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P&G CEO AG Lafley 2007 Speech

P&G CEO AG Lafley 2007 Speech



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Published by Merries
A.G. Lafley, Chairman and Chief Executive

5 August 2007 Speech Transcript:

Presented to the Academy of Management, a leading professional association for scholars dedicated to creating and disseminating knowledge about management and organizations.
A.G. Lafley, Chairman and Chief Executive

5 August 2007 Speech Transcript:

Presented to the Academy of Management, a leading professional association for scholars dedicated to creating and disseminating knowledge about management and organizations.

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Published by: Merries on Sep 12, 2008
Copyright:Attribution Non-commercial


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Ongoing Transformation:Leading Change to Sustain Growthand Leadership
A.G. LafleyChairman and Chief Executive5 August 2007Speech Transcript:Presented to the Academy of Management, a leading professional association for scholarsdedicated to creating and disseminating knowledge about management and organizations.A.G. also received the Executive of the Year award.
Academy of Management A.G. Lafley - Page 2 of 18
At P&G, delighting consumers and building brands is a team sport,and it’s a pleasure to accept this recognition on behalf of 135,000P&G’ers around the world. Their capability, creativity andcommitment are the true source of our success at P&G.
This recognition means a lot to me because it comes from scholars who are advancing the practice ofmanagement worldwide. Sustaining growth… creating value … transforming organizations and cultures… ishard work. Practitioners benefit enormously from those of you who study this work and advance thinkingabout what it takes to do the work well. Given the breadth, depth and quality of your scholarship, it’senormously gratifying to earn your recognition – and I thank you for the honor.I’m here today as a practitioner, but I didn’t begin my career with plans to be in business. Instead, I was setto become a history professor. In 1969, I was in the Ph.D. program at the University of Virginia studyingMedieval and Renaissance European history. When I drew a low number in the Vietnam War draft lottery, Idecided to join the Navy – where I had a unique experience.
I was in the Navy, but never spent a day at sea aboard ship.
I served in the Vietnam War but never spent a day on the ground in Vietnam – until I worked with theP&G team to open a subsidiary there 24 years later, in 1994.
I was in the military, but I never carried a gun.Still, if it weren’t for the Navy, I would never have ended up in business or at P&G. I started out in militaryintelligence, in Washington, DC. Then, when another officer suffered a heart attack, I was sent to run retailand service businesses at a big U.S. airbase in Japan, just outside Tokyo.
It was my first chance to run a business, and I loved it.
We operated grocery, department and specialty stores, and a wide range of services: barbershops, beautysalons, laundry and dry cleaning, gas stations, home kerosene delivery, restaurants, and packaged liquorstores. We also ran the military clubs – complete with gambling and slot machines and live entertainmentthat ranged from The Monkees to Frank Sinatra.Essentially – all the retail and service operations for a small town of about 10,000 Navy, Marine Corps, andtheir families.Customers were demanding. Service expectations were high. The work force was a mix of Japanese womenand men, the husbands and wives of service women and men, and government civil service managers.Competition was real – from nearby Army and Air Force exchanges and from low-cost Japaneseentertainment, service and shopping offerings in the Tokyo metro area.Profits were critical because they paid for all the other services on base – golf, tennis and swim clubs, moviehouses, bowling alleys, amusement arcades, and more.It was a great experience – a chance to learn about a lot of different businesses from the ground up in asmall $10 million-a-year business: my first general manager job, and I loved it!When I left the Navy, I went to Harvard Business School. Two years later, I accepted an offer from P&G --and more than 30 years later, I’m still there.
Academy of Management A.G. Lafley - Page 3 of 18
The point I want to make is that while I look at the world through a practitioner’s lens, my early interest in anacademic career has pre-disposed me to keep a watchful eye on relevant research and scholarship. So, it’sthat balanced perspective that I hope to share with you this afternoon.
I understand that one of the important issues in business educationtoday is the challenge of fitting all the individual disciplines into asingle coherent whole.
In many ways, we in the management of business face a similar challenge. The organizations we lead aremulti-business or industry… multinational or, in P&G’s case, truly global… and multi-disciplinary or multi-functional.Our job – and this is particularly true for CEOs – is to bring together the many businesses, functions andgeographies and to leverage learning, scale and scope. We do this primarily through the choices we make ineight critical areas: Purpose and Values, goals, strategies, strengths, organizational structure and systems,innovation, leadership, and culture.I’d like to talk about these choices and how they’ve helped transform P&G over the past seven years. It’sneither my job nor my expertise to figure out how P&G’s and my experience could contribute to academicresearch or to case studies in the classroom. That’s clearly your work and expertise.But I thought it might be helpful to talk about the choices we’ve made in these eight areas. I want to explainhow they’ve enabled us to manage P&G’s business and the organization as a unified whole… and how, as aresult, we’ve been able to restore and strengthen P&G’s competitive position, deliver industry-leadingbusiness and financial results, and sustain growth.
And growth, of course, is the biggest problem facing businessestoday, especially large companies.
We all know the general story. Growth eventually stalls at almost all large companies -- often after periods ofrapid growth and with little warning.One study indicated about 80% of the world’s firms failed to meet a growth threshold of five percent in realterms from 1994 to 2004. Another study found only one percent of more than a thousand firms grew EPS10% every year of a ten-year period.Over the past 25 years, P&G’s performance has been inconsistent: we have a few good years and theninevitably encounter problems on one or two businesses… or in a couple of major countries. Total-companysales, earnings, and cash flow suffer, and we have to begin the hard work of climbing the steep hill back tosustainable growth.We faced one of our greatest crises in 2000. We missed earnings in the March quarter. P&G’s stock pricedropped more than 50%, which was a loss of nearly $50 billion in market capitalization.P&G leaders were lying low. Heads were down. Competitors were on the attack. P&G business units wereblaming headquarters, and headquarters was blaming business units. Employees were calling for heads toroll. Retirees -- who had just lost half their retirement nest eggs -- were madder than hatters. Analysts andinvestors were surprised and angry.

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