Don't Shout, Listen

Like the Wizard of Oz hiding behind his curtain, Procter & Gamble has for most of its history hidden behind its powerful array of consumer brands. About itself -- about the people and the practices that go into developing those brands -- it has retained a rather secretive air. Pay no attention to the corporation in Cincinnati, the company seemed to say. Instead, just watch as billions of consumers keep coming back to products like Crest, Folgers, and Tide.

But there's a new spirit of openness at P&G -- and it's most evident on the Internet. Just take a look at PG.com. A year ago, it was a stodgy, nondescript site where no one other than investors and job seekers had any reason to go. Today, when you log on to it, you see a consumer-friendly portal that proudly announces P&G's responsibility for "more than 300 brands you know and trust." On the site, you can call up a wealth of information about the history, structure, and operations of the $40 billion company; link to "tips and resources" on family, household, and personal care; and, most intriguingly, take part in P&G's efforts to create, test, and market its brands.

For P&G, brands are the chief medium through which it communicates with customers. Traditionally, that communication has gone more or less in a single direction, with P&G spending billions of dollars a year to tell consumers through bold, persistent advertising that Pantene or Pringles (for example) would reliably deliver what their hair needed or what their stomach craved. While the company has made the use of focus groups and test markets into an art form, it has kept such interaction with customers tightly under wraps. The basic model: Research secretly, and carry a strong brand.

That model is due for revision, says Greg Icenhower, 38, an associate director of corporate communications at P&G and the man who took the lead in revamping PG.com. "We've been voted the best marketer of the 20th century," he says, referring to a ranking published by Advertising Age magazine. "But that's because we were the biggest shouters. In the 21st century, we want to be the best listeners."

The relaunch of PG.com took place last September. Icenhower had put together a skunk-works team that included him and seven other P&G people, some of whom had no relevant Internet experience. While rebuilding the site, the team undertook none of the intense testing that P&G would normally insist on devoting to such a high-profile project. On the contrary, Icenhower convinced his bosses that the focus of his team's work should be on experimentation. "I told them that we wouldn't get everything right but that by making mistakes, we would start learning lessons immediately."

The PG.com team successfully pushed to include two features on the site that would have been almost unthinkable in the old, close-to-the-vest world of P&G. In Try & Buy, which has become the site's most visited section, consumers can purchase new products before they show up in the supermarket or drugstore. (In May, a Pampers gift pack was on sale through PG.com.) Previously, only customers who were on a special mailing list or in a test market had been able to enjoy such perks. And in Help Us Create, P&G conducts virtual test markets where consumers can tell the company which kinds of new products it should make, or how it might improve existing products. (Visitors who came to the site in May could offer feedback on the Olay beauty-care product line.) For a company whose tight control over product development and testing is legendary, all of this marks a big change.

But P&G has good reason to be in an experimental mode. The company stumbled badly in 2000, missing analysts' profit expectations and causing its famously reliable stock to plummet from $103 in January 2000 to $64 in June of this year. Under A.G. Lafley, who became CEO a year ago, the company is regrouping after what its leaders now admit was an overambitious change effort. This year, in a bid to focus on profitability, P&G announced that it will lay off more than 17,000 people over the next three years. It has even moved to reshuffle its product lineup, in part by putting such revered brands as Crisco and Jif up for sale.

More to the point, P&G has stepped up its experimentation because it has discovered an ideal laboratory for doing so: the Internet. Unlike many old-economy outfits, P&G is no conglomerate-come-lately when it comes to negotiating the Net. As early as 1995, it had 10 Web sites up and running, and it was also an early player in the banner-advertising game. Recently, some of P&G's biggest brands have all but given up on banner ads. But the company still operates more than 70 Web sites. And rather than give up on the Net as a whole, P&G has turned it into an arena for trying out new approaches to branding -- new ways to make the shift from shouting to listening.