AT last I get to meet the man who brought us the five-bladed razor. Just what the modern world needed...
“Well, it does give you a fantastic shave,” says AG Lafley, global chief executive of Procter & Gamble (P&G) and manufacturer of the Gillette Fusion razor — the best a man can get. Oh, come on. Most of us, back in the mists of time, were happy with two blades.
Lafley, pin-neat, affable and very well-shaven, just smiles. “OK, sometimes it goes beyond ‘need’, to being something you just want,” he drawls. Then he laughs as he picks another sandwich from the platter in front of us.
Lafley, with spikey, white hair and open-neck shirt, is something of a surprise. Squeezing me in during a nine-hour stopover in Britain — I am sandwiched between meetings with Tesco and his local team — he is so far removed from the old “Proctoid” reputation of P&G’s uptight management that you cannot help but warm to him.
An American eastcoaster, schooled in Chicago, he took over at the soap-powder giant six years ago amid profit warnings and crisis. Since then he has turned P&G round, pushing it upmarket in the West and downmarket in developing economies, and concentrating resources in its top billion-dollar brands.
He has also completed three acquisitions: Clairol, Wella and, earlier this year, Gillette. That £30 billion purchase confirmed P&G’s status as the world’s biggest consumer-goods company — with brands in Britain including Fairy Liquid, Ariel, Bold, Flash, Pampers and Tampax — and the world’s biggest advertiser. Most importantly, Lafley has tried to make P&G more innovative and outward-looking.
And to meet, he’s a charmer. He slips into the modest meeting room at P&G’s British base in Weybridge, Surrey, without fanfare or fuss. No retinue, no notes, just an impish “hello” and an informal manner that belies his position as one of the most powerful businessmen on the planet.
Later he tells me about his early years in the US Navy, under the Vietnam draft, running the retail and service operation at an airbase in Japan. Like the base in Joseph Heller’s Catch 22? “Yeah, yeah. I am Milo Minderbinder,” he cries, citing the novel’s mercenary mess officer who would do anything to cut a deal. “That was my job,” he smiles, “and nothing much has changed.”
Beneath the easy schmooze, however, you can detect a steely discipline that tolerates no slip-ups. Like his preference for his initials AG over his first name Alan, he doesn’t mess about. He forbids long meetings, hates Powerpoint displays, and encourages executives to discuss, rather than just present points of view. He also works out in the gym every day — probably why he looks 10 years younger than his 59 years — and when there’s no gym, like that morning in his Geneva hotel, he gets up at 5am and does 20 minutes minimum in his room, without fail.
That combination of rigour and probing has boosted P&G’s performance and underpinned its integration of Gillette.
“I have never been involved in an execution that’s been more complex and difficult,” says Lafley. “$11 billion (£5.6 billion) of Gillette sales combined with $57 billion of P&G business, 30,000 employees combining with 100,000 at P&G, on the ground in 80 countries, selling in 160. It’s been an incredible amount of work by an incredible team.”
Will it hit the predicted revenue and cost synergies of $16 billion? He nods. “I am cautiously optimistic.”
Academics who have worked with Lafley say his approach is transforming the business. “He is different from chief executives of other major companies,” says Roger Martin, dean of Rotman Business School in Toronto, who advises Lafley on strategy. “Most are only comfortable in big, set-piece meetings. He is a read-and-react guy. And that has a pervasive impact all through the organisation.”
That more flexible approach is now infusing P&G, headquartered in Cincinnati, Ohio, and once famous for its conservative culture. Boston-based Gillette, with its Right Guard, Oral-B and Duracell brands, takes P&G into new growth areas.
“Gillette is a device designer, they are great engineers — shaving systems, electric toothbrushes,” he says. “We are biochemists, so we are going to combine that with their device manufacturing.”
Gillette’s Fusion wet razor, launched here last summer, with its over-specced design and battery-in-the-handle emitting “micropulses”, is symbolic of the new “Procter and Gadget” approach. Electrostatic dust mops, ultrasound stain removers, air-freshener machines that play discs of scent like a CD player — do we need these innovations? Lafley grins. “We do them if you want them. But Procter & Gadget is a bit of an overstatement. We now do over $1 billion in devices, but we are $75 billion in total.”
