Book Extract: Integration is never easy

P&G realised early on that for the merger with Gillette to succeed it needed to keep the Gillette employee turnover rate at a single-digit level and minimise disruption through discipline

LEADING WITH STRATEGIC THINKING: FOUR WAYS EFFECTIVE LEADERS GAIN INSIGHT, DRIVE CHANGE, AND GET RESULTS
Author: Aaron K Olson, B. Keith Simerson
Publisher: Wiley
ISBN: 9788126556915
Price: Rs 499

In early 2005, Procter & Gamble (P&G) agreed to acquire Gillette in an effort to combine many of the world's top brands and broaden P&G's portfolio of consumer products. P&G set a goal of generating more than $1 billion annually in combined revenue and savings within three years of merging with Gillette. P&G realized that much of this value would ultimately be attributed to a well-organised approach to integrating Gillette's worldwide organisation. A major component of this required the integration and transformation of IT.

At the time of the acquisition, Jose Ignacio Sordo was the Latin American CIO for P&G, leading an IT organisation composed of more than 2,200 associates. The team provided IT services across the entire region. To increase the likelihood of P&G optimising the Gillette brand and realizing the synergy objective, Jose was asked to lead the Latin American P&G and Gillette business integration and to drive the integration, coordination, and execution of the new organization's business capability. Because P&G's leadership team planned to rely on the Latin American experience to more effectively and efficiently move into other markets, Jose was asked to achieve this within two years of the acquisition.

The geographic scope of Jose's undertaking was huge. The functional scope of Jose's undertaking was similarly broad. His organization was responsible for all ordering, shipping, and billing systems, P&G's physical distribution network, manufacturing control systems, integrated trade terms and agreements, accounting and financial reporting systems, P&G's Human Resource benefit harmonization and HR system, infrastructure standardization, facilities consolidation, and plan system optimization. Charged with establishing the approach, methodology, and process for integrating the two giants, Jose quickly realized that a stumble on his and his organization's part would jeopardize the business case behind the P&G-Gillette merger.

The risks included shortfalls in profitability or underperformance in P&G's brand recognition, which was expected to result from their acquisition of Gillette.

From Jose's perspective, three factors would ultimately contribute to the successful integration of P&G and Gillette:

1. The "new" P&G had the right to succeed, ensured by its taking steps to not lose sight of or become distracted while delivering on its value proposition and acting in a manner consistent with and supportive of its underlying values and overarching mission.

2. The merged P&G and Gillette organization would quickly provide added value to stakeholders and customers, remaining nimble by leveraging existing structures, systems, processes, and so on.

3. The "new" P&G would identify and address potential impediments, obstacles, and barriers to success by proactively taking steps to reduce, mitigate, or avoid the most likely threats and monitoring progress so unexpected challenges could be identified and addressed along the way. Jose considered these three factors to be a given and was confident the new P&G would bolster its brand, increase profitability, optimize synergy savings if it focused on one goal: execution.

Yet along with this goal, he considered leadership and team contribution to be of paramount importance.

Jose believed it was important for members of the combined organization to quickly establish new assumptions and expectations about what was and wasn't important. It was critical that everyone felt that they were on the same team. One way Jose helped Gillette employees feel they were part of P&G was to "connect the two company networks - enabling e-mail and other personal productivity systems within the P&G firewall - on the first day following the close of the deal."

Reprinted with permission