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Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage by Colin Price, Scott Keller

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5

Architect

What Do We Need to Do to Get There?

When Alan G. Lafley took the helm at Procter & Gamble in June 2000, the global consumer goods giant was floundering. His predecessor as CEO had issued three profit warnings in four months, and Lafley vividly recalls being “the deer in the headlights, being grilled about the company and about why it was doing so badly. And the stock price had gone down a few bucks that day because I was a total unknown.”1

Jump forward five years to 2005, and the company's fortunes had been transformed. Profits had soared by 70 percent to US$9.8 billion, and revenues by almost 30 percent, to US$51 billion. Jump forward another five years to 2010, the year Lafley retired, and his legacy was plain to see. P&G's portfolio of billion-dollar brands had grown from 10 to 22, the number of brands with sales between US$500 million and US$1 billion had increased fivefold, overall sales had doubled, profits had quadrupled, and market value had increased by more than US$100 billion.

Impressive though they undoubtedly are, the numbers don't tell the whole story. Under Lafley, P&G had also become a more consumer-driven and externally focused company. Between 2002 and 2007, the billion dollars it invested in consumer research went not only on traditional techniques such as focus groups, but on studying consumers in more detail by living and shopping with them. Lafley also drove innovation through the organization by looking externally for ideas and making it clear ...

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