Turning the Tide at P&G
Lafley seizes on everyday "teachable moments." Take, for example, a recent meeting he had with his executive speechwriter, Greg Icenhower. The two got together to complete an unfinished paper by Drucker.
"Greg was immediately thinking about all the usual stuff," recalls Lafley. "Where should we publish? When should we publish? How should we organize the piece?"
"So I said, 'Greg, let's begin at the beginning. Who is the piece for?'"
Drucker would surely have chuckled. He would also nod approvingly at another Lafley tactic for keeping his people tuned in to what's important: the simple act of listening, especially to P&G's customers.
For Lafley, that doesn't mean poring over market research reports and lining up focus groups, which he frankly avoids. Instead, he visits dozens of everyday consumers each year, sitting down in their homes or walking with them through their local grocery store. A housekeeper from Venezuela tells him why she uses five different skin lotions for her feet, face, body, and hands. In Vietnam, a homemaker explains why she uses the competitor's laundry detergent. "I know it's not quantitative research that's representative ... it's mother-in-law [research]," Lafley says of pearls he gets from customers he meets, almost always women. "It's keeping you in touch with the qualitative side."
It's akin to the way Lafley first found success in the merchandising world, as a junior Navy supply officer in 1969. Put in charge of a military department store on his base in Japan, he held monthly meetings with the military wives who shopped there. He took their suggestions to heart and stocked the aisles with Japanese pachinko pinball machines, Oriental rugs, and painted ceramic elephants, which promptly sold out.
No big wow. Lafley joined P&G soon after graduation from business school, signing on in 1977 as a brand assistant for Joy dishwashing liquid.
Not that his ascension to CEO was a fait accompli. So soft-spoken that his demeanor has been compared with Mr. Rogers, Lafley "isn't the sort of guy you meet and think, 'Wow,'" Norman Augustine, a P&G board member, says of his first unmemorable interactions with Lafley. "But he wears well."
Augustine says Lafley is as good a listener to colleagues as to customers. "Normally, a new CEO would come in and say, 'Here's the 20 things I'm going to do by next Tuesday,'" Augustine recalls of their first meeting after Lafley's promotion. "But just like [with] the little woman in the hut in Vietnam, he'd come to listen."
That said, Lafley isn't a pushover, and he uses his "consumer is boss" mantra to divine what's negotiable and what's not. An example is his decision in 2000 to cut R&D spending and rely more on outside partnerships, which he believed would better connect P&G with customers and improve the company's lackluster 20 percent product hit rate. The idea, since dubbed "connect and develop," was a radical departure from P&G's invent-it-ourselves culture, which relied mostly on 7,500 company scientists to churn out new products. Instead, Lafley set a goal of obtaining 50 percent of new product ideas from outside, while dramatically reducing the number of inventions P&G patents.