Tuesday, November 16, 2010

Interview: Jim Stengel, Global CMO of Procter & Gamble

By Rob O’Regan and Constantine von Hoffman 


Jim Stengel has passion. And he loves to talk. What better combination for a Q&A? We sat down with Stengel, Procter & Gamble’s global marketing officer, at the company’s Cincinnati headquarters to plow through a wide range of marketing topics.  


CMO: “Put the consumer at the center of all we do” is a great mantra, but what does it actually mean? 


Jim Stengel: It’s a real centering concept for everyone in marketing and the partners, internally and externally, we work with. When A.G. [Lafley, P&G's CEO] started talking about that five years ago, there were head nods: “We’ve done that for 155 years!”

But what starts to happen is that we start really, really, really thinking about what that means. There have been deep discussions by teams about, “Who are we really for? Who is attracted to our equity? Are they sufficient for the growth goals we have? If not, who else could be attracted to our equity? Is our equity defined well enough to be aspirational to consumers?” This journey we’re on about being focused on core consumers started back then.

And that does a couple things. One, it gives us more aspirational brands, more broadly defined brands. But it also has a tremendous effect on the culture. Because it gets people out of the office. It gets people working together in unexpected situations. It galvanizes teams on what’s really important. And it inspires people. Because whatever they’re working on, whether it’s a life-changing drug like Actonel or Asacol, or it’s Tide or Downy, when they understand it has a role in someone’s life, when they talk about it, they come back more pumped up. 

How is that different from what P&G has always done?

It’s a different starting place; it makes no assumptions. And it’s a framework for how we think. P&G has a reputation of being very process-oriented and template-driven. That isn’t the way anymore. We teach a mental approach; we learn from our cases.

But consumer-centric marketing makes no assumptions. It begins with “who is your consumer, and what’s different about her?” It sounds like such a simple question, but if you went to most companies and asked that question, you wouldn’t get a very satisfactory answer. 

When you ask that question, is the answer based solely on what the people in the room say, or whatever customer research you’re doing?

What works best is immersion. You usually have a general idea. If it’s Pampers, it’s pretty clear that you’d better go out and spend some time with moms, although even within that group we get specific about what’s important to them.
But we try to, as a team, do some experiences. And that may be shop-alongs, live-alongs; it could be a day in the life. We try to be much more innovative about how we get our people, in an honest and natural way, to experience how our brands are part of our consumers’ lives.

We’ll also look at demographic trends, consumption trends – all the quantitative stuff you’d expect us to look at. 

How do you encourage the willingness to fail, to take a risk and go against that innate conservative mindset?

That’s always a challenge for a company with our history of success and our still relatively competitive culture. I don’t think we have that nailed; I don’t think anyone does. What we try to do personally is to have leadership share where we failed and learn from that. All of our senior leaders are very quick to talk about their career mishaps. And they’ve done okay.

Also, something that we’ve been doing is rewarding those who step out to test and experiment. We’ve had a contest going over the last six months, which is very much about innovation.

The reward is actually not in the result; the reward is in the people and the ideas that come forward.

If we want to be the company with a potential to lead the way into this evolving market landscape, we’re not going to do that by writing some papers; we’re going to do it by tapping into the creativity of our people, and encouraging them to come forward with bold ideas, based on the consumer, on a different way to build brands than we’ve done in the past. 

How new is the immersion strategy, and what have you learned from your early experiences that you’re bringing to bear now?

We’ve always tried to get our brand managers out of the building and to experience life like our consumers; I did it 15-18 years ago. But it was, I think, a little bit more programmed back then, a little more focus group-oriented or moderator-driven. What we’re now trying to do is let people, without a filter, really be with our consumer and be in her life. We think that’s where a tremendous amount of innovation will come from. 

How do you get the consumers to kind of accept you into their world, to allow you to watch?

They are surprisingly open. I think it’s a sign of respect that we want their input and we want to listen. We sometimes divulge we’re with P&G or a brand, but sometimes we don’t. It depends on what the objective is. 

Does interacting in that way require any special training?

It does. We have a very strong market research organization, or as we call them, Consumer Market Knowledge. They are on each team, and they make sure that our brand people understand how we do this. I can’t underscore enough how that has led to some of our best ideas. 

Talk a little bit about how that consumer research filters back to the R&D group and what impact that has.

They do it with us. This is an interesting idea, in and of itself: All the functional lines are getting blurred. Some people are threatened by that, but I think it’s very exciting. I sit in some team meetings where I don’t know who’s from marketing, which is as it should be. 

They don’t dress better? 

Not anymore! 

How do you balance the P&G brand versus the product brands?

We don’t do an awful lot of work to make the P&G brand clear. We rely on our brands selling what they have to offer, and standing on their own in terms of quality and trust, affection, whatever.

We’re a little bit different outside the U.S. In some countries like Japan and the Philippines, P&G is at the end of every ad. And we went into many markets in Central and Eastern Europe advertising P&G just to establish the quality image.

It’s something we always are thinking about, testing out. The corporate reputation is extremely important to us, and we are coming out a bit more with it in ways that we think are right. But I don’t ever see a day when it’s “Pampers/P&G” or “P&G/Pampers.” And frankly, as we get more diversified, are consumers reassured that the company that makes SK-II also makes Bounty? Maybe, maybe not. 

