Procter & Gamble's lesson for hospitals: Reduce complexity

by Kenneth Kaufman "We are going to create a faster growing, more profitable company that's far simpler to operate," said Procter & Gamble CEO A. G. Lafley, announcing that the parent company of some of the world's most well-known products would be shedding half of its 200 brands. The situation that led Procter & Gamble to this move has some striking parallels to the situation for today's hospitals. Like Procter & Gamble, hospitals are well-known brands in their communities. Like Procter & Gamble, hospitals' delivery networks have grown over time, creating great complexity in structure and operations. And like Procter & Gamble, hospitals are legacy organizations in an environment that favors the innovation and speed of upstart companies. Simplicity and profitability Procter & Gamble's brand portfolio is broad, deep and complex. It operates in markets throughout the world. By paring down its brands, Procter & Gamble can reduce non-core product categories, as well as the number of brands within each category, helping to focus the company on what it does best. Although underperforming brands will be obvious targets, Procter & Gamble "will sell a billion dollar-plus brand if it is no longer strategic," according to Lafley. "We are not selling flies on the tail of a dog." A significant motivation for this move is reducing costs and improving profitability. In 2013, Procter & Gamble's top 80 brands accounted for $84.1 billion in sales...
Source: hospital impact - Category: Health Managers Authors: Source Type: blogs