Q&A with Lafley: It's the consumer, stupid

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Advertising Age: One thing we hear is that Procter & Gamble's strategic direction isn't really any different than it was under [former P&G Chairman-CEO] Durk Jager, but the people management is. Do you agree with that?

Mr. Lafley: The broad strategic direction is very similar. ...What we did was make it work. There are two or three big strategic differences that I think need to be understood. One is, Durk was a big believer in innovation, but he was [also] a big believer in technology push. I'm a big believer in innovation, but I'm a big believer in consumer pull and 360-degree innovation and connect and develop [with outside partners], which I think helps you respond to consumer pull.

The second big change is that I pretty consciously called out the move to [health and beauty]. Durk had been looking at [acquiring] a health-care company. But we also were looking at a lot of companies that were in our paper businesses, our food businesses. ...For me it was pretty clear that we would have to move out of the commodity food businesses and into the health and personal-care and beauty-care businesses.

The third one is, I made a very conscious choice with [Kerry Clark, co-chairman and president, global market development and business services] and a few others that we were going to get after low-income consumers and developing markets. Except for China and Russia, which were on [former Chairman-CEO] John Pepper's radar, Durk was very much focused on the developed world. He thought that the vast majority of the economic buying power is in Japan, the U.S. and Western Europe, and that's where all of our resources ought to go.

Our growth rates in health and beauty care and our growth rate in those developing markets have been very good and have sort of rounded us out so we haven't been totally reliant on the U.S. and Western Europe, or totally reliant on the paper and laundry businesses.

AA: [Saatchi CEO] Kevin Roberts observed [during P&G's Buzzpoint summit on influencer marketing] that P&G is a "classic pendulum society." I think he was talking about marketing approaches. ...I was wondering if you think that has been true and maybe whether it's less true now that there's more focus on some key principles in marketing.

Mr. Lafley: We did have that tendency. That's why I tried to bring the balance and focus back and the centering around our purpose and values and principles. I've been through a few of these [swings] in the 1980s and 90s. We were going to be a big food and beverage company in the 1980s. I thank God we didn't become a big food and beverage company. I don't think it would have been a good fit for us.

We want to be responsive to the marketplace, to consumers, to retailers and competitors. And I think sometimes when you want to be responsive and you want to be fast to act or react, it can look like a bit of a pendulum swing.

I used to joke [quality guru Edward Deming] used to talk about PDCA - Plan, Do, Check, Adjust. ... And what I tried to get us to do is take a little more time planning and a little more time measuring and checking so you get balance.

But when you get a lot of [hard charging] leaders who want to make a difference, there's a tendency to act. ...And what we do pretty well now is think the choice through. And then when we go to market, we go in a very coordinated way.

AA: Early in your tenure as CEO, I remember asking someone, what's really different now? And they said: `Well, they're competing with the outside world instead of with each other now.' It seemed apt. I was wondering if you have noted that change, too, and why you think that is?

Mr. Lafley: Yes. I think you're dead right, and whoever you spoke to was dead right. We talked very openly about being more like the three musketeers - all for one and one for all. We talked about collaborating inside to compete better outside. We talked about being best of teammates so we could be fearsome competitors.

The second thing that made a difference is we shifted the focus to the consumer, and it was a huge difference. You've been following our company and industry forever and you go, my God, that's so simple. It is. But when the discussion is about serving the consumer ... it's a totally different discussion.

When the consumer is boss, when you try to win the consumer value equation, when you try to make the consumer's life better, then you're focused externally and the internal competition starts to get under control. And it's absolutely a huge difference.

And by the way I don't think it's just P&G. ... I'm on the [General Electric] board, and I'm sure they wrestle with a lot of the same things. But they've done a pretty good job of keeping their businesses a little more separate.

AA: One thing I've heard from several people is that you were one of the few senior executives in the company who really got along well with both John Pepper and Durk Jager. I was wondering if that's something you agree with and if so how you did it?

Mr. Lafley: It's true. And I got on well with [former Chairman-CEOs] Ed Artzt and John Smale, too. I'm pretty focused on the business. I'm pretty focused on building the organization. I would describe myself as apolitical to a fault. It frustrates people here in Cincinnati in Republican and Democratic parties, but I'm just not politically inclined.

I'm interested in strategy and strategy games. I'm interested in service, how can you create brands and products and services that really are delightful and create new levels of experiences. I'm interested in people and how and why they choose to be leaders and how they develop and grow themselves. So the kind of stuff I'm interested in sort of never got me dragged into any of the office politics.

I ... alternated and worked for John, then Durk, then Ed, then John, then Durk. ...So I guess if you asked them, they'd say, `Hey, Lafley, yeah, he's on my team.' I was on their team.

The other thing I will say: I spent `93 to `98 half a world away in Asia. And when you're away from the office, you're away from politics. ... Even today I travel 50% of the time. So when somebody says, `Yeah, we have this little office politics thing going on,' more than half the time I'm not even aware of it. And if I am aware of it, my attitude is: Let's solve it, let's make it go away and get refocused on the business.

But they're both great men and they were very strong leaders in very different ways. John leads from the heart. He's incredibly energizing. When you work for John, you just want to do your best. Durk worked from the head. Very bright guy. I loved to talk vision and strategy with him. We were both sort of amateur military strategists. And I loved to talk innovation with him, because he had his own innovation theories, and I had mine, and we were both convinced that innovation was the lifeblood of this company. We used to have debates that will never get resolved, because they can't be resolved, about which innovation strategy is better than the other one. But both are outstanding leaders. The company was lucky to have them.

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