You’ve been oft quoted saying that the marketing model is broken. Can you talk a little bit about how the mix within P&G is changing, from the traditional pieces that you feel aren’t effective anymore to some of the new messaging approaches that you’re building into your marketing organization?

I said that at the AAAA conference 16 months ago; I think it was true then, and it’s true now. What is encouraging now is that things are starting to shake free. 
Like what?

I just think there’s more experimentation and more innovation in marketing models, not just from us but from others in the industry. I think you’re seeing it from us, and you’ll see more of it.

I don’t think anyone has the perfect answer. I don’t think there’s a model anymore. I think there’s an approach: Begin with the consumer that’s important to you. And then learn about her life before you run out and execute. Do the deep dive on the media in her life. To me, that is a provocative event. People start to see that this is how the consumer is in control, that she is choosing, that she feels more empowered than ever. She feels overwhelmed, but she wants choice; she wants it all. And we have to find a way that fits into her life in a way that she accepts. That, to me, is where marketing is going. 

Do you bring the agencies along with you on these consumer immersions?

Absolutely. And we’re having a lot of discussions about how they need to change, how they need to challenge some of their paradigms, some of their silos, some of their ways of doing business. So that we can build capability in this area, really understand lifestyle, and then move on to more creative planning. It sounds blood simple, and in concept it is. But executing against it still demands that you do a lot more thinking and consumer work before you execute. 

Are the creatives getting a little more paranoid with the emphasis on measuring their performance and effectiveness?

Not that I’ve found. A number of them have said to me jokingly, “You know, you’ve taken away all of our excuses.” But the best ones are really excited by this drive to be more innovative in our planning. And a lot of them are trying new things on their own.

I think we’ve moved from saying, “We want great television advertising,” to “We want great ideas that connect with consumers as we build our brands, take us to a different place emotionally.” And all the great brands do that. 

You’ve changed the process of paying ad agencies based on straight commission. How do you translate that to other agencies you work with?

We do have an opportunity—and we’re working on that—to transfer those principles of sales-based compensation at other agency types. We do it for the ad agencies and we’re looking at some different approaches for the communication planning agencies.

We haven’t locked in anything yet, but my ideal world would be incentive-based, sales-based compensation for all value partners. There are lots of complications getting there. I think we can screw up a lot of things by moving too fast, because we don’t know what we don’t know. But the principle is dead-right. 

How do you ensure that your billion-dollar brands don’t suck the life out of the smaller brands that may have higher growth potential, but need that care and nurturing?

That’s something we wrestle with a lot. The way we’re organized helps prevent that. We still have brand teams for the smaller brands. We still break our business into categories. So in any given category, the person managing it thinks about the entire portfolio. We try not to starve the small brands for the big brands. We have a lot of brands in the $500 million to $1 billion range that are potentially $1 billion brands. We have some real growth engines at $200-$300 million that we need to nurture. And we really do look at the best ideas.
Having said that, this company will only be healthy if the big brands in the big countries are growing. So when Lafley meets with his top team and we review the business, that’s where we start. 

You talked about sharing your mistakes. What’s yours?

I have several, but I think the principal one would be that I’m not moving fast enough on things that I have a hunch about. And I try to live that today. The older you get, the more confidence and experience you get, you learn to trust your hunches. You smell something. When something isn’t quite right, even if I can’t articulate it, I’ll just say, “Wait a minute, something isn’t right.” Or if something looks really good, I won’t go out and look for 10 more pieces of data. I’ll say, “Run with it, go!” 

Test now and measure it later?


But you have to measure at some point.

You have to measure, and you have to have enough basis. But you learn from experience. You get a sense, you get intuition, which I think is really powerful. 

Talk a little bit about the methodologies you’re developing to measure some of these emerging marketing techniques, like branded entertainment, or blogging, or word of mouth. At some point you must have to come back and say, “OK, we’ve made an emotional connection with the consumer; here’s what it translates into.”

We do a lot of equity work once the brand is in the market. For the big brands, we look at the data every quarter. And we really see it move when a brand gets it right.

On the broader question, we’re pushing creativity, innovation and risk-taking at the same time we’re pushing discipline. And that one-two is very powerful. We have a lot of efforts on ROI. We’re moving forward on the Apollo project with Arbitron and VNU. But we’re also working with some of the best modeling agencies, trying to understand how you can better break apart what’s going on in the market to understand what’s driving the whole equation. We’re looking at modeling the nontraditional stuff: word of mouth, public relations, things like that. And we’re making some progress.

Do we have it all solved? No. But we’re asking lots of questions and trying to build capability in that area. I want to have the best knowledge and systems and processes around ROI but at the same time have the most innovative and creative marketing organization. The key is keeping both of those initiatives going. You don’t want the measurement to stifle the creativity. 

What role do you play in protecting the customer data that you’re collecting? Is that an IT function, a marketing function, or a combination of the two?

It’s a combination of the two. I do a lot of work in this role with IT. That’s just the way marketing has evolved. Chief marketing officers today had better be very close to technology and their IT department, and develop some partnerships in that area, or they’re going to be left behind. There’s no doubt there. 

Source: CMO magazine (a publication of CXO Media, Inc.), September 2005

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