Why has AG Lafley been so successful at running Procter & Gamble? According to Roger Martin, dean of the University of Toronto’s Rotman School of Management, Mr Lafley is a great example of the superior leader who doesn’t reduce management to a series of “either/or” choices. Instead, he has been able to blend two seemingly incompatible courses of action into a very effective strategy.
In his recent book, The Opposable Mind, Prof Martin tells how P&G was being pushed in two different directions when Mr Lafley became chief executive in the dark days of 2000. On the one hand, the maker of Tide detergent and Crest toothpaste faced pressure to cut costs in order to compete more aggressively with own-brand goods. Yet there was an opposing school of thought that said the path to salvation lay in going upmarket by using expensive innovations to differentiate P&G brands from the me-too products.
As Prof Martin tells it – and as an advisor to Mr Lafley he has had a privileged view of the turnround - part of the genius of the P&G boss was in finding a way to reconcile these two positions into a synthesised whole that managed to satisfy both constituencies. Costs were cut but there was also a new emphasis on design and on importing external ideas that helped P&G to charge higher prices. Prof Martin calls this have-cake-and-eat-it approach ”integrative thinking”.
In this 9-minute audio interview, I chat to Prof Martin to find out how managers can structure their own problem-solving in order to avoid simplistic binary oppositions.
He explains how managers must avoid unconsciously filtering out information that clashes with their own pet model. He praises Issy Sharp, founder of the Four Seasons hotel chain, as another ‘integrative thinker’, while also giving his analysis of how the credit crunch is affecting executive decision-making.
As a postscript, I can’t help but notice something intriguing about Prof Martin. He sits on the board of Thomson, the Canadian group that is waiting for the formal consummation of its takeover of Reuters, the British financial data provider. Reuters shareholders formally vote on the offer tomorrow. Assuming they agree to the deal, Prof Martin will sit on the board of Thomson-Reuters alongside Niall FitzGerald, the chairman of Reuters and a former boss of Unilever, P&G’s great rival. Mr Lafley’s canny leadership made life at Unilever far from easy for Mr FitzGerald. I hope there are no hard feelings.
PPS: those interested in the P&G renaissance should also find this analysis by my colleague Neil Buckley interesting.