One of the most interesting major corporate CEO’s on my radar is A.G. Lafley of Procter & Gamble. He, as the famous phrase has it, "think[s] different."
Exhibit A is a low-profile piece from The Wall Street Journal this past week headlined, "Rewarding Competitors Over Collaborators No Longer Makes Sense." In its legendary heyday during the 1950’s and 1960’s, P&G’s famous brand management system was second to none.
MBA’s from name-brand schools in grey flannel suits would take the fruits of P&G’s world-class research labs (this is no joke—P&G products, from Crest to Tide to Pampers, were materially technologically superior to their rivals upon market introduction, and strove to maintain their functional-benefit leadership) and market them through the mass media of the day, such as soap operas.
The dark side of brand management, and brand managers, is that they traditionally were rotated out of their jobs every two to three years, their future position dependent upon their brand’s performance under their brief stewardship, with the perverse consequence of encouraging efforts at short-term market-share boosts such as coupons and promotions.
While these shenanigans might polish the manager’s resume at the time, the standing joke was that such efforts "can rent market share, but they can’t buy it." Nevertheless, the P&G "brand manager as king" culture meant that the ambitious were judged on their track records vis-a-vis their peer group and not on long-term brand-building. The internal logic was ineluctable, even if the larger message to P&G should have been "be careful what you wish for."
Come we now to this:
"Managers have been raised on the mantra that to advance they must outperform fellow managers. Those who wrest the most productivity from employees and get the best financial results are generally rewarded with raises and promotions.
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But that formula is out of date, and adhering to it can undermine corporate goals."
And the corporation being cited? P&G. Not only P&G but Cisco: Collaboration is good for business, says Diane Adams, vice president, human resources, worldwide sales, “dramatically improving productivity and helping us to grow.”
Or Boeing, whose bet-the-company project of this decade is the development and launch of the 787 "Dreamliner." Rather than entrusting it to a C-suite executive teamed with, maybe, an engineer, as in the past, here’s the new model:
"Mike Bair heads the development team of its new 787 aircraft model, which is due to come into service in 2008. The job involves working with thousands of Boeing employees and nearly 100 global suppliers.
"Mr. Bair says his experience as a Boeing salesman to American Airlines in the 1990s helped prepare him for his current job. Then, he had just two direct reports, so rather than order a staff to perform specific duties, “I had to convince people across the company to do things to satisfy the customer,” he says.
"As head of the 787 team, he has scoured the globe for suppliers to do a variety of design and engineering work Boeing used to do itself. He found some of them in the U.S. and others in Europe, Japan and Korea."
And back to P&G: What, exactly, are the benefits of this "collaboration?" Not fuzzy-mushy caucus-to-consensus. Not let-a-million-viewpoints-bloom. No. Rather, hard-headed debate and hammering things out, the refining of strategies, plans, approaches, and techniques on the hot forge of different ideas freely expressed.
Lafley pointedly insists on dissent, indeed makes it a formal requirement of decision-making:
"Before he makes a decision or sets a new strategy, “he always asks managers to give him two different approaches and present the pros and cons of each,… And at meetings, A.G. says, ‘Before you jump in and inject your own point of view, make sure you listen and truly understand the other’s point of view.’"
We’re not done with Lafley and P&G.
According to McKinsey, he has orchestrated one of the most seminal changes in P&G history in his relatively brief five years there. And not by calling for radical shakeups or restructurings, and not by sounding alarmist calls about how revenue, profits, market share, this, that, or the other needed to be shocked out of their comfort zones and doubled, tripled, or exponentially whatever’ed.
For starters, Lafley agrees with Lou Gerstner (IBM) that strategic visions can be a distraction, and so has simply never offered one. He also agrees with Larry Bossidy (Honeywell) that it’s all about execution, but also knows that exhorting great execution is feckless. Rather, one needs to put in place:
- a disciplined strategy
- a structure that supports that strategy
- systems enabling a large and distributed firm to work together
- a culture of "winning" and
- inspirational leadership.
Brilliant execution will then follow.
What did Lafley inherit five years ago? Essentially, a by-the-numbers, incremental-gain culture: Grow market share 1-4% this year, take out a weak competitor, grab their market, keep up the pressure, re-invest, extend a brand, grab more territory, lather, rinse, repeat. The only problem with this is it can lead to a culture of "complacency," not "winning."
Let’s bring this home to law-firm land. What would a Lafley look like for your firm?
First, focus.
For P&G, the "core businesses" are "one, two, three, four. Fabric care, baby care, feminine care, and hair care. And then you get questions, ‘Well, I’m in home care. Is that a core business?’ ‘No.’ ‘What does it have to do to become a core business?’ ‘It has to be a global leader in its industry. It has to have the best structural economics in its industry. It has to be able to grow consistently at a certain rate.’"
Second, you can’t micromanage.
Lafley views his role as a coach, but coaching "doesn’t mean coddling." My favorite of all his techniques here is his "not-do list." We all know people hate to make choices, and believe it’s better to have a lot of options, but sometimes extraneous options that have been ruled off the table have a habit of reappearing. So he maintains a "not-do list," and anyone caught doing it has his budget excised.
Third, and back to the beginning: Stick to your core.
Lafley started with P&G values and said, "Here’s what’s not going to change. This is out purpose: To improve the everyday lives of people around the world with P&G brands and products that deliver better performance, quality, and value."
On the other hand, "here’s the stuff that will change. Any business that doesn’t have a strategy is going to develop one; any business that has a strategy that’s not wining in the marketplace is either going to change its strategy or its execution."
So what do we have?
A manager who:
- insists on dissent and debate—he calls it "collaboration"
- yields to no one on the tie between strategy and execution
- reinforces the firm’s core values while extending its perimeter to embrace new products, new markets, and new partners.
And who, by the way, took a company whose stock had fallen nearly 50% in the last few months before he took the helm into one that is now at an all-time high.
