The Millennial CEO is a Game Changer

August 15, 2008

BY MICHAEL KRAUSS

Shaking hands with A.G. Lafley, chairman and CEO of Procter & Gamble, you get a sense of the man as soft spoken, friendly, warm and self-effacing.

“You’re going to do a column on me,” Lafley says. “Oh gee.” Lafley’s point was simple. It wasn’t necessary to write about him. What in the world had he done?

Here’s one of the most successful CEOs of the new millennium deflecting praise. Lafley is a different kind of CEO, one who can lead change and check his ego at the door. Lafley is the Millennial CEO and a role model for creative, constructive and effective organizational change.

No matter your business, Lafley’s accomplishments, leadership-by-example behavioral style and writings can make you a better executive.

Lafley reversed P&G’s slide and transformed the company into an innovation engine. That alone qualifies Lafley for “CEO of the Year” honors, an award presented by Chief Executive Magazine in 2006. Lafley’s manner and style, his personal modeling of CEO as servant, facilitator and enabler make Lafley truly unique.

He can play hardball in the boardroom. But Lafley is the opposite of former General Electric CEO Jack Welch. Welch was a man of the 1990s and the prototypical “tough guy” CEO. A former hockey player, Welch had the edge of a street fighter and training of an engineer. Lafley is a different kind of CEO for a different generation.

Few CEOs have an interest in, or the patience for, the soft stuff. Artistic design is one of them. Yet Lafley is deeply committed to design and he hired the best to come to P&G. They became a scarce but highly valued resource that aided P&G’s turnaround. “I knew very little about design, but I knew I wanted it,” Lafley says.

Lafley spoke recently at the prestigious Illinois Institute of Technology Institute of Design Strategy Conference. He was there to mix and mingle with individual artists and designers. He genuinely cared about their thoughts and ideas. He spoke about the power of design and designers, and the importance of inductive, deductive, and abductive—the process of drawing disparate ideas together to create an entirely new concept—reasoning.

Unlike many CEOs, Lafley heaps praise on others. He praises his division presidents, his brand managers, his 138,000 employees. Lafley never takes a bow himself. To him, success is not about the CEO.

At the IIT design conference Lafley fielded oblique questions from a seemingly ill-informed design student. Lafley never wavered from his purpose. The moderator sought to shield Lafley from an obtuse question. Lafley calmed the moderator. He returned to the student, not once, but twice, to understand his question.

Lafley showed his character. He showed patience and willingness to listen. He showed an understanding and sensitivity for creative minds and how to nurture them. Lafley sought the nugget of gold in the student’s question. In that moment he showed why he succeeds as CEO and a game changer.

Lafley took the helm of P&G in June of 2000. The day he was named CEO P&G shares tumbled three dollars and $7 by the end of his first week. Market capitalization had fallen more than $50 billion and share price was off 50% in the prior six months.

Since that day, Lafley’s team has taken P&G to new heights. Today P&G has $76 billion in revenues, robust earnings of $3.39 per share, a market capitalization of nearly $194 billion, and the stock price has more than doubled.

Lafley’s team continues its long-standing focus on P&G values. The consumer is the preeminent boss. The difference Lafley made is turning P&G into an innovation engine. The company’s market-facing innovations are obvious. It is easy to see new products like Febreze or the Swiffer duster. What’s more difficult to identify and more important for marketers to understand are the internal changes Lafley led within P&G.

That’s why reading Lafley’s new book, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (co-authored by Ram Charan), is a must read for every marketer. The book does more than chronicle P&G’s turnaround. It provides insight into a set of managerial techniques we all need and lays out the responsibilities of an innovation leader.

Lafley describes how P&G’s once-closed innovation process drove outward with the creation of the “Connect and Develop” program. Connect and Develop aimed to open P&G employees to consider new ideas, whatever their source. Shortly after becoming CEO, Lafley set an audacious goal, that P&G would partner with outsiders to achieve 50% of its innovation revenues.
By watching Lafley speak and then reading his book, you would think this man is a business school professor more attuned to the ivy-covered halls than the boardrooms of commerce. Of course you’d be wrong, and you’d miss the point. In order to be successful in today’s boardroom, you need to be a multidisciplinary executive.

Is there a P&G way that we all should follow? Lafley doesn’t think so. He sees P&G’s consumer focus as a purpose, but he knows the only path to long-term success is to master change and be wary of formulaic principles handed down from generation to generation.

Says Lafley, “Principles can harden into a process, that can harden into a way. That's a risk for us. We're 171 years old this year. We'd like to be another 171 years. We get in trouble when we stick with a strategy too long. We get in trouble when we stick with a way of operating too long. We get in trouble when we stick with one execution too long because consumers are always changing. The marketplace is very fluid. Competition is increasing and intensifying. So we need to change.”

Michael Krauss is president of Market Strategy Group, based in Chicago, and can be reached at Michael.Krauss@Mkt-strat.com or news@ama.org.