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Winning With the P&G 99: 99 Principles and Practices of Procter and Gamble's Success

Winning With the P&G 99: 99 Principles and Practices of Procter and Gamble's Success

by Charles L. Decker

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Instantly recognizable as the company behind such familiar products as Ivory soap, Tide detergent and Crest toothpaste, Procter & Gamble is admired as one of the world's best managed companies. Marketing training at P&G rivals that of an MBA degree, and Harvard Business School teaches P&G's brand-management system. Now, a former P&G marketing executive


Instantly recognizable as the company behind such familiar products as Ivory soap, Tide detergent and Crest toothpaste, Procter & Gamble is admired as one of the world's best managed companies. Marketing training at P&G rivals that of an MBA degree, and Harvard Business School teaches P&G's brand-management system. Now, a former P&G marketing executive identifies ninety-nine practices and principles that fuel this $35 billion powerhouse -- strategies for success in business and in life.

As a brand manager, Charles Decker saw P&G wisdom at work from the inside. For this book, he interviewed dozens of ex-"Proctoids," as they call themselves, to incorporate their perspectives on P&G. Here are the beliefs ("A brand can't stand still"), the code of business conduct ("Do the right thing") and the rules of engagement for television advertising ("Show the package in the first eight seconds") that are at the heart of this marketing giant. Here are anecdotes of a corporate culture where winning is the goal, risk avoidance the criterion, and the airtight memo the basis for action.

Accessible and engaging, WINNING WITH THE P&G 99 offers the time-tested strategies that have kept P&G on top -- practical insights for anyone managing a business, a career, or striving for a personal best.

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Although Procter & Gamble's innovations have created or shaped many of the categories that the company competes in -- shortening, detergents, disposable diapers -- consumers know the company through its brands. P&G's loyal consumers don't buy "shortening," they buy Crisco. They don't buy "laundry detergent," they buy Tide. And to strengthen the bond between its brands and its consumers P&G spends more than $3 billion a year advertising and promoting its brands -- more than any other company in the world.

An extraordinarily creative and innovative company, Procter & Gamble has had an impact on the social landscape and quality of life that goes beyond the many product innovations it has pioneered. P&G is cautious, deliberate, and methodical -- that's part of the company's culture. But it is also part of P&G's culture to be proactive in looking for not only new and better products but new and better ways to conduct business -- leaving its competitors to react to each new initiative. Consider the following three examples.

P&G has been an innovative force in employee relations, having pioneered a shorter workweek over a hundred years ago and the oldest profit-sharing plan in continuous operation in the U.S. The company is still on the forefront of employee relations initiatives -- most recently in May 1998 with a grant of stock options to all employees (not just management).

P&G had a lot to do with the rapid development of both radio and TV. While other businesses were skeptical about radio in the early 1930s, P&G seized the initiative, developed programming, and dominated the medium. Then, in the early 1950s, the company shifted its advertising budget almost entirely to television, created the daytime "soap opera" and programming (such as Search for Tomorrow, The Guiding Light, Days of Our Lives, As the World Turns, and The Edge of Night) that, even today, pervades the medium and engages the daily attention of millions of people. P&G continues to view new media as an opportunity to improve its competitive position and is in the vanguard of advertisers aggressively expanding their presence in cable and on the Internet.

P&G also played an important role in the evolution of the ubiquitous and highly efficient supermarket retail distribution system. In 1920, ninety-five percent of the grocery trade was controlled by wholesalers who supplied independent retail grocery stores. But wholesaler buying patterns were erratic, often coming in great surges. That was highly inefficient for P&G and all the other grocery product manufacturers because it required major surges in production followed by plant slowdowns or shutdowns and employee layoffs. P&G dared to challenge the power of the wholesalers by increasing its sales force fourfold and selling direct to the retailer. P&G prevailed despite bitter resistance from both the wholesalers and the retailers themselves, and soon other grocery manufacturers also began to sell direct. The power of the wholesalers was broken, and the stage was set for the evolution of the supermarket retail distribution system. P&G continues to impact the grocery retail distribution system with its initiatives, as will be discussed later in this book.

Although most consumers know Procter & Gamble only through its brands, the company itself is well known and widely admired in the business community:

Ç For eight consecutive years, P&G has ranked among the top ten of the most-admired corporations in the U.S. in Fortune magazine's annual survey.

