NEW YORK: Procter & Gamble, the consumer goods company, has announced that it plans to restructure how it organises and develops its brand management teams as a key component of its strategy to improve its beauty business.
Speaking to an investment conference in Boca Raton, Florida, P&G chief executive A.G. Lafley recalled how the company's beauty business tripled its worth to $22bn from 2000 to 2007 – a similar growth rate as technology giant Apple – yet P&G remained at the same level while Apple went on to $170bn and more.
Part of the problem, he said, was that company had moved away from its previously successful brand management system, Dow Jones Business News reported
, and it now needed to put it back together, including looking for outside assistance where needed.
Traditionally, P&G employed established teams that remained mostly intact to develop its beauty brands, but it then adopted a management model, popularised by General Electric (GE), which rotated managers across the business.
"We had maybe half a dozen leaders [in beauty] in four years [and] many of them had never spent a minute in the industry," he said. "We were enamoured with the GE and P&G development assumption that general management is fungible and functional management gets developed by moving around every two or three years."
He added that P&G's earlier success was because it built continuity, partnered with people from outside the company, and selectively brought in "people who really knew the industry".
He also turned down suggestions that P&G will seek further acquisitions in beauty care, emphasising that it needed to focus on the business as it is, such as increasing sales of its Pantene hair-care brand.
Fixing the beauty business "is not a quick hit," he concluded. "We have got to get back to the strategy that works for us."
Data sourced from Dow Jones Business News; additional content by Warc