AG Lafley: A giant winner in the battle of the consumer brands
A Day in the Life: Procter & Gamble's chief isn't afraid to go public about washing his linen as he battles to ensure a recession doesn't dirty his record
Saturday 19 April 2008
AG Lafley is a man of routines, of goals, targets and lists, and an early-morning work-out or a dip in the pool has been a habit for years. Frankly, it is the only way to pep oneself up for a typical business day that will take him to two cities, hundreds of miles apart – and all before lunch.
The early start is part and parcel of running the most powerful consumer brands business on the planet. Mr Lafley is the man behind Ariel detergent, behind Crest toothpaste, Fairy washing up liquid, Duracell batteries and Gillette razors, behind Pringles, Pampers, Tampax and Tide, the best-selling detergent in the US.
It is a giant list, with an ambitious goal – a decade of strong growth, free of profit warnings, and Mr Lafley, who has been at the helm of P&G since 2000, is tantalisingly close to reaching that target. Just the small matter of a consumer-led recession to worry about.
"You just have to read the newspapers this morning or turn on any one of the news channels," he says. "There's no doubt that the US economy is slowing and the consumer is under pressure. You don't buy an iPod when you can't put food on the table for your family. But we're not going to the bathroom less. We're not brushing our teeth less. We're not bathing less. We are not washing our hair less. Virtually every product that P&G sells is not losing frequency of usage. So I'm much more comfortable being in the consumer staples business than I would be in the consumer discretionary business."
Mr Lafley has a more relaxed demeanour than your average American corporate boss, all open-necked shirts, spiked white hair and a charming smile. While his father had been a rising star inside General Electric, and the family had moved around with each new posting, AG had rather planned to be a basketball coach or a teacher. It was only in the US Navy that he found his vocation, when he was posted to oversee the retail and services businesses inside a US air base in Japan. Harvard Business School followed, and he joined P&G's laundry detergents business in 1977.
Thrust into the top job after a nasty profit warning felled his predecessor in 2000, until recently he has kept a lower profile than one might imagine for a company of P&G's power. However, he has long been the chief executive's chief executive, cited by the likes of Sir Terry Leahy at Tesco as one of the business leaders he admires for his quiet intelligence and his lack of flash. And with each passing year of solid results, and with the audacious $54bn takeover of Gillette in 2005 having been deemed a success, Mr Lafley is increasingly sought after for his "vision", his prescriptions for business success.
Now – having flown from his home in Cincinnati, Ohio, to Washington DC – he is charming the attendees at the Newspaper Association of America's conference in a panel discussion on innovation. Innovation, you see, is at the core of that "vision", as it has been ever since Mr Lafley began clawing his way up through the detergents business.
"The beauty of laundry" – he is not being ironic – "is that most outsiders and fortunately most of our competitors think laundry detergents are commodities. They are not, they are highly differentiated performance products, and I'll tell you, when you do eight or nine loads of laundry a week, and especially when you do it by hand, which is how it is done in developing markets, you can see the difference in the performance of the products, and it is very frustrating when a product doesn't perform. Do you do your own laundry? I do. And I've done a lot of loads of laundry. I've sat with women around the world washing clothes in rivers and streams and everything else. Tide was introduced in 1946 in the US, so the brand is now 62 years old, and we've improved that brand in a noticeable way for consumers on average about once a year."
Mr Lafley dashes away from his conference session. Before lunch he has to be at Gillette's historic headquarters in Boston, hundreds of miles up the east coast. The 2005 takeover was on a scale never before attempted, and industry analysts worried that the savage cost cuts and job losses would destabilise the companies, but most now concede that the integration has provided exactly the kick to P&G's growth that was intended.
Over a light lunch, Mr Lafley is reviewing the progress of some of the Gillette brands, and he is making the usual disciplined use of time, keeping meetings short, strict limits of 20 minutes for one-to-ones, an hour for a group session. Even so, he won't today have time for one of his favourite parts of the job, "walking a store", wandering through a retailer to see how products are being displayed, and searching for clues on how customers are reacting.
"Actually, one of the big strengths that we picked up with Gillette is that they are phenomenal in-store marketers. They know how to place razors and blades at different points in the store to maximize sales, they know how to do that with Duracell batteries, so we have learnt a lot."
Mr Lafley is using some of his new-found profile to trumpet P&G's credentials in a book that he has co-written with the management guru Ram Charan. The latest in a round of media interviews promoting the book – The Game Changer – is with Harvard Management, meaning he can make a welcome return to his alma mater.
"This is not a book about me, we didn't want to do a book about me. This is not really even a book about P&G. There's already a great book about P&G called Rising Tide. We wanted to do a book about innovation. We want to partner with innovators outside of the company, from anywhere, from a garage, from a research laboratory, from a university, from our suppliers and customers, even from our competitors, to create new brands and product lines that delight consumers and create revenue and profits. Last year, for the first time, fully half the new products we brought to market had one or more outside innovation partners, and we think we can continue to increase that."
Finally, it is to a recruitment event at Harvard, where Mr Lafley is pitching P&G to future graduates. "We are not a dog-eat-dog hedge fund or investment bank. We would like you to join us and have a career that lasts a lifetime with us, and I think we are a very unique company in that regard, much more like Toyota than other American companies. Everybody at P&G is in the business of meaningfully improving everyday lives for consumers, we believe that's our job. We are delighted when can do it, we are disappointed when we don't."
Name: Alan (AG) Lafley
Education: Hamilton College, New York, and Harvard Business School
Family: Two sons
1970-1975 US Navy; 1977-present: Procter & Gamble, joining as brand assistant for Joy washing-up liquid. Headed P&G businesses in Asia from 1994-1998 before running the global beauty care business. Made chief executive in 2000, and chairman in 2002.
Board memberships: Dell and General Electric
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