Was the Gillette acquisition also about bulking up against the retailers? “No, I don’t think size matters. Leadership matters, but big’s never been good for its own sake.”
As for talk of a battle between manufacturers and retailers, especially over own-brands, the media is missing the point, he says. We are now in an era where the consumer leads. “Tesco is successful because it is responsive to consumers — you have more choice, you are more demanding and your standards keep rising.”
But what about that difference between “need” and “want”? P&G has been stoking consumer desires for a century and a half. Isn’t it time it re-evaluated its impact, socially and environmentally? “We think a lot about how we touch and improve everyday life, but we’re realistic. We are not curing cancer, we are providing everyday household products that make life easier.”
That, of course, can cover a multitude of sins, such as flooding the world with disposable nappies that aren’t so easy to dispose of.
Lafley keeps his cool. “Yeah, I think we could do more on disposable nappies. But we are going to take sustainability to the next level. One of the reasons why I was late in meeting you was because I was talking to Tesco about this, and where we try to start is at the level of strategy and principles.
What can happen to well-meaning environmental causes is that they become one-issue orientated. We want to look at cradle-to-grave impact.”
He promises better results on recycling and biodegradability, and animal testing, too. But you don’t have to go far on the internet to find campaigns encouraging consumers to boycott P&G because of its involvement in testing products on animals. His promises will cut little ice with activists unless they see real change.
There is also the suspicion that Lafley’s conviction is irrevocably linked with selling. “We want to touch your life in ways that are meaningful,” he says, “and that’s where I think issues of sustainability and the environment are good ones. We can do our part.”
Lafley was born into big corporate life. “I was a GE brat,” he says. “My father worked for General Electric, we moved every three to five years.”
The eldest child of four, Lafley went into P&G after the navy, via Harvard Business School, starting as brand assistant on Joy detergent. He worked his way up through laundry products, the Far East operation and global beauty care before taking the top slot.
Becoming chief executive just as results slumped was terrifying, he admits. What had gone wrong? “I will oversimplify: we were trying to change way too many things too fast, to make P&G more competitive in the 21st century. The intention was good, and the strategic changes were good, but we couldn’t execute them ... We changed a lot of people’s jobs and tried to run a business that is very intense on an every minute, every hour, every day basis, and make the biggest change ever, and the wheels started coming off.”
And he doesn’t duck responsibility for what went before. “You have to understand that I was part of setting it up, part of the small team that worked on the design. I felt I owned every bit of it.”
So does he feel lucky in the timing of his ascent? Confidence in P&G was at an all-time low — the share price has doubled since he took over, enabling him to make those acquisitions.
No, he says. “There’s a great photo of me on the first day, sitting in the basement of a TV station starring in the black end of a camera. They are firing questions at me and I look very serious. I wasn’t serious, I was scared to death.”
Others point out that he took over just as a two-year recession was about to bite. And luck, according to Lafley’s adviser Martin, had little to do with Gillette picking up the phone last year. “The reason Gillette’s chief executive Jim Kilts called was because of what Lafley was capable of,” says Martin. “And there’s no way in the world that AG could have done that deal with the stock price he inherited.”
Lafley says he fixed P&G’s problems by doing what he always does: methodically breaking them down into small chunks, then building everything up again, and getting people talking. “I ran round with lists. This is what we do in seven days, in 30 days, in 100 days. That’s how I work.”
Under Lafley, P&G has a more thought-out strategy, pushing towards high-margin items in developed economies, and basic items for poorer consumers elsewhere. Commodity goods or mistakes — P&G made a few, like the Sunny Delight drink — have been sold off.
Any long-term worries now? He pulls a face. “Disruptive technology — if someone finds an alternative to solution chemistry for laundering clothes, that’s a $10 billion sector in jeopardy.”
