Gillette Co: USD 52.4 Billion Takeover by Procter & Gamble Co.
In 2001, James M. Kilts, then newly appointed as chief executive officer of Gillette Co., replaced two-thirds of the company's senior management team and trimmed 3,700 jobs, more than 10% of the company's work force. Employees of the century-old company thought they had seen the shake-up of all shake-ups.
Just wait until they see what Procter & Gamble Co. could have in store.
In announcing the $52.4 billion takeover of Gillette, P&G's CEO, A.G. Lafley, said he planned to "learn a lot from the people at Gillette" and talked about ways the companies could combine Cincinnati-based P&G's knowledge of women with the shaving know-how of Boston-based Gillette and delve into the business of women's hair removal, which Mr. Lafley said was a $10 billion business.
But Mr. Lafley's organization has a tendency to teach rather than learn. P&G has such a strong corporate culture that employees develop a lingo that only other P&Gers understand. The employees, nicknamed "Proctoids," write memos in a certain format, and use a certain brand of paper clip. Board members need a glossary to understand all the acronyms the company uses. Many P&G employees joined the company right out of business school, have never known another corporate culture and are eager to help new employees learn the ropes.
Yet Gillette employees may be difficult students. The company has its own staid culture, rooted in Gillette's flagship razor and blade business. The business model of giving away the razor and selling the blade may be the world's most-recognized mercantile concept.
Gillette's longtime focus has been on developing better and better products to make mundane activities, such as shaving, require high-tech tools -- a complex operation focused largely on high-tech research and development that P&G cannot afford to disrupt.
How well P&G and Gillette work together is crucial to the success of the takeover. In particular, P&G cannot risk alienating the core Gillette work force, which has developed
Just wait until they see what Procter & Gamble Co. could have in store.
In announcing the $52.4 billion takeover of Gillette, P&G's CEO, A.G. Lafley, said he planned to "learn a lot from the people at Gillette" and talked about ways the companies could combine Cincinnati-based P&G's knowledge of women with the shaving know-how of Boston-based Gillette and delve into the business of women's hair removal, which Mr. Lafley said was a $10 billion business.
But Mr. Lafley's organization has a tendency to teach rather than learn. P&G has such a strong corporate culture that employees develop a lingo that only other P&Gers understand. The employees, nicknamed "Proctoids," write memos in a certain format, and use a certain brand of paper clip. Board members need a glossary to understand all the acronyms the company uses. Many P&G employees joined the company right out of business school, have never known another corporate culture and are eager to help new employees learn the ropes.
Yet Gillette employees may be difficult students. The company has its own staid culture, rooted in Gillette's flagship razor and blade business. The business model of giving away the razor and selling the blade may be the world's most-recognized mercantile concept.
Gillette's longtime focus has been on developing better and better products to make mundane activities, such as shaving, require high-tech tools -- a complex operation focused largely on high-tech research and development that P&G cannot afford to disrupt.
How well P&G and Gillette work together is crucial to the success of the takeover. In particular, P&G cannot risk alienating the core Gillette work force, which has developed