Shake-up goes on, with caution

Durk Jager’s ousting has been interpreted as “the revenge of the Proctoids”.

To see it that way is a mistake. We humans have a habit of appointing leaders to start revolutions, bang heads together and sweep away shibboleths, only to react against their excesses and elect a moderate to restore ruffled feathers and keep the essence of the revolution intact. Tony Blair didn’t get elected by promising to go back to pre-Thatcher days. New chief executive Alan Lafley isn’t going to undo what Jager began.

P&G’s big reorganisation, which replaced regional reporting groups with global business units, will almost certainly stay on track even if people’s jobs change a little more slowly. So will moves to encourage faster decision-making and a more entrepreneurial culture.

P&G’s hierarchical “sell and inspect” mode of operating, with each lower level trying to sell recommendations to their bosses, had become a bureaucratic nightmare, instilling an initiative-sapping fear of failure within the corporation.

Likewise, P&G’s obsession with implementing best practice meant “we had best practised ourselves into a lock step”, concedes one insider. There was no room left for experimentation. And new recruits aren’t willing to be indoctrinated with the P&G bible of brand management any more.

Lafley will continue this shake-up, but more cautiously. One of his priorities will be to restore budgetary control. To encourage entrepreneurial decision-making, Jager replaced a rigid, centralised line-by-line approach to budgeting with a policy of spend what you like (within limits) as long as you reach profit targets. Clearly, that went too far, too soon.

But the essence of the problem remains. Companies such as P&G and Unilever invented a marketing system that lasted a hundred years. They know this system cannot last another hundred years.

Before, chief executives could rest content with pushing the limits of this system. Today, they have to invent a new one – and shore up the old one. The result is experiments on the fringes, such as Unilever’s MyHome and P&G’s Reflect.com, along with far-reaching changes at the heart.

But it’s tough. As one senior executive close to P&G’s board commented before Jager’s ousting: “It’s a part of leadership that sometimes you don’t get things right because nobody else has done them before and you don’t have a good model to follow. We are taking it on the chin.” And that won’t stop simply because there’s a new face at the helm.