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Inside P&G’s digital revolution
CEO Robert McDonald wants to make the consumer goods giant the world’s most technologically enabled company. Here’s how.

Robert McDonald is a CEO on a mission: to make Procter & Gamble the most technologically enabled business in the world. To get there, the 31-year company veteran and former US Army captain is overseeing thelarge-scale application of digital technology and advanced analytics across every aspect of P&G’s operations and activities—from the way the consumer goods giant creates molecules in its R&D labs to how it maintains relationships with retailers, manufactures products, builds brands, and interacts with customers. The prize: better innovation, higher productivity, lower costs, and the promise of fastergrowth. McKinsey’s Michael Chui and Thomas Fleming recently sat down with McDonald at P&G’s Cincinnati headquarters to talk about the nature and progress of the company’s digitization initiative, as well as its implications for P&G’s people and culture. An edited summary of the interview follows.

In the accompanying article, ‘My leadership philosophy,’ McDonald reflects on how his experiencesas a US Army Airborne Ranger inform his approach to leading P&G.

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November 2011

Real-time insights
Our purpose at P&G is to touch and improve lives; everything we do is in that context. With digital technology, it’s now possible to have a one-on-one relationship with every consumer in the world. The more intimate the relationship, the more indispensable it becomes. We want to be thecompany that creates those indispensable relationships with our brands, and digital technology enables this. One way is through consumer feedback. In 1984, when I was the Tide brand manager, I would get a cassette tape of consumer comments from the 1-800 line and listen to them in the car on the way home. Then, back at the office, I’d read and react to the letters we’d received. Today that’sobviously not sufficient—you’ve got blogs, tweets, all kinds of things. And so we’ve developed something called “consumer pulse,” which uses Bayesian analysis to scan the universe of comments, categorize them by individual brand, and then put them on the screen of the relevant individual. I personally see the comments about the P&G brand. This allows for real-time reaction to what’s going on in themarketplace, because we know that if something happens in a blog and you don’t react immediately—or, worse, you don’t know about it—it could spin out of control by the time you get involved. The technology also lets us improve things that are working. For example, we’re rolling out a product called Downy Unstopables, a fragrance addition you can add to your wash, and the real-time comments fromconsumers about the product’s characteristics are helping us figure out how best to join in the discussion through our marketing efforts.

Robert McDonald is the president and CEO of P&G.

From factory to shelf
From an operational standpoint, we also believe that to be successful we’ve got to continue to improve productivity, and being digitally enabled allows for that as well. So we’re digitizingour operations everywhere—from our manufacturing plants to the stores where consumers purchase our products. We believe digitization represents a source of competitive advantage. In our manufacturing plants, for example, we have systems that allow people to use iPads to download data off the production line in real time and communicate that to a place where we roll the data up.

Inside P&G’sdigital revolution

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We’re not there yet, but we envision a system where I could literally see, on my laptop, any product at any moment as it goes through the manufacturing line of any one of our plants. And what I’d love to be able to do is see the costs of that product at the same time. It’s challenging because accounting systems aren’t designed today for operations—they tend to look...