The departure of Procter & Gamble chairman and chief executive officer Edwin Artzt in July (MW last week) will mark a turning point for the firm. It resolves a long-running power struggle at the head of the company in Cincinatti and reflects a re-alignment away from its US base.
Apart from the appointment of John Pepper as Artzt’s replacement, other personnel moves at senior level reflect an ongoing change in P&G’s corporate culture. Of the six executives at the top of P&G, four are non-American.
Since 1990, P&G’s international sales have equalled those in the US. The company’s focus has also shifted, with the most important markets now developing in the Far East.
The cultural changes reflect the two biggest challenges confronting the company: P&G is threatened by own-label competition and government regulation through price restrictions.
The changes began in 1990 with Artzt’s appointment as chairman and ceo. He injected a tough competitive style into management and marketing in the US. Artzt also cut unprofitable brands and developed a more aggressive marketing approach to rivals, especially Unilever.
After rising through the P&G ranks from a European base, he introduced an early form of category management that made managers share responsibility for categories instead of just brands, and for regions rather than single countries.
While in Europe, Artzt cultivated his own people, such as Durk Jager, currently head of US operations, and European executive vice president Harald Einsmann. He assisted in their promotion within the company. They now form P&G’s core management.
Meanwhile, the US markets headed by John Pepper were under intense pressure in the late Eighties because the international side of the business, run by Artzt, grew rapidly – with P&G eating into its competitors’ core markets, particularly Unilever’s.
At the global corporate level, last week’s announcement appears to have placated Pepper’s supporters at a time when Artzt’s supporters occupy key positions. Though Pepper replaces Artzt in July, Jager occupies the new position of chief operating officer and will have a more hands-on role. Einsmann takes over European operations.
The moves suggest that there will be little let up in the aggressive management style developed under Artzt.