Obama's pick to lead the VA led a private-sector digital revolution
- By Adam Mazmanian
- Jun 30, 2014
As CEO of Procter & Gamble, Bob McDonald used technology to cut costs, improve efficiency and empower customers -- lessons that could translate well to the troubled Veterans Affairs Department.
The former head of the company that makes Tide detergent and Crest toothpaste might seem like an odd pick to head the Department of Veterans Affairs. Bob McDonald, a former Army captain and business executive who headed Procter & Gamble from 2008 to 2013 brings leadership skills and military credibility as a West Point graduate, but he lacks the medical experience of Cleveland Clinic CEO Toby Cosgrove, who was under consideration for the secretary of Veterans Affairs post. But McDonald led a digital transformation at the world's largest consumer packaged goods firm that could have lessons for the VA.
That transformation at P&G also offers some clues about how he might lead an agency that needs to improve its business culture and the way it manages the technology behind its health records and scheduling system.
McDonald placed a lot of value on enabling end-to-end communications and logistics inside the company, and out to their network of retailers. As a global supplier, P&G maintains relationship with retailers down to the level of small rural grocery stores in the developing world.
McDonald explained in a November 2011 interview in McKinsey Quarterly that P&G provided retailers with smartphone applications that allow them to order wirelessly, and access information on how to optimize their store to maximize sales of company products. The company reduced its transportation costs in a time of rising fuel prices with a program called "control tower," which mapped together deliveries of raw materials and finished goods to maximize the efficiency of its shipping by eliminating "deadhead" loads. The company runs a similar program with its network of distributors that links into P&G systems and helps manage transportation logistics.
McDonald also sees technology as a way to empower customer feedback.
As social media channels developed, McDonald sought to incorporate consumer comment from blogs, Twitter, online retailers, and elsewhere into the workflows of brand managers. A "consumer pulse" tool filters comments about P&G products in real time to company employees. Maintaining the real time flow of business and consumer data looms large in making business improvements, according to McDonald.
"For companies like ours that rely on external data partners, getting the data becomes part of the currency for the relationship. ... We have analytic capabilities that many retailers don’t have, so often we can use the data to help them decide how to merchandise or market their business in a positive way," he said in the 2011 interview.
VA watchers should take note of McDonald's insistence that top executives understand the technology that drives these business practices.
"We established a baseline digital-skills inventory that’s tailored to every level of advancement in the organization," including senior managers, McDonald said. "We've got to have the standards for everyone because otherwise we’ll dumb the organization down to the lowest common denominator."
Acting VA Secretary Sloan Gibson issued a report on June 27 warning that "a corrosive culture had led to personnel problems across the department that are seriously impacting morale and, by extension, the timeliness of health care." McDonald has focused on culture in his leadership philosophy, noting that "ineffective systems and cultures are bigger barriers to achievement than the talents of people."
And those who want to see an overhaul of top managers at VA might take heart from another of McDonald's leadership tenets – "there will be some people in the organization who will not make it on the journey."