by Patricia Sellers
There aren't many hero CEOs anymore. So it's remarkable that two of the most admired chiefs have announced their retirement within the past three weeks.
Now comes the news that Procter & Gamble (PG) CEO A. G. Lafley is stepping down after reviving that consumer giant and doubling its size to $83.5 billion in less than a decade. Like Mulcahy, Lafley earned his leadership chops out of crisis, led with a quiet charisma, had a clear focus, and constantly communicated.
Not a coincidence that they both succeeded. Those are the things you need to do to be a great leader.
Even people who have followed Lafley's career hardly remember how terrible things were in June 2000, when Lafley was plucked out of the beauty business to lead a company in crisis. He detailed the mess well in a Harvard Business Review piece this past May: "The company had announced that it would not meet its projected third-quarter earnings, and the stock price plummeted from $86 to $60 in one day...The price dropped another 11% during the week my appointment was announced. A number of factors had contributed to the mess we were in, chief among them an overly ambitious organizational transformation in which we tried to change too much too fast...But our biggest problem in the summer of 2000 was not the loss of $85 billion in market capitalization. It was a crisis of confidence."
Lafley is too diplomatic to name his problematic predecessors, but I'll tell you who they were because I knew them all: CEOs Ed Artzt and Durk Jager were as hard-driving as leaders come -- and intimidating too. They knew how to line up followers. But inspire the troops to become leaders? They struggled to do that. And another CEO in between the Artzt and Jager regimes, John Pepper, was well-liked but not tough enough.
So P&G had lurched through leaders who just weren't right—until Lafley surprised everyone. He understood the power of a consistent message. His mantra for nine years: "The consumer is boss."
Diligently and methodically, he spread the word that P&G had to focus on big brands, big markets, and big customers. He said that P&G, to win with powerful discounters, must slash costs and reinvest savings in marketing and product design.
Focusing on those things, Lafley became the best organic-growth guy in the consumer-products industry. In a 2004 Fortune story about P&G's innovation drive, I quoted him: "Organic growth is more valuable because it comes from your core competencies. Organic growth exercises your innovation muscle. It is a muscle. If you use it, it gets stronger."
He drove innovation by reaching outside for ideas -- an alien concept for promote-from-within P&G. Shamelessly, he used hokey terms to communicate: "Connect and develop" was his term for partnerships with outsiders who might be more creative than the folks at P&G.
Here's the key: P&G employees understood Lafley's mission. The company's results proved that. By driving innovation in age-old brands like Tide and Crest and Olay, P&G outperforming rivals like Unilever (UL) and Colgate-Palmolive (CL).
But even as Lafley declared that acquisitions are risky, he didn't shy away from them completely. "When we acquire, we acquire to build the core," he told me in 2005. He bought Wella and Clairol to expand P&G's beauty business. And as P&G grew to be a top player in personal care, he bought Gillette for $57 billion in 2005. That acquisition added five billion-dollar brands -- Gillette, Oral-B, Braun, Duracell, and Mach3 -- to P&G's stable of 16. Last year, annual sales of Gillette Fusion topped $1 billion, and today P&G claims 23 billion-dollar brands.
Lafley has been contemplating retirement for a while. As the global crisis hit and P&G's growth around the world slowed, the board urged him to stay on. Fortune has been saying for a long while that COO Bob McDonald, a 29-year P&G veteran who is a West Point grad and U.S. Army captain, had the edge. Insiders says he played a key role in the Gillette acquisition. The other contender was Susan Arnold, a 29-year veteran who drove P&G's high-margin beauty business to $20 billion in sales and went on to oversee all of P&G's brands; she quit in March one day after her 55th birthday, clearing the way. (Speaking of birthdays, McDonald turns 56 on June 20, one week after Lafley celebrates turning 62.)
Now with P&G's stock trading at $52.63, down from its high of $74.67 at the end of 2007, McDonald has his own recovery to pull off. But in terms of confidence in leadership, the new boss has nowhere near the turnaround challenge that Lafley did.
The ouster of Bank of America's (BAC) chief risk officer, Amy Brinkley, was inevitable, as I wrote in "Behind the shakeup at BofA" on Friday.
And as I mentioned in that piece, two years ago, Fortune featured Brinkley and five other execs in "One Step Away," about rising-star Most Powerful Women on track to be CEOs of Fortune 500 companies someday. So what's happened to the other five?