As for cycles and slumps, “Stuff happens, but we get better at managing it. I was in Asia when it tanked. But our size and diversification helps now. We always say we know something will blow up.”
So will P&G just continue to gobble up rivals, getting bigger and bigger, until some error bursts it in pieces? Lafley looks serious. “We don’t have a choice but to grow because the alternative doesn’t work. You could split it up — and you should if it’s better for business in the long term and for your shareholders. And we have sold off businesses, well over $1 billion worth, some of them leaders in their markets...”
But it still has significant new areas to conquer. Anyway, he has to go, another meeting to shoehorn in. He wanders out to have his photograph taken, then piles a paper plate with sandwiches, smiles goodbye, and strolls off to cut his next deal.
He makes it look so easy — Milo Minderbinder might want to take notes. I feel in urgent need of a shave.
Inside the consumer-goods powerhouse
PROCTER & GAMBLE, now seen as a quintessentially American company, was the creation of an Englishman and an Irishman, writes Ben Laurance.
William Procter, newly arrived from England, and James Gamble, who had emigrated from Ireland, set up separate businesses in Cincinnati. Procter made candles, Gamble became an apprentice soapmaker. It was because the two men married sisters, Olivia and Elizabeth Norris, that they were brought together and became business partners. Procter & Gamble was born in 1837. By 1859, its sales had reached $1m a year.
Almost 170 years on, P&G is a collosus, with annual sales of $75 billion. P&G reckons that each day, three billion people worldwide use one of its products.
But in the late 1990s, before AG Lafley took the helm, the company stumbled. It had noted the high market share and margins that Unilever was achieving with detergents in Latin America — the Anglo-Dutch group had more than 80% of the market in Brazil, for example — and decided to attack. Unilever hit back at P&G’s aggression by launching a price war. Eventually P&G admitted defeat and withdrew.
Also in the 1990s, P&G appeared to be on to a winner with its Sunny Delight drink. Sales boomed — then flopped. The brand was sold.
The takeover of Gillette last year was important not simply because of the brands it brought; with Gillette owning the battery maker Duracell, it gave P&G an important presence in several developing countries where it had been weak.
Wherever it operates, P&G manages to counter the power of retailers by heavy marketing, non-stop innovation and a relentless merchandising effort to ensure that its products are well-presented in supermarket aisles.
The company started by William Procter and James Gamble is now worth nearly $200 billion.
Vital statistics
Born: June 13, 1947
Marital status: married, with two sons
School: Fenwick High School, Illinois
Universities: Hamilton College and Harvard Business School
First job: brand assistant, Procter & Gamble
Salary: $1.7m plus bonus
Homes: Cincinnati, West Virginia and Florida
Car: yellow Corvette
Favourite book: he is a fan of history
Favourite music: Diana Krall
Favourite film: The Departed
Favourite gadget: Braun Triumph toothbrush
Last holiday: Long Island Boat Key
AG Lafley's working day
THE global boss of Procter & Gamble wakes at 5am at his home in Cincinnati, Ohio. “I always go to the gym or the pool first thing,” says AG Lafley. “I have to work out every day.”
He drives himself to his open-plan office at P&G’s 11-storey base before 8am. “I try to divide my day into three parts: the inevitable meetings — 20 minutes if they are one-to-ones, one hour if groups. Then some time with customers or suppliers or walking a store. Thirdly, with the people I coach or mentor — I talk to every president in the company for 30 minutes a month.” He finishes before 7pm.
Downtime
AG LAFLEY relaxes by swimming – “it clears the mind” – and clay-pigeon shooting with his eldest son. “I’m not good at it but I really like it,” he says. “It requires total concentration.”
He spends a lot of his free time backing educational and theatre charities — in particular the Cincinnati Community Theatre.
But his real passion is his collection of Vespa scooters. “I have three now. I think I had the first in Cincinnati. I have one the same colour as Gregory Peck’s scooter in Roman Holiday.” He wants to add a BMW motorbike to the collection but says that this makes P&G “very nervous”.
