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How Jim Kilts Razored Gillette's Costs

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By 38Packard
December 10, 2009

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Hi downisland,

You can't cut operating costs by 22% and be a nice guy.

I had the pleasure to work for The Gillette Company prior to, and during the acquisition by P&G. I actually made it through the "field the best team" process and worked for P&G out of the Boston offices for almost three years. When they recognized my ability to get things done in the P&G world, they offered me the Executive career track which lead to Cincinnati - and that's when I decided to take another position at a local company.

However, this is not about me, but more about a guy named Jim Kilts. Bostonians either love him or hate him - there's not much middle ground when it comes to Jim Kilts.

BRK was a major shareholder in Gillette, and when it came to recruiting a new CEO, I have to believe that WEB had a lot of input into the choice. I'm not sure about this, but it makes sense. The choice of Jim Kilts as CEO for Gillette was closely linked to his ability to resurrect dying brands at Nabisco - he was the "brand king" there.

When he arrived at Gillette, he cut operating costs to the bone, froze new hires, instilled fiscal responsibility and drove innovation throughout all brands. He was also all about data. He wanted a daily electronic report that showed our global sales by brand, customer, and geography. He wanted to see what orders were in the pipeline and why others were stuck in the pipeline. He managed inventory putting in a program known as "SKU Management" to reduce our number of global SKUs. He challenged plant managers to reduce injuries, machine down time, and improve overall quality and productivity.

He took the savings and invested heavily in marketing - even purchasing the naming rights to "Foxboro Stadium" now known as Gillette stadium where the NE Patriots play.

When Jim Kilts wanted his employees to get a message, he had the IT folks force MS Explorer to a pop-up window which required to you hear or read his message to you. This was not optional - you kept getting the pop-up until you watched or read his message. He was a great communicator.

He was also not really a nice guy. He meant business - and it was all about meeting or exceeding objectives. He ran a tight ship. I have to say that a lot of the longer-term Gillette associates were not happy when he first arrived, but then, over time, as the stock price grew and grew, they saw the fruits of their labor being realized in their employee stock savings plan balances. More and more folks realized we were all on the right track. We were clicking as an organization.

When the acquisition of G by P&G was announced, part of the negotiated settlement included the clauses that BRK would hold onto the G shares that would be converted to P&G as well as WEB would produce a 30-second spot supporting the deal. These elements were actually in the purchase agreement which I had a chance to read (it was all in an SEC filing) back when the deal had closed.

I have to believe that WEB was pulling the strings at Gillette prior to and during Kilts' CEO reign, and orchestrated the acquisition by P&G to unlock the real value of the Gillette brands. I continue to hold onto my P&G shares today, as I believe that this will continue to be a great investment for the future.

So, when I read that Sokol may not be a nice guy, that he is trying to wring additional cost and profit from a hurting brand, I recall my days at Gillette and the success that came from our hard work and pain. I also think that WEB had a big hand in what was going on. If NetJets becomes another Gillette, BRK shareholders should be optimistic. :-)

Cheers!
'38Packard