Procter & Gamble : Organization 2005 and Beyond
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Authors
Authors: Ravi Madapati,
Faculty Member,
ICMR (IBS Center for Management Research).
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Jager's Resignation Contd...
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Analysts speculated on the reasons behind Jager's failure. Jager had tried to put too much pressure on P&G managers into bringing products to market faster. He had pursued major moves such as the dual acquisition of Warner-Lambert and American Home Products, which were futile. None of these improved P&G's performance. Jager's exhortations also did not go well in P&G's cautious corporate culture. His plan had been too aggressive. He had introduced new products recklessly in the hope of finding the next billion-dollar product. He had decided that P&G would sell its products under the same name all around the world. So in Germany, the name of its dishwashing liquid suddenly changed from Fairy to Dawn, the name it sold under in US. But since Dawn was unknown in Germany, sales plummeted. |
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Besides transfers, the program had also led to various behavioral problems. As a result of the Organization 2005 program, some food and beverage managers, based in Cincinnati, reported to a president in Caracas, Venezuela. Managers in the laundry and household cleaning business reported to Brussels.
Organization 2005 under Lafley
Alan George Lafley (Lafley), a 23-year P&G veteran replaced Jager as president and CEO. Lafley announced he would improve operations and profitability and rebuild the management team. The heads of P&G's operating businesses and corporate functions hailed from 13 different countries.
The new faces included Deb Henretta, head of global baby care; Jim Stengel, global marketing officer; and Fabrizio Freda, head of the global snacks business. Overall, the average age of the Global Leadership Council was down to 49, compared to 54 three years earlier. Unlike Jager, who focused on taking new initiatives in under-developed markets, Lafley decided to focus more on big countries and big products. He concentrated on selling Tide and Pampers in Western Europe before talking about developing new products in Poland. The new CEO chose P&G's best selling brands that generated over $1 bn in sales and announced they would receive top priority. He announced they would get the bulk of P&G's resources, manpower and financial backing. Lafley also announced plans to improve the company's competitiveness and revitalize long-term growth, through initiatives that seemed to be an expansion and acceleration of Organization 2005.