Critical Thinking Case Studies

Chapter 1: Communicating at Work

Stodgy Proctor & Gamble Stumbles in Reinventing Itself: Communication
in Process
For decades Procter & Gamble was lionized as the world’s smartest
and best marketer. But in the late 1990s, the Cincinnati-based consumer-products
giant underwent a brutal restructuring that shook it to its very laundry-detergent
roots. With over 110,000 employees, it sells more than 300 brands in 140
countries and takes in more than $40 billion in annual sales. To promote
its brands, it pioneered many mass marketing techniques and even created
a new medium—the soap opera.

Many of its products are household names—Tide detergent, Crest toothpaste,
Pampers diapers, Cover Girl makeup, and so on. Nearly every American has
one or more P & G products tucked under the kitchen or bathroom sink.
Despite its well-known brands, however, P & G suffered from a lack
of innovation in new products, declining profit share, and a rigid, bureaucratic
company culture. Moreover, it was fundamentally a U.S. company.

To make itself over from a stodgy, old-economy dinosaur into a nimble,
Net-savvy 21st-century innovator, the company instituted “Organization
2005” in the late 1990s. This six-year plan set out to speed up
the introduction of new products while going global. The workforce was
to be cut by 15,000, and chains of command were rearranged, grouping employees
by products in five “global business units.” For example,
food and beverage managers, who were mostly in Cincinnati, reported to
a president in Caracas, Venezuela.

Instead of bringing amazing results, however, the radical restructuring
created unhappy, confused employees. According to many, the reorganization
was too quick, too crude, and performed with too little consideration
for the people responsible for implementing the changes.

In any organization, when employees fear that their jobs will change
or even disappear, morale plummets. Rumours fly, and productivity sinks.
Excessive caution and mistrust prevail. That’s why in times of upheaval,
communication—and lots of it, becomes paramount.1 You’ll learn more about this case on page 24.

Critical Thinking

How is Procter & Gamble similar to many organizations today? What
kinds of changes are other companies undergoing?

Why is communication within an organization especially important
in times of change?

How could improved communication have helped Procter & Gamble
implement its restructuring plan?

Procter & Gamble Revisited: Process in Progress
Long admired as one of the country’s best-managed companies, Procter
& Gamble fell upon bad times when it launched a plan to reinvent itself.
Durk Jager, the CEO in charge of the restructuring, lasted only 17 months
before he was “coached out,” which is P & G lingo for
being fired. The company’s stock price plunged to half of its former
value, a startling drop for a company widely regarded as the world’s
preeminent marketer.

Critics say that a major reason for the CEO’s departure was that
he did not bring the managers of P & G’s brands with him on
the changes. This means that he was unable to communicate to them his
vision for reorganizing the company, and he did not get their support
or “buy-in.” Within 18 months 80 percent of the most senior
managers were performing different jobs from those they had done earlier.
Jager himself was described as a “fearsome character, more than
willing to shoot the messenger who brought him bad news.”2 Naturally, managers who were having trouble achieving the reorganization
goals were reluctant to reveal their problems to him. As a result, problems
were not resolved. Although Jager’s job was “to give P &
G a serious kick in the pants,”3 many felt that the reorganization could have been executed less brutally.
His brusque, noncommunicative style alienated managers. You’ll learn
more about this case on page 31.

Critical Thinking

How could Procter & Gamble have improved the downward flow of
information regarding its reorganization plans?

How could Procter & Gamble have improved its upward flow of information?
What are typical obstacles? What part does a manager’s personality
play in encouraging or discouraging upward communication?

Is horizontal communication important in an organization such as
Procter & Gamble? What are typical obstacles? How could horizontal
communication be improved?

http://www.pg.com
Applying Your Skills at Procter & Gamble: Process to Product
One of the goals of the massive reorganization at Procter & Gamble
was moving away from TV promotions and advertising to one-on-one targeted
marketing. To communicate more directly with its customers, P & G
created 72 Web sites involving its best-known products, such as Tide,
Crest, Scope, Oil of Olay, Pantene, Jif peanut butter, and Bounty towels.
As part of a group of college interns at P & G, you have been asked
to review the main Web site and give your candid reactions.4 Your boss says that management particularly values the opinions of new-hires
who have not yet become “Proctoids.” Here are some questions
to answer as you explore the main P & G Web site:

What are your reactions to the main page? Is it easy to read? Cluttered?
Can you see at a glance how to navigate the site?

How does P & G seek to achieve its goal of creating a dialogue
with customers?

Your Task
In teams of three to five, discuss your responses to the listed questions.
Summarize your conclusions and (a) appoint one team representative to
report to the class or (b) write individual memos or e-mails describing
your conclusions. (See Chapter 8 and Appendix B for tips on writing memos.)