Motivating People: Richard Nicolosi at P&G2013/5/23John Kotter
For about 20 years after its founding in 1956, Procter &Gamble’s paper products division had experienced little competition for its high-quality, reasonably priced, and well-marketed consumer goods. By the late 1970s, however, the market position of the division had changed. New competitive thrusts hurt P&G badly. For example, industry analysts estimate that the company’s market share for disposable diapers fell from 75% in the mid-1970s to 52% in 1984.
That year, Richard Nicolosi came to paper products as the associate general manager, after three years in P&G smaller and faster moving soft-drink business. He found a heavily bureaucratic and centralized organization that was overly preoccupied with internal functional goals and projects. Almost all information about customers came through highly quantitative market research. The technical people were rewarded for cost savings, the commercial people focused on volume and share, and the two groups were nearly at war with each other.
During the late summer of 1948, top management announced that Nicolosi would become the head of paper products in October, and by August he was unofficially running the division. Immediately he began to stress the need for the division to become more creative and market driven, instead of just trying to be a low-cost producer. “I had to make it very clear,” Nicolosi later reported, “that the rules of the game had changed.”
The new direction included a much greater stress on teamwork and multiple leadership roles. Nicolosi pushed a strategy of using groups to manage the division and its specific products. In October, he and his team designated themselves as the paper division “board” and began meeting first monthly and then weekly. In November, they established “category teams” to manage their major brand groups (like diapers, tissues, towels) and started pushing responsibility down to these teams. “Shun the incremental,” Nicolosi stressed, “and go for the leap.”
In December, Nicolosi selectively involved himself in more detail in certain activities. He met with the advertising agency and got to know key creative people. He asked the marketing manager of diapers to report directly to him, eliminating a layer in the hierarchy. He talked more to the people who were working on new product development projects.
In January 1985, the board announced a new organizational structure that included not only category teams but also new-brand business teams. By the spring, the board was ready to plan an important motivational event to communicate the new paper products vision to as many people as possible. On June 4, 1985, all the Cincinnati-based personnel in paper plus sales district managers and paper plant managers-several thousand people in all-met in the local Masonic Temple. Nicolosi and other board members described their vision of an organization where “each of us is a leader.” The event was video-taped, and an edited version was sent to all sales offices and plants for everyone to see.
All these activities helped create an entrepreneurial environment where large numbers of people were motivated to realize the new vision. Most innovations came from people dealing with new products. Ultra Pampers, first introduced in February 1985, took the market share of the entire Pampers product line from 40% to 58% and profitability from break-even to positive. And within only a few months of the introduction of Luvs Delux in May 1987, market share for the overall brand grew by 150%.
Other employee initiatives were oriented more toward a functional area, and some came from the bottom of the hierarchy. In the spring of 1986, a few of the division’s secretaries, feeling empowered by the new culture, developed a secretaries network. This association established subcommittees on training, on rewards and recognition, and on the “secretary of the future.” Echoing the sentiments of many of her peers, one paper products secretary said: “I don’t see why we, too, can’t contribute to the division’s new direction.”
By the end of 1988, revenues at the paper products division were up 40% over a four-year period. Profits were up 68%. And this happened despite the fact that the competition continued to get tougher.
(From "What Leaders Really Do", HBR, May 1990, John Kotter)