CEO supremo Lafley is back, P&G will be too

Yes, it probably was a bit of a man-crush and yes I should have just moved on. But last week when I heard on the radio that Lafley’s replacement – the dour Bob McDonald – was stepping down and that AG was returning to the role of CEO I damn near crashed my car.

Many commentators have compared the return of Lafley to similarly remarkable second acts from the likes of Steve Jobs at Apple, Howard Schultz at Starbucks and Michael Dell at Dell. But these three were effectively founders returning to their own companies. Lafley is unique because he was not born into the role; he was just so amazing as CEO that P&G asked him to come back.

What makes him great? If you study Lafley as hard as I have, there are some very clear and simple reasons why Lafley was, and is, so good. They might sound simple, but that’s partly the strength of the man – he does not over-elaborate or complicate matters.

Let’s start with focus. Bad executives overcomplicate their marketing strategies and brand plans with too many products and tactics. Lafley has a laser-like focus on doing only a few things, but extremely well. Human beings “don’t want to stay focused”, he once told a journalist. “So my job is to get them to focus their creativity around the focus; focus their productivity around the focus; focus their efficiency or effectiveness around the focus.”

Focus on the focus. Can you see why I love him? He is like an FMCG Yoda.

Second, a company can be successful only if it puts the consumer at the centre of everything. As Lafley repeatedly says: “The customer is the boss.” Yes, I know this is obvious but how many CEOs say this? More to the point, how many really believe it?

Lafley constantly challenges his executives to show him the data to back up their decisions. He famously once made his senior directors take the day off and follow a group of French women shopping for beauty products. The Wall Street Journal once got permission to shadow him on a trip to South America but was surprised to find him not in P&G’s local offices but spending the morning in a small kitchen of a young mother from Caracas as she explained which beauty products she used. Imagine the CEO of one of the world’s biggest companies spending 20 days a year in the bathrooms and kitchens of the customers that pay for his and everyone else’s salaries. Awesome.

Third, strategy is about making choices. Lafley was a disciple of author and consultant Peter Drucker and learned from the master that, to use the dreadful but very accurate American terminology, a great manager must be ‘choiceful’. Lafley argues that businesses fail when they don’t make difficult choices about where and how they can win particular markets and put the full weight of the business behind them. 

“Strategy is five choices,” Lafley once explained to the Harvard Business Review. “What is winning; where am I going to play to win; how am I going to win where I play; where are my core competencies that are going to enable me to win where I play; and what management systems and measures are going to help me execute my strategies?”

Finally there is innovation. Lafley broadened the concept of innovation from being just about the product to every element of P&G’s business. Crucially, he also liberated the act of innovation from the isolation of P&G’s Cincinnati labs and put it into the world of the consumer. As soon as a P&G department had even the faintest glimmer of a new idea, it would immediately expose it to the target consumers that it was aimed at and then continually turn the wheel between organisation and consumers. “We try to put the end consumer at the centre of everything we do. In the case of the innovation process we want the customer engaged at the front end. Right after we have an idea – right after the kernel – we engage with target consumers.”

Lafley is back. All my old slides are back. And P&G, quite probably, is too.