Warc Blog

Procter & Gamble rethinks strategy

24 February 2014
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

 
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