At the time, Procter and Gamble’s stock was plummeting. Between 1990 and 2000, the company had failed to double its sales—a goal that it had met every previous decade since 1940.
By 2002—Lafley’s second year on the job—Procter and Gamble’s stock had nearly doubled, rising from $57 per share to about $90 per share.
The turnaround Lafley engineered at Procter and Gamble won him a national reputation, something the modest and somewhat non-descript 56-year-old says came as somewhat of a shock.
“I never thought about being a CEO,” he said. “Was I expecting it? Not at all.”
Lafley’s growing personal reputation also landed him the prestigious speaking engagement at Harvard Business School (HBS), from which he graduated in 1977.
Erin E. Russell who chaired the search committee that chose HBS’s class day speaker, said Lafley’s experience with transforming a struggling company makes him an appropriate speaker at a time when business school graduates face a moribund economy.
“We wanted someone who would be able to speak to managing a difficult situation and coming out on top and Lafley fits that model exactly. He does have that experience,” says Russell. “He was at the top of our list because he managed and engineered an amazingly impressive turnaround at Procter and Gamble.”
Turning A Company Around
When Lafley took over, Procter and Gamble was in desperate need of new leadership.
His predecessor, Durk I. Jager, had pioneered ambitious new products in hopes of finding a blockbuster for the company, but never did. With investor confidence slipping, Procter and Gamble’s board removed Jager, an unusual act for the 166-year-old company.
Lafley, instead of focusing on researching new products, set out to build the company around its proven brands, such as Tide, Pamper, Crest and Bounty paper towels.
In September of 2002, Fortune Magazine called Lafley’s approach “straightforward” and “back-to-basics.”
“He has been trying to think of new ways to bring business and to extract value from what they are good at” says David J. Reibstein, a professor in marketing at the Wharton School.
Lafley has channeled the company’s energy towards studying and catering to the needs of the everyday consumer, rather than developing cutting-edge technology.
“The only reason Procter and Gamble is in business, and has been for 166 years, is because we create, manufacture and sell branded products that make yours and my life better daily. We are focused on serving families, particularly women, around the world,” he said.