LeadingandManaginginOrganization

PandGCase

ExecutiveSummary:
TheproblemisthatPandGstrugglestoachievecoreearninggrowthandlackstheinnovationand
speedtobringnewproductstomarketquickly.Ourobservationisthatacontributingfactortothese
issuesisthattheorganizationsuffersfromalackofintegratingfactorsamongstitsGBUsandMDOs.
Ourrecommendationiffortheimplementationofafewkeyliaisonpositionstomoreefficientlybring
newproductstomarkettobeclosertothecustomerandthereforehavetheabilitytodevelopnew
productideas.WealsorecommendreducingthespanofcontroloftheCEObycreatingtwonew
executivelevelpositions.

Analysis:
Theproblemofpoorcoreearninggrowthpluslackofinnovationandtimelinessofbringingnew
productstomarketisaresultofmanyfactorsintheformalorganization.Salesgrowthwas4.8%in
2000,aheadofthe2.6%in1999wherenetincomefromcontinuingoperationswasdownfrom1999.
ThelargestincreaseinexpensethataffectedthecoreearningsgrowthwastheSGandEexpenses.
Withoutfurtherdetailhereitishardtoassumewhathascausedthis12%increaseoverprioryearin
expenses.Thiswouldneedtobeinvestigatingmorecloselytodetermineifthiswasaresultofthe
implementationofthenewITsystem,advertisingcostsorsomeotherpartoftheincentivesystem.
Moreimportantlyhowever,the1995matrixorganizationstruggledwithpooralignmentofthecompany
strategyandmetricsystembetweenthefunctionalheads,regionalareasandcategorymanagers.
Whereanumberoftheseissueswerearesultoftheformalstructure,theinformalstructuremayalso
becontributingtotheproblems.Eachdisciplinemayhaveasetofnormsthatisdrivingtheirdaily
decisionsandthesevaluesmaybeinconflictwithoneanothermakingisdifficulttoachievethesame
goals.
WhereOrganization2005aimstoovercomemanyoftheseissuesandeliminatemultiplelayersof
management,itfallsshortofimplementingalloftheintegrativefunctionsneeded.Thenew
organizationisinmanywaysasiloedcompanywitheacharea(GBU,MDOandGSB)havingvery
differentgoalsandmetricsthatareinconflictwithoneanother.Wherethetaskfunctionspecialization
seemtobeverywellorganizedanddelineatedintheGBUandMDO,thelackofintegrationhasbecome
aseriousissue.
Toensurethatthethreesilosbecomemoreintegrated,thereareanumberofapproachesthatcould
bepursued.First,investigatethepotentialforaliaisonpositionbetweenthemarketresearchgroup
andtheCMK(consumermarketknowledge)group.Thesetwogroupsarefocusedonunderstandingthe
customersneedsandshouldbeinconstantcommunicationtoensurethatPandGistargetingthe
correctareasfornewproductdevelopment.ThisliaisonrolewouldalsointerfacewiththeNew

