Procter & Gamble: Organization 2005 & Beyond
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Case Code : BSTA062
Case Length : 15 Pages
Period : 1998 - 2003
Organization : Procter & Gamble (P&G)
Pub Date : 2003
Teaching Note :Not Available
Countries : Global
Industry : FMCG Fast Moving Consumer Goods
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Procter & Gamble's (P&G) Organization 2005 was conceived as a set of far-reaching initiatives to accelerate the company's growth. It involved comprehensive changes in organizational structure, work processes and culture to make employees stretch themselves and speed up innovation. Organization 2005 also sought to leverage P&G's global presence. The program was intended to boost sales and profits by introducing new products, closing plants and eliminating jobs. This initiative spearheaded by P&G CEO Durk Jager (Jager), who became CEO in 1999, was to be a six-year, $ 1.9 bn effort. Jager believed that rapid restructuring was necessary to create new growth opportunities for P&G.
While launching the program he expressed his optimism1:
"Success is defined first and foremost in terms of growth. Unless a company grows at an acceptable rate -- year in, year out -- it can't sustain its organization. Success also means growing profitably. Otherwise, it can't produce the resources and capability to invest. To take risks, seizing new opportunities. The programme
we lay out here today is designed to deliver that growth, at a consistently
higher level. Just come back in a couple of years and take a look. I believe
that the best way to accelerate growth is to innovate bigger and move faster
consistently and across the entire company."
Jager indicated that the cultural changes he planned to introduce would create an environment that produced bolder goals and plans, bigger innovations and greater speed. As part of the exercise, Jager redesigned the reward system to strengthen the link between executive compensation and results...