to

come out on top. Here’s how Harrison keeps P&G Product Supply

ready for future challenges while delivering short-term results.

Anticipate the future

Harrison prepares for the future by first acknowledging that past

accomplishments don’t always mean much.

“The things that had served us well over the last 10 or 15 years

were unlikely going to be sufficient to maintain our level of contribution to the company’s result over the decade we’re into now,”

Harrison says.

To get a better idea of where things might be headed, start by

talking to your customers and suppliers.

“I think one piece is trying to recognize when things are changing and we need to be thinking or doing things differently,” he says.

“You also talk to your customers; you talk to your suppliers.”

With customers, Harrison is trying to understand what drives

their businesses and how P&G can create value.

“Every customer has a little bit different set of value drivers, and

so it’s important for us to understand how we can enhance the

value creation process, which we obviously want to turn into a

growth engine for the company,” he says. “Our hope and our

expectation would be that as we create value for customers, that

customers will reflect the value we’re creating by reinvesting or

supporting our business in ways that give us disproportionate

growth.”

With suppliers, Harrison is always looking for innovation.

“We have several suppliers (whom) we have very close technical working relationships with ... that’s clearly an area of great interest

to us as we continue to try and source more and more of our innovation from outside the company, and we have a goal of getting 50

percent of our innovation from external sources, and our suppliers

are a good source of that,” he says.

Once you have input from customers, suppliers and all your

internal experts, you can start putting together a plan.

“You try and build in the best data you can from your business

leadership in terms of where that is going to be, and you put that

into an analytical model that really looks at things like distribution

costs and transport miles and wage rates and construction costs

and all of those,” Harrison says. “I don’t want to say out pops a

model because it doesn’t, but it starts to build a road map for you

that you can then follow as it goes forward.

“The group that’s doing this, we’ve got manufacturing folks, distribution folks, sales people, R&D, a lot of information systems

people, we’ve gotten some external consultancies involved, we’ve

been soliciting customer input on where they think their business

is going. And out of all of that data in the hands of people who are

knowledgeable in their fields comes a piece of work that gets guided and certainly vetted by some modeling to be sure you’re on

track. It’s more than sticking pins in a map, and it’s a lot more than

plugging data in. It’s really a very interactive process with people

who are knowledgeable, backed up by some good analytic tools.”

Communicate the plan

The challenge with identifying future trends is that it often points

to the need for change — something that doesn’t come naturally to

most organizations.

Harrison says you have to find a way to make the need for

change clear, exciting, energizing and compelling in terms of what

the future needs to be. From there, you need to communicate a

road map that shows it is plausible that the company can get there.

“Sometimes in the absence of that second piece, the leap would

appear too great for folks, and finding a way to at least indicate to

people how we get started, and the fact that it is something that is

doable and equally importantly critical to the business results that

the organization needs to achieve, I think is key to get people moving,” he says.

Once you get people moving, then it’s easier to keep the plan for

change moving or even accelerate it. The challenge is, how do you

break out of where you are today?

“The way I try to do that is try to clarify in a very energizing and

compelling way what it is, get clear on some broad-stroke ideas on

what the focus should be and get people some thoughts on how

you get started in a way that makes people see that it is doable,”

he says. “I never believed that you need to have a plan necessarily

that needs to add up to 100 percent of what a future vision would

be. In fact, you could argue that if you have a plan that gets you 100 percent there, it’s not very visionary.

“And it doesn’t even need to be fully

thought out — around here folks have

heard me use the whole notion of something called North Star, which doesn’t

mean anything but your vision or where

you want to go. I like to think of it as similar to you’re a traveler and you’ve found the

North Star. The point isn’t that I’m always

going north, the point is that I’m never

going south. I may be going a little northeast at times, I may be doing northwest

because there are short-term things that

you have to manage — there’s a business

need that needs to be met short term as

well as long term — but ideally everything

you’re doing is moving you toward what

you’ve defined as your desired end state.