Ç It is a $35 billion global empire that has consistently outperformed the Dow Jones average by a wide margin. The company has increased dividends to shareholders for forty-two years in a row. In the Fortune survey, it was regarded as one of the top-rated companies for "value as a long-term investment."

Ç P&G is regarded as one of the best-managed companies in the world. Harvard Business School teaches P&G's heralded brand management system, which the company pioneered in 1931. That system has been emulated by countless companies.

Ç P&G gets high marks in the Fortune survey for its "ability to attract, develop, and keep talented people."

Every year, P&G hires over a thousand graduates from the world's best colleges and graduate schools: engineers, chemists, physicists, biologists, doctors, dentists, business school graduates, and so on. In the U.S. in brand management alone, P&G hires about one hundred recruits to meet the high level of attrition in the very demanding brand-management environment. Brand management represents only about five percent of management-level employees. However, the brand management gauntlet feeds ninety percent of the general management positions in the company and is the route to the very top of the organization. Only a few make it. Most people in brand management leave on their own initiative, lured by other opportunities or to escape a culture that is not to their liking. Some find career track opportunities more suitable to them within P&G. Others are encouraged to continue their careers elsewhere -- with the grounding in marketing and management that will serve them for the rest of their lives.

The brand management system works for Procter & Gamble because it is supported by the fundamental belief that spawned the system in the first place: consumers don't buy just products, they buy brands. As the brand is central to the company's success, the brand manager is central to the way the company is organized. But brand managers are not given free rein to do whatever they want with their brands. They are expected to manage their brands with the same analytical approach, thoroughness, and professionalism that is expected from everyone in the company.

Most companies, especially packaged-goods companies, regard P&G training as better than an MBA degree. Recruiting P&G marketers is a sizable cottage industry within the business community. For other packaged-goods companies and advertising agencies, P&G is a primary source of junior and midlevel executives, who, not infrequently, rise to the top of those organizations (for example, former CEOs Jim Ferguson, at General Foods; Jim Burke, at Johnson & Johnson; Bill Phillips, at Ogilvy & Mather; Bill Dunlap, at Campbell-Mithun). And some of the major non-packaged-goods corporations that today dominate their industry sectors have been led by ex-P&Gers. John Smale, former chairman and CEO of P&G, took over as chairman of General Motors in the fall of 1992; Bob Herbold made it to the eleventh-floor executive suite at P&G before he was tapped as COO of Microsoft; John Hanley moved to Monsanto as CEO; Steve Case founded America Online.

Some of the principles, practices, and beliefs that make P&G what it is today can be traced back to the beliefs and ethics of the company's founders, William Procter and James Gamble. These principles, practices, and beliefs evolved into a corporate culture of operating and thinking that has stood the test of time.

The policy of promoting from within, for example, may historically have had something to do with P&G's headquarter location in Cincinnati -- a relatively isolated place compared to New York City, the location of such competitors as Colgate-Palmolive and Lever Brothers, both of whom have readily recruited from each other and from the many other consumer-products companies in the area. But, more important, P&G's policy of promoting from within evolved out of the company's concern for its people, its sense of self-reliance, and the value it places on developing a body of knowledge and learning from its past experiences.

This book grew out of a deep respect that I developed for Procter & Gamble during the five years that I was there in brand management. And during the thirty years or so since I left, as I worked with over twenty other consumer products clients, I came to appreciate how different P&G is in its beliefs and culture and ways of doing things. Many of P&G's principles can be applied or adapted to other companies, and the principles or practices that are not appropriate for certain companies are still instructive, providing insights for those seeking alternative approaches.

Winning with the P&G 99 will present P&G's marketing, business-management, and career-development principles and practices in a way that will enable readers to understand how these have been so successful for P&G and the implications they might have for other companies or other individuals. Their application is not limited to packaged-goods companies and their products. There are implications for just about any business and even for academic, government, and nonprofit organizations. Anyone with a customer, a subordinate, or a boss can gain new insights from these lessons.

My interest in Procter & Gamble, business principles and practices, and consumer marketing does not end with the publication of this book. If you have any comments or suggestions about anything in this book -- or even relevant anecdotes -- I would be eager to hear from you.

Charlie Decker
Pelham, New York

Copyright © 1998 by Charles L. Decker

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