BusinessDevelopment(NBD)grouptomakesurethereisconstantfocusonthecustomerduringthe
businessdevelopmentprocessaswellasthemarketinggroupsothattheappropriatemarketing
campaignsarefocusedonthecustomermarketidentifiedduringthedevelopmentprocess.Thisnew
rolecouldbecalledaCustomerAdvocate
Also,Ibelievethatamultidepartmentgroupshouldbeformedtodevelopapipelineforfastmarket
launchofnewlydevelopedproducts.ThisnewgroupshouldconsistofamultidisciplinaryteamofNBD,
theCMKCustomerAdvocate,manufacturing,distribution.Inthiscase,IamassumingthattheCMK
CustomerAdvocatehasalltheinformationneededfrommarketingandmarketresearchtofullyserveas
amemberofthiscommittee.
Othersuggestionsincludeforminganintegratorrolewhichfocusesonthebigboxcustomeracrossall
majorgeographicalareas.ThispersonwouldinterfacedirectlywiththeCBD(customerbusiness
development)departmentandtheheadsofeachoftheMDOstoguaranteethatthelargestcustomers
ofthecompanyarebeingservedappropriatelyandnewbusinessinnovationstakingplace.
ThisintegratorroleaswellasthenewCMKcustomeradvocatecouldreporttoanewPresidentofthe
GBUand/orPresidentoftheMDO.ThespanofcontrolfortheCEOgoesfarbeyondwhathewillbeable
tohandleanddowell.TheExecutiveVPpositionswillreportdirectlytotheCEOandhaveallofthe
geographicalMDOsandproductcategoryGBUsreportingtothem.
Lastly,torenewthecompanyfocusonRandD,theGBUandRandDVPsshouldhavemoreofadirect
connectionwiththeCorporateHeadoftheNewVenturesgroup.Thiswouldensuredirectaccesstothe
CEOofallofthenewandexcitingactivitiesinwhichtheRandDgroupsareengaged.Also,theNBD
headshouldalsohaveadottedlinefunctiontotheGBUheadwhentherearenewproductsin
development.
Whichoftheabovealternativeswouldhavethebiggestimpactonthegapsidentifiedinlackofcore
earninggrowthandlackofinnovativenewproductsgettingtomarketinatimelyfashion?Themost
importantroleisthecreationoftheCustomerAdvocateliaison.Thenewgroupwouldbegintohavean
immediateimpactonthetimelylaunchofnewproductwhichwouldinturnfuelsalesgrowth.Since
theremaybeaneedformultipleroleofthistypeIwouldfocusfirstonthoseGBUsthathavehad
troublegrowingandhavenewproductsindevelopment.Afterreviewingthefinancialdatainexhibit8
andtheproductdevelopmentopportunities,Iwouldsuggeststartingwithsnacksandbeverages.It
mightalsobeworthwhileasasecondapproachtoworkwithateamthathasbeendoingwellinsales
growthandtheimplementationofnewproducts.Byrollingthisouttotwogroupsatonceyouwillhave
abetterideaofitsimpactofthecompanyperformance.IwouldchooseFabricsandHomecareaswell
duetoitsstrongfinancialresultsin2000andthearrayofnewproductsinnewbusinessdevelopment.
Iwouldalsoconsiderimplementingthebigboxintegratorpositionimmediatelyasthesalesresults
fromthismarketsegmenthavebeendiminishingrapidly.Thiscouldhelptopropeltheorganicsales
growthofthecompanywhichhasbeengoingintherightdirectionoverthelastfewyears.

Therearestillgrowingconcernsaboutorganicsalesvolumebeingbelow1998aswellasprofitability
beinglowerintheEuropeanmarkets.TheseideastobringthemoreformalPandGstructuretogether
shouldaddresstheseprofitabilityissues.
SolutionandActionPlan:
ThefirststepintheplanwouldbetotalktotheCEOabouttheproposedchangesandmostspecifically
aboutourdesiretopotentiallyreducehisspanofcontrol.Wewouldexplaintohimtheimportanceof
freeinguphistimetothinkaboutlargerstrategyconcernsandthecreationoftheSeniorVPofGBUs
andMDOswouldbethebestutilizationofhistimeandstillallowhimtobeintimatelyinvolvedinthe
business.
WewouldthenaskforadditionalmonetaryresourcetocreatetwooftheCustomerAdvocatepositions.
ThismoneywouldcomefromtheMDOandGBUgeneralbudget.Approachingtheleadersofallof
thesegroupswillbecrucialtoachievetheirbuyinandsolicittheirhelpintalkingtotheirteam
regardingthisnewpositionandtheroletheywillserve.Wewouldwanttocarefullycrafttheright
messagetobedeliveredsothatthisnewpersonisacceptedasthedefactoleaderofthisintegrative
process.Againwewouldstartwithastrugglinggroupandaproducinggroupandfocusitacrossall
geographicalareas.
Acceptanceofthisnewpersonasadefactoleadercouldhaveanimpactontheinformalorganization.
Asthisnewliaisonpositionwillnotreallysitineitherdepartmentexclusively,theymightbeconsidered
anoutsiderandnotgiventhefullrespectthatisdeserved.Itwillbeimportanttomonitortheinformal
organizationfortheirresponsetothisnewposition.Thecustomeradvocatestaskswillneedtobewell
definedsothatprogressiontoagoalcanbemeasured.Thewaywewillknowifitisworkingisthat
thereshouldbeanimmediateimpacttooverallsalesgrowthandcorenetearningcontributedform
thesetwoareas;bothfabric/homecareandfoodandbeverage.
Thisfirstpartoftheplanshouldbeeasytoimplementandmeasurable.Afterthat,wecouldlookto
implementsomeoftheotherideasabout69monthsinthefuture.