“There will be some things that blow you

a little off course, but ideally, they don’t

blow you backward. But you don’t know

whether it’s being blown backward or not

unless you really know where you’re really

trying to go long term.”

Engage employees

Harrison loves to visit plants and hear stories from employees of how they have

improved the business. With 145 plants in

60 countries, sometimes that means talking

through a translator, but the important

thing is that employees get a chance to

share their stories. He uses these visits as

an opportunity to get employees energized

and enthusiastic about their ideas and

where the company is going. It’s also a way

for him to get firsthand information on how

the various parts of the business are doing.

But to make it work, you have to believe

in the power of engaging employees.

“If you don’t enjoy interacting and at

some level listening, then it’s going to be

sort of hard to really get enthusiastic about

it,” Harrison says. “Every time I visit any

organization, not just a plant, we almost

inevitably have some sort of town-hall

meeting, where I will do a state of the business update, and then more importantly

throw it open for a Q&A.

“You’re never quite sure what questions

you’re going to get, and sometimes they are

not easy ones and maybe sometimes not

even comfortable ones. You want your

organization to see you as approachable,

accessible, and someone who’s at least

willing to listen and be in touch with what’s

going on in the organization. And that does-n’t mean that you grant everything that

comes up, it just means that you listen and you hear it. There have been times when

I’ve gotten a question and I’ve said, ‘Sorry,

that’s not going to work but here’s why.’”

When talking to these groups, Harrison

says it is helpful to make sure you have a

plan for the things you want to communicate to them.

“There are a number of things I want to

keep working every time I visit anywhere,”

he says. “Folks will tell you that I’m always

talking about offering P&G a ‘demonstrable competitive advantage,’ because I see

that as our job. You find some themes that

you really want to drive and you tailor

those for the organization that you’re meeting with, and then I think the other piece is

being able to communicate things in a way

that is not only clear but energizing.

“I’m not sure if I always achieve this goal,

but my goal is always to leave a group with

more energy than they had when they

came in.”

When talking to employees, you don’t have

to ignore negative topics to energize them.

“It doesn’t necessarily mean that you do

that by just praising mediocre performance, that’s not the point,” Harrison says.

“The point is how do you talk about challenges and gaps in a way that values and

recognizes and creates an energy and

enthusiasm that they can go out and fix

those things. You can give a negative

review on a plant or any organization and

have people feeling pretty bad, or you can

give a negative review on an organization

and have people fired up to go make it better. I try to operate from the second camp,

though occasionally you have to operate

from the first camp.

“I think to the extent that you can energize people about the need to improve as

opposed to threaten people and scare people about the need to improve, the more in

touch and the more fun and energized and

aligned your organization is going to be. I

don’t personally believe that fear is a sustainable leadership model. You can get

some short-term things there, but that’s not

an ongoing leadership model in my view.”

When everyone understands the context

decisions are being made in and how they

fit into the puzzle and are given a chance to

participate, that’s when you really start seeing results.

“We really encourage people to really

think about how their ideas really play out

in the context of business results,” Harrison

says. “If you can’t relate your great idea to

some sort of improved business results, then you’ve got to wonder if the people are

really working on the right thing.

“If people understand what the business

needs are, the competitive needs, and

you’ve got good alignment with company

objectives, your strategies are clear and

you’ve done a good job creating alignment

and ownership, it’s amazing how much creativity and energy emerge as you go about

dealing with these challenges.”

While P&G Product Supply still has some

challenges ahead, Harrison says it’s important to anticipate, stay focused and stay

true to your strategies.

“You’ve got to find a way to balance meeting your short-term goals but do it in a way

that doesn’t blow you off course of where

you’re trying to go longer term,” he says.

“Part of the job of the leader is to instill

confidence and provide direction. If you

show up as panicked, the organization will

take its cue from that. If you show up as,

‘This is a tough challenge, but here are

some thoughts on how we could go meet it.

How do we tackle this thing but with an

eye toward success?’ That creates a spirit

and energy in the organization.”

HOW TO REACH: Procter & Gamble Product Supply, (513) 983-1100 or www.pg.com