As a leader in the consumer goods industry, Procter & Gamble has seen tremendous business success while consistently seeking to deliver a balanced impact to consumers, customers, employees, society, and shareowners. It was our honor to interview CEO Jon Moeller during the Future Leaders Programme at the Consumer Goods Forum, cosponsored by Bain & Company. Moeller has been a senior leader for more than two decades, including his years as chief operating officer and chief financial officer. He spoke with Richard Webster, the global head of Bain’s Consumer Products practice.
Q: What were the key objectives you and the leadership team set out to achieve that allowed you to transform for impact and achieve dramatic results over the last five years?
Moeller: The first objective was to commit ourselves to balance, to deliver to both the top and bottom lines. In the past, we had shifted between focusing on one or the other, without the level of success that we thought we were capable of achieving. The second thing was that, in our quest for top-line growth, we had for many years prioritized market share. And we often approached share from the standpoint of taking somebody else’s business. In our industry, that’s a very difficult thing to do sustainably, so we shifted our approach to think about expanding the total market, not just taking share.
The third was a dramatic reshaping of our portfolio. We decided to focus on daily use categories, in which performance drives brand choice. Our goal was to reduce the number of brands we bring to market from about 220 to 65, and the number of categories we compete in from 17 to 10. By focusing on a smaller set of brands where we knew we could outperform, we believed we would increase our rate of top-line and bottom-line growth.
Q: What was the biggest challenge that you had to overcome in achieving those objectives?
Moeller: The biggest challenge really was un-anchoring the leadership team, employees, and board from the past. Changing our profile in the marketplace without changing our op model was not going to work. To help people move we needed very strong, compelling sets of data, like the correlation between top line, bottom line, and share price, and like the impact of superiority where we had it and where we didn’t.
If you’re going to be in categories where performance drives brand choice, you have to perform. And we weren’t. We had about 30% of our sales that were noticeably superior on first use to consumers. And 70% were parity or worse. We really raised the bar in terms of what it meant to be superior and what we needed to deliver on it. And this required significant investment, so we embarked on two 10-billion-dollar cost-reduction programs to free up money to invest in superiority.
Q: Constructive disruption requires a strong growth mindset. How does P&G enable this for its employees?
Moeller: We can’t be complacent. We have to ask each other “what’s next?” and that requires change at the individual level. For example, often our objective in meetings is to look smart, at least not look dumb, or to carry an agenda. If instead we went into each meeting with the objective of learning something from each person in the room, that puts you in a mindset of constant learning and growth.
Q: What is P&G doing to take ESG beyond being the right thing to do, to being a strategic advantage that unlocks greater value for consumers and shareholders?
Moeller: ESG is not an organizational tax. It’s an opportunity to thrive. ESG had to be integral to everything. For example, if our strