AG Lafley's Message on Sustainable Growth

Last week I had the opportunity to see AG Lafley, the former chairman, president, and CEO of Procter & Gamble, give a speech on the "Seven Drivers for Sustainable Growth." It was one of the best business presentations I have seen, and I wanted to share the substance of his message. Here are excerpts from my notes:

In his talk, Lafley says that "sustainable growth" is the greatest challenge of any company. It can only be achieved through innovation and by setting and creating goals, strategies, structures, systems, leadership, culture, purpose, and values to support it.

At P&G, AG Lafley and his team made a strategic decision that the only growth the company would focus on was growth that was centered on the customer. When Lafley returned from running P&G's Asia business in the late 1990's, the company's corporate culture had turned inward.  Management was too focused on their phones, blackberries, and computers and was not connecting with consumers. Lafley changed this dynamic, by getting P&Gers out to see customers more often and by bringing more customers in for visits at P&G's headquarters in Cincinnati. 

Lafley spoke about the importance of culture in creating a productive environment at P&G. This meant being more externally focused--more open, curious, and collaborative. And it meant being proactive about change.  "We don't want you to just recognize change, we want you to embrace it," says Lafley.

Getting your people to embrace change and offer new ideas is crucial. "The ideas are there for improving your service and operations." Interestingly, P&G does not pay for employee ideas. It offers powerful recognition, including better job assignments and more interesting work. According to Lafley, "we celebrate our successes and we celebrate our failures that we learn from." 

Values are a critical component of P&G's success in achieving sustained growth. Lafley states the mission of P&G is to improve people's every day lives. "We are not just going to work to make a profit.  We are going to work to make people's lives better. That inspires people," says Lafley. 

Whether your organization has stated values or not, "it has values," according to Lafley. At P&G, the values are integrity, trust that everybody will do their job, leadership, ownership, and a passion for winning. The company recruits the best players who are both individual and team players. If you are just a singles tennis player, he says, "don't come to work for P&G."

P&G plays from its strengths. It has a concept called "CORE" that identifies which of its businesses has the potential to be a global leader. In so doing, it makes tough decisions about divesting businesses that don't match this criteria. For example, in the early part of this decade, P&G divested some of its food and beverage businesses, including the Jiffy peanut butter brand which was grossing $350 million annually. Lafley says they made this decision because "only Americans eat peanut butter and they only eat it during recessions!  It had limited growth opportunities" and was not a strategic fit for P&G's global business.

Lafley talks about the need to innovate and change, particularly in slow-growing markets. "Change is the only thing you can count on in the world," says Lafley. It is volatile, unexpected, and disruptive. According to Lafley, you can ignore change, you can react to change, or you can anticipate change--identifying the opportunities, and positioning your company to take advantage of it.

"Change is coming," says Lafley, and organizations need to be externally focused to anticipate and respond effectively. The toughest thing is to influence people in middle management and some at the top, because they are invested in the status quo. "But," he says, "Sustainable growth depends upon it."

 If you have an interest in bringing AG Lafley to your next meeting, please drop me a note at saul@lauthorities.com or a call at (202) 721-7675.