Written by John Pepper with introduction by Steve Boehler
John Pepper knows a thing or two about leading a successful business.
John spent much of his career at Procter & Gamble, becoming CEO of the company in 1995. Following his time at P&G, he went on to serve as Board Chair at Walt Disney as well as Board roles at other fine companies and served as Board Chair at Yale. During his tenure as CEO, John led Procter & Gamble through a period of significant growth and expansion, introducing new products and expanding the company’s global footprint. He also spearheaded efforts to improve employee diversity and inclusivity, earning recognition for his commitment to corporate social responsibility.
Notably, John also co-founded the National Underground Railroad Freedom Center in Cincinnati, Ohio, a museum and educational center dedicated to telling the story of the Underground Railroad and the struggle for freedom and civil rights in America. This is an important resource and is a source of connection to me as I grew up in a small town in Upstate New York where Harriett Tubman settled and is buried.
John’s Principles to Achieve Good Results in Business speech is personal to me, as I have revisited it often since originally hearing it at P&G’s year-end meetings in 1981. His advice is as relevant today as it was over forty years ago. The following is a reproduced transcript of John’s talk.
J. E. PEPPER SPEECH - 1981 CINCINNATI YEAR-END MEETINGS
I would like to share three principles with you that I have come to believe are among the most important to achieving good results in the business. I have come to believe in these principles, both by seeing the benefits of them when they are practiced well and by seeing what happens when they are not. As you would guess, they re-articulate many of the things you have heard earlier today. For each principle, I will suggest a few “how-to’s”.
There is a limited number of things which either we, personally, or our organizations can focus on consistently over time — so we better make sure that those things we do concentrate on are the most important.
For me, by far, the most important are those results needed for growth in three areas – volume, profit, and people. Volume and profit and people – VPP, if I could engage in an acronym. My advice would be to be a very persistent person – VPP – in emphasizing those things that will build volume, profit and people.
A lot of time when we spin wheels it is because we are putting our time and effort against a project or an aspect of a project that, even if successfully completed, will not make an important contribution to the growth of volume, profit and people.
As for some “how-to’s”:
First, we need to take the time to think… to think deeply and creatively about what our volume, profit and people growth objectives and strategies should be. I emphasize the phrase “time to think deeply and creatively about objectives and strategies”. If you are like me, you find it very hard to put enough time against this. Recall the recent quote from George Bernard Shaw that appeared in a recent issue of Moonbeams: “Few people think more than two or three times a year — I’ve made an international reputation for myself by thinking once or twice a week. “We really do need to think, at least once or twice a week. Reserve the time for it.
Second, we need to put together imaginative, specific plans to meet our objectives.
As we all know, well-thought-out goals and strategies are important but a statement of goals, without carefully thought-out, creative plans to execute them, is almost worthless.
Third, these goals and the plans to meet them need to be constantly recycled and kept in front of our organization. It is easy for them to be dutifully prepared and put in a file drawer. But they must be kept front and center. They need to be an operating tool. They are going to need to be changed, updated and, above all, acted upon.
The most important thing here is that our organizations are focusing on the achievement of results on the limited number of things that will contribute most to building volume and profit and people.
In the Advertising Department, that is almost certainly going to be better copy.
In Sales, it may be better distribution and featuring.
In Manufacturing, it is probably going to be lower unit costs and quality.
And, in every discipline, it is going to include training and recruiting.
Approaching the business in this focused way will lead to simplification.
It will help avoid getting into the trap where there is too much attention on process and form and not enough on the end result.
Net on this point — we have got to be sure that we are focusing our own efforts and those of our organizations on developing sharp, innovative plans to get results against those objectives that will do the most to build volume and profit and people.
Know the reality of your business and your consumer and your competitor.
It is amazing to me that, as good as we are, and as long as we have been in most of our businesses, there are still such important facts to be discovered that are important to improving our business. And may it ever be the same. That’s what keeps this business so invigorating.
For example, in just the last 18 months or so, by really finding out what’s happening to laundry in the home, we have made important discoveries about how fabric softeners interact with surfactant and can reduce the whiteness of garments. This knowledge is critical to developing improved detergent formulas.
By asking deeper, smarter questions, we have learned about differences in diapering practices and acceptance of Pampers among women who bottle-feed and breast-feed their babies.
By conducting focus group interviews, we have learned that consumers in one country have reacted differently and far less positively to superior whiteness sale in cold water than we had thought they would.
By studying our competition in greater depth, we have learned that European coffee competitors are following a different product and marketing program than we had previously understood. And that is suggesting action for us.
By talking to the trade in greater depth, we have learned that our business has been held back by bad trade relations in several countries and we have developed ideas on how to fix it.
By making in-depth financial analysis, we have learned that a key competitor is getting half its profit in a large subsidiary from a product in a category which we hadn’t looked at closely before. Now we are.
By thinking more broadly about recruiting, we have found that we haven’t been sufficiently taking advantage of foreign students studying in the U.S. as a source of recruits, and I could go on and on.
All these are learnings that really grow out of the basic principle of knowing our business … our consumer … our competitor, in depth. Of staying in touch with reality.
Herbert Butterfield, in his book “The Origins of Modern Science”, noted that “… of all forms of mental activity, the most difficult to induce even in the minds of the young, is the art of handling the same bundle of data as before, but placing it in a new system of relations with one another. It is easy to teach someone a new fact”, he said, “but it needs a light from heaven to enable a teacher to break the old framework to which the student has been accustomed.” This statement describes a challenge we face in spades. How do we address the challenge?
