It's been a year since AG Lafley walked back into P&G's offices for the second time, and the quality he's brought back to the company is focus, but now it's vision time, write's Stack's CEO Liz Wilson.
Conventional wisdom suggests that we should never go back. Yet that’s just what Alan "AG" Lafley did 12 months ago when he returned to Procter & Gamble four years after stepping down as its CEO.
Renowned as an innovation and strategy wizard who accelerated P&G’s fortunes during the first decade of the new millennium, Lafley was expected to steady the P&G ship as both chairman and chief executive.
While it wasn’t exactly sinking, analysts and shareholders both seemed to crave clarity and an injection of energy at the FMCG giant.
Lafley didn’t waste time. Amid speculation that his return to P&G would be relatively short-lived, Lafley swiftly implemented a structure that included the appointment of four presidents to head each of its new sector-based divisions. This provided important clarity for employees at all levels of the organisation, as well as for shareholders.
Absolute, unwavering, focus
The quality that Lafley brings to P&G is focus - absolute, unwavering focus on consumers along with an unflinching ability to make strong decisions.
This was described in his most recent book 'Playing to Win: How Strategy Really Works'. In an interview to promote the book in early 2013, Lafley said: "[P&G’s] results came directly from focusing on our three most important strategic decisions — grow P&G’s core, extend into beauty and personal care, expand into emerging markets.
"Fortunately, it worked. It shows just how powerful a few strategic choices can be."
'Lafley could do with one or two big ideas'
Innovation has long been a priority for P&G and is a quality that Lafley has consistently promoted. In a P&G results statement last month, Lafley said it remains vital: "We’re operating in a slow-growth, highly competitive environment, which places even greater importance on strong innovation and productivity improvement. We’re delivering meaningful product innovations that are attracting more consumers to our brands."
Lafley and his team have their work cut out. Most innovation across the FMCG sector in recent years has been incremental – adjustments to formats and creation of new brand variants – there hasn’t been much that’s more meaningful and game-changing than that. So Lafley could do with one or two really big ideas in his pipeline.
Scaling the 'quirkiness' of Old Spice
This innovation challenge extends to marketing and communications. Big brands remain over-reliant on the old model of paid media, and are only slowly uncovering new models that work for them. P&G seems to have evolved close relationships with Facebook and Google and has created specific activity around brands and built partnerships designed to earn reach, not just pay for it (for example Duracell and the NFL in the US). The biggest example is probably still Old Spice.
However, Old Spice feels like one of the quirkier brands in the corporation and there doesn’t yet seem to be a methodology for scaling this approach. In the overall context of P&G’s activities this is pretty much scratching the surface. In its favour, P&G absolutely excels at scaling opportunity so is probably the corporation you’d most back to crack this ahead of its competitors.
Unilever catching up
During Lafley’s previous stint in charge, P&G discovered the value of creativity in its communications. James Hurman’s book 'The Case for Creativity' demonstrates the link between creativity and business performance through the years and says P&G was "recognised as Advertiser of the Year [at Cannes] in 2007 when its share price hit an all time high of $74.67, beating the S&P 500 by a country mile."
Lafley was directly involved in this creative push and backed the decision to attend Cannes for the first time in 2003. As Jim Stengel, P&G’s former marketing chief, says in Hurman’s book: "I’d bring in our CEO and say ‘AG, just tell them [the agencies] how you’re seeing the business, brands and people."
Yet since then, rival Unilever’s share price has performed strongly. Is that the effect of Unilever introducing a big, uniting, organisational, idea in "Sustainable Living"?
P&G’s equivalent is its long term Olympic partnership – a different approach built around a partnership and highly desirable content, rather than an organising vision. Time will tell which is the most powerful.
Now it's 'vision time'
Ecommerce and changes to the retail model also present challenges. Under Lafley it seems that P&G’s approach is to build one customer journey through its communications rather than obsess about "digital" as a channel.
As Marc Pritchard, P&G’s global marketing chief, said last year: "It's [about] freeing up our minds on building creative ideas that come to life through the mediums that we engage with every single day - search, social, mobile, PR, and yes, even TV."
Lafley has made a solid start on stabilising P&G and providing focus around its four key product categories. Now it’s vision time and the challenge of rebuilding P&G’s reputation as an innovator in both product and marketing.
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