What Healthcare Executives Can Learn from P&G

Procter & Gamble (P&G), the world’s largest consumer-products company that aggressively expanded for years, recently announced that it will sell more than half of its brands.

Are you asking what this has to do with healthcare? Well, a lot actually.

Just like many of today’s health systems, P&G is in a very competitive and changing market. While it was successful under its former strategy for many, many years, leadership realized that the best way to continue to lead the market was to become more nimble. As Lindsey Dunn quoted in a recent Becker’s Hospital Review blog post, the idea is to “create a faster growing, more profitable company that’s far simpler to operate.”

Ms. Dunn notes that many hospitals and health systems are beginning to realize what P&G and its leadership recognized: Only so much can be attained by focusing on all existing products/service.

In Hospital Impact, Kenneth Kaufman, CEO of Kaufman Hall wrote a post, titled Proctor & Gamble’s Lesson for Hospitals: Reduce Complexity, that compares P&G’s portfolio-cutting decision to the tough decisions facing healthcare CEOs. Mr. Kaufman’s assessment is that by reducing non-core product categories, P&G will be able to focus on what it does best.

Mr. Kaufmann then goes on to analogize P&G’s bloated portfolio to the traditional mindset of hospitals trying be all things to all people. As a result, extremely complex organizational structures, infrastructures and operating processes must be in place in order to support the array of services hospitals offer. This creates a level of complexity that can be a major barrier to success in a transformative environment, like the one in which healthcare finds itself today.

Kaufman concludes, “A. G. Lafley (CEO of Proctor & Gamble) offers a valuable message for hospital leadership: Simplifying structure and operations is a critical first step in preparing for even more dramatic changes to come.”

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