Most basically, by being sure we don’t get enclosed in an ivory tower and that, rather, we stay in touch with the reality of our business and the market — with what our competitors are doing; with what our consumers need and want; with consumers’ acceptance of our products; with the trade’s attitudes toward us; with the needs and desires of young managers.
For example, we have got to regularly check to be sure that our laboratory measurement techniques in product development are in line with current practices in the home.
We need to be sure that our research on consumer usage and practices and attitudes towards products is up-to-date and real depth. We need to be sure that we are asking the right questions in this research.
We need to thoroughly understand what our competitors are doing — and why — with a positive view to acquiring learnings that can help our business.
We need to have close contact with the trade — to understand what our trade customers are thinking and seeking; and the implications of this on our business and how we deal with them.
We need to find out how consumers are reacting to our advertising and the promises it makes about our products.
In these and in all ways, we and our people need to stay in touch with reality. We need to avoid abstractions. We have got to get out of the office and into the field.
Managers will find different ways to do this. I’ve made it a practice for the last few years of setting up a 6-month calendar of visits to the field; visits to our plants; visits with our Salespeople — all with the intent of trying to stay in touch with the market. In the U.S., I made it a practice while going to and from work of listening to tapes of Market Research Department focus groups and other contacts outside of the office to be vital to keeping a fresh view of what’s important to consumers, of what’s changing, and of what the real issues are, of what opportunities for improvement exist.
So much for this point.
Take full advantage of all the talents and energies of our people – the people reporting to us, staff groups, peers, agencies, whoever is involved in making our business succeed.
As good as we are at providing an environment where people can make the most of their abilities – and we are good relative to other companies – we are not as good as we should be. I’m sure we never will be but we have got to do our best to keep getting better. Whether it be in our plants, our agencies, our brand partners, our sales organizations, we tend to underuse the talents and abilities of our people and the only way I know to overcome this inherently human problem is concentration on it… concentration particularly on good communication, delegation and good teamwork.
There are many aspects to this. I will cite six that I have found important:
- First, let people know what is needed and what the total business situation is in which we’re operating. We too often tend to be too closed in sharing the reality and totality of business challenges and plans with our people. Our people want this broader perspective and they respond when it’s made available.
A classic example of this for me was a major profit problem we had on Bold-3 in the U.S. in 1978 when we found ourselves in a loss position due to much higher than estimated product costs. By bringing together all of the people that needed to be involved in the solution to this problem, by letting them know the “dollars and cents” reality of the situation we were in and the magnitude of the improvement that was needed, this group achieved outstanding ideas and execution. They accomplished what would have seemed to be wildly optimistic objectives.
The same thing is starting to happen right now on European Lenor where we’re operating at a break-even on 15MM cases and have the potential to improve our total European profit by 50% if the European Lenor brand profit team can reach its target profit margin. Everyone involved knows the size of the stakes we’re dealing with and they’re responding. Net: Tell people clearly and openly what it is that we need from their operation. And tell them why we need it
- Second, we need to delegate more. Outstanding people learn and grow by doing, by being in effective control of important parts of an operation. Sure, they’ll make mistakes from time to time and, we do need to protect against major harm to the business or individual but we’ve also got to recognize that our younger people will learn just as much as we did from some things that don’t work.
- Third, help create great interfaces. Build bridges between people. Get people from appropriate disciplines together to work on a ’problem. Get people who are experienced with an issue in one geographical locale in touch with others who are about to experience the same issue. Let me emphasize that General Manager leadership and championing of team-building is absolutely essential. It will not happen without it.
- Fourth, listen well. Unless you feel you are always right, and I have yet to meet someone who is, it’s hard to over-estimate the benefits of being a good listener. Some of the best decisions I have ever been involved in have come because l have listened well to a committed and strongly-put but controversial recommendation from a knowledgeable member of the Company or agency. Listening well promotes good decisions, helps permit radical ideas to see the light of day, helps good communication, and it is a superb tonic to motivation. For it demonstrates honest respect. It helps people feel like winners. And it vividly conveys the expectation of high contribution.
- Fifth, constantly encourage your people to propose and do what they believe is right after objective consideration of other points of view not what they feel you or other members of Management want.
- Sixth, and, finally, personally champion, recognize and reward those results with which you believe count most in the development of our business and your organization. For example, if an R&D person comes up with a major product innovation – recognize it – consider increasing their salary immediately, even though they had a raise six months ago. If a Sales Manager breaks a long-term distribution problem at a key account, call them up, recognize and reward the result. There is nothing that provides a clearer message to the organization on what’s important or is more motivational to an individual or group than you’re taking the time to recognize and reward superior results.
Former P&G CEO John Pepper
What a speech! A leadership MBA in 5 pages. Let us know what you think.
And come back next week for a special discussion I had with Mr. Pepper about this speech and how he might update it if given today.
Steve Boehler, founder, and partner at Mercer Island Group has led consulting teams on behalf of clients as diverse as Ulta Beauty, Microsoft, UScellular, Nintendo, Kaiser Permanente, Holland America Line, Stop & Shop, Qualcomm, Brooks Running, and numerous others. He founded MIG after serving as a division president in a Fortune 100 when he was only 32. Earlier in his career, Steve cut his teeth with a decade in Brand Management at Procter & Gamble, leading brands like Tide, Pringles, and Jif.