One woman made it MOREPatricia Sellers - Jun 8, 2009 12:31 PM ET
Another Fortune Most Powerful Woman -- a longtime member of our annual Power 50 list -- is leaving the corporate world. Susan Desmond-Hellmann, who was Genentech's (DNA) president of product development, is heading to the University of California San Francisco as chancellor.
Desmond-Hellmann's departure from business's upper echelons (She ranked No. 13 on Fortune's 2008 Power 50 list) adds to the trend of top women execs leaving corporations and deciding not MOREPatricia Sellers - May 1, 2009 3:41 PM ET
Another powerful woman called last week to tell me she's opting out. "I'm going to do what I want to do rather than what I need to do," said Julie Fasone Holder, Dow Chemical's (DOW) SVP and chief marketing, sales and reputation officer
It's the trend lately. If you've been checking into Postcards regularly, you've read about my conversations with high-ranking women choosing the good life vs. the grind. Susan Arnold MOREPatricia Sellers - Apr 7, 2009 2:40 PM ET
by Patricia Sellers
Dawn Hudson spent more than a decade chasing stretch goals at PepsiCo (PEP). She headed sales and marketing at Frito-Lay, the consumer giant's snack unit. She led marketing at Pepsi-Cola North America and ascended to CEO of that $5.5 billion business.
That job turned out to be Hudson's ceiling inside PepsiCo, where chairman and CEO Indra Nooyi has put her own stamp on the company. Hudson (who ranked as MOREPatricia Sellers - Mar 26, 2009 1:39 PM ET
Tech companies are rethinking their identities. IBM may buy Sun Microsystems. Cisco (CSCO) is moving into the server market, and also mightily into the consumer space. The latest move by Cisco CEO John Chambers--whose family reportedly owns eight Flip cameras--is a buyout of Pure Digital Technologies, which sells those ultra-simple videocameras. (I love mine.)
Powerful people are busy rethinking their identities too. My last two stories in Fortune are about ex-CEOs MOREPatricia Sellers - Mar 20, 2009 3:55 PM ET
by Patricia Sellers
Procter & Gamble (PG) lost its president today: Susan Arnold, a 29-year veteran who drove the company's high-margin beauty business to $20 billion in sales and went on to oversee all of P&G's brands, stepped down one day after her 55th birthday.
"My dad retired at 62," Arnold said, phoning this afternoon on her way to a Walt Disney (DIS) board meeting. "Then he got really sick. You know MOREPatricia Sellers - Mar 9, 2009 2:57 PM ET
I've been sharing plenty of content from last week's Fortune Most Powerful Women Summit. Hope you don't mind. I figure, if you have the premiere gathering of women leaders plus Warren Buffett at an historic moment, why not mine it for all it's worth? Which is quite a lot. Though the Summit content is off the record, some panelists told me I can pass on highlights to you. During a MOREPatricia Sellers - Oct 9, 2008 12:12 PM ET
My colleague Carol Loomis interviewed Warren Buffett today here at the Fortune Most Powerful Women Summit in North San Diego. Buffett told us that he came up with a big idea literally while walking to the session this morning. Click here to read "Buffett: My fix for the economy."
Another highlight: Time Inc. CEO Ann Moore did a great on-stage chat with PepsiCo (PEP) CEO Indra Nooyi. Silicon Valley talent maven Juliet Flint MOREPatricia Sellers - Oct 2, 2008 5:31 PM ET
Greetings from Southern California! We're here for Fortune's 10th annual Most Powerful Women Summit which, even with all that turmoil across the global markets, is drawing the heaviest hitters in business, starting with Warren Buffett and Lloyd Blankfein.
The world's greatest investor and the Goldman Sachs (GS) CEO will be at our opening dinner tonight. It's a crazy coincidence since we invited these two men (our first time inviting men) months ago. Then, last week, the MOREPatricia Sellers - Oct 1, 2008 1:57 PM ET
|Men's Wearhouse fires the 'I guarantee it' guy|
|U.S. oil boom helps thwart OPEC|
|Investors hold their breath for the Fed|
|Chrysler relents, agrees to recall 2.7 million Jeeps|
|Men are disappearing from the workforce|