P&G is digitizing every facet of its world, from advanced manufacturing and product design to virtualized consumer testing, driven not out of any love for technology but by ever-faster business cycles, says its CIO Filippo Passerini.
When you’re the CIO of one of the biggest companies on the planet, as well as the head of its business services operations worldwide, covering everything from IT to finance to facilities management, you know a thing or two about handling pressure. But when one of the world’s revered consultancies, McKinsey & Co, sums up your challenge as “creating the world’s most technologically enabled company” – you know expectations are running high.
For Filippo Passerini, the veteran CIO at consumer packaged goods giant Procter & Gamble (P&G) and president of the company’s Global Business Services group, the responsibility for making sure that the vision of the company’s digitization strategy is backed by a relentless business focus has propelled him into the leadership ranks at P&G.
“I see myself as a business person who happens to have an interest in — and an understanding of – technology,” says Passerini, who has, during his 30-plus year career at P&G, worked in six different countries, starting in his native Italy. “Everywhere I went, I took the opportunity – and considered it my job – to understand the business and look at how I could make an impact on it.”
As a result, during his eight-year tenure as CIO, Passerini has always ensured that every aspect of transformation begins with a business case – and not IT. “For us, technology is never the starting point,” he says. “Technology is the enabling tool. The real driver for business transformation is a change in work processes, business processes or culture – in the way employees work and operate, rather than the technology per se. We prefer to be technology agnostic.”
All things digital
The transformation processes at P&G are well respected and considered among the best in the industry. In determining which areas of the company to prioritize, the leadership team works hard to identify key global trends that are influencing business and society.
“Every three years or so, we look at the megatrends going on in the world,” says Passerini. “From these, we go down to those that have a unique impact on our business. From those that have an impact, we define the strategies that we believe are critical for the people who play a leadership role in the business. Then we choose the technologies that will enable those strategies. So, as you can see, technology is only at level four in this process.”
One trend that P&G identified several years ago was the acceleration of innovation. The company saw that other industries were rapidly reducing their innovation cycles: for example, automotive manufacturing was bringing a cycle of five or six years down to 12 months or so.
“That’s so dramatic,” says Passerini. “And of course, consumer electronics, fashion design, you name it, have also accelerated dramatically over the past seven or eight years. We said this trend is really pervasive, so it is critical that we accelerate our own product innovation-to-market time.”
In order to allow that to happen, one of the company’s IT strategies has been to enable a three- to five-fold decrease in P&G’s time to market. To do this, it has digitized as many of its critical processes as possible, from manufacturing to package design to consumer testing. For example, if the company wants to gauge consumer reaction to a new way of packaging shampoo, it can use digital technology to create a virtual product in a matter of hours (as opposed to a physical product, which used to take several weeks) and request instant – and more frequent – feedback from focus groups.
Bringing business value to the CEO
“We have virtualized 90% of our business when it comes to testing our product packaging with consumers,” Passerini points out. “That is creating a lot of business value because we get much better quality feedback, and can go to market faster.”
For such business-critical requirements as accelerated innovation, or any others identified under the megatrends process, best-in-class technology is considered vital. “In those areas, we want to be ahead of the game and set the standards for the industry,” says Passerini.
By contrast, when it comes to more commoditized IT, such as servers and infrastructure, his priority is: “To be very efficient and very cost-effective. We want to operate with excellence, but we don’t necessarily want to be at the bleeding edge in those areas.”
Given his key position at the company, Passerini is well placed to give insight into the sometimes-vexed question in modern enterprises of the optimum position of IT in the corporate structure.
“It’s all about the business,” he muses. “I don’t think many CEOs will question the importance of technology per se. But the CIO has a big responsibility and a big role to play in bringing business value to the CEO.
“If he does that, I have to believe that the CEO can only respond with open arms.”