At a recent event at the Center for Strategic and International Studies, former Procter &Gamble CEO John Pepper discussed his new book, Russian Tide, in which he documents his experiences expanding the company’s business into the former Soviet Union in the midst of unprecedented change in the early 1990s.
Pepper, who was active in introducing P&G to multiple countries during his tenure, described why he chose to focus his book on Russia, saying firstly that the story brings to light what makes for business success. Secondly, he said he wanted to share his “great adventure,” and finally, he wanted to tell his story because of his personal “affection, affiliation… and fascination of Russia.”
P&G was one of the first and most successful Western companies to move into the Russian market after the fall of communism. According to Pepper, “In the midst of all the political, social and economic upheaval in the region, P&G and every other major company seeking leading positions asked themselves the same question: How far and how fast should we move?”
However, as he explained, P&G’s strategy to be successful in the region heavily relied on local Russians, as much as the quality of the brands. They recruited local students from Russian universities and even developed a relationship with St. Petersburg University to train future businessmen and women. For distribution channels, they followed the trans-Siberian railway and were able to buy formerly government-run production facilities.
Throughout its expansion in the region, P&G was conscious of building a sustainable footprint and relied heavily on fostering relationships and practicing cultural sensitivity. In his book, Pepper writes:
“Our experience in Russia also reminds us that great success is not simply an outgrowth of a bold vision. It requires the superb execution of a few well-chosen strategies. In Russia, these strategies were founded on building a strong local organization, developing local manufacturing capacity and raw material suppliers, a superior and bold new distribution infrastructure, and a broad and deep brand portfolio providing superior scale, with brands covering multiple price points and meeting varying consumer needs.”
Pepper estimated that in P&G’s third year in Russia, sales were less than $25 million, with expenses double this. Today, P&G is a $3 billion company in Russia with 60 brands and 3,000 employees, of whom 95 percent are Russian. He explained that the key lesson he learned from this success was the power of vision. As John Smale, P&G CEO from 1981 to 1990, told Pepper at the time, “I never encountered a point where I thought we were going the wrong way.”
Throughout the discussion, John Pepper stressed the importance of relationships in a venture of this nature, a sentiment echoed in his book:
“My experience in Russia over the past two decades deepened my appreciation and, even more, my affection for this remarkable country: its literature, its music, its art and above all, its people.”
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