Age: 60
Education: A.B. in history from Hamilton College; MBA from Harvard Business School
Previously: Has spent his entire career post-MBA with P&G, including as executive vice president in charge of Asia and president of global beauty-care business and North American market development
A.G. Lafley wasn’t the most exciting choice to take over Procter & Gamble seven years ago. After an earnings shortfall had sent the company’s stock price tumbling — and Lafley’s predecessor packing — some investors were hoping for a fresh outsider with a big name to stabilize the consumer-goods giant. Lafley was a P&G lifer.
But his performance since he became CEO in June 2000 is now the subject of case studies and the source of widespread admiration. “Unlike Procter & Gamble’s products, Lafley isn’t a household brand name,” says one of our survey participants, a global investment specialist at JPMorgan Private Bank. “But he does have the old-school management skills that turned a dormant firm into a world powerhouse.”
Lafley began the turnaround with a renewed focus on selling P&G’s existing brand-name products, rather than extending into new ones. Similarly, he has said he would return P&G to a consumer “pull” approach, using innovation to give customers what they want, rather than trying to “push” new technology and products onto them.
Lafley also forged relationships with outside inventors and designers, eschewing the commonly held belief that all P&G products must come from inside the company. He has further built P&G through acquisitions, including that of Gillette in 2005 for $57 billion.
“[Leadership] boils down to four things,” Lafley says. “[Leaders] have clearly defined values that guide their choices and actions and which they articulate often; they embrace change as inevitable and regularly challenge the status quo; they have the courage to stare reality in the face and act; they have a sincere passion for learning and for developing other leaders.”
Challenging the status quo has paid off at P&G. After surging 15 percent in this year’s third quarter, P&G’s stock has doubled since Lafley took charge in June 2000. Its revenues have climbed from $43.4 billion annually five years ago to about $76.5 billion for the year ending June 30. Profits in the same period roughly doubled, from $5 billion to $10.3 billion. That’s an exciting CEO indeed.
Upcoming Challenges:
At a recent shareholder meeting, Lafley said P&G might sell some
businesses to concentrate its portfolio on faster-growing brands. Also, higher energy costs are forcing the company to increase prices on some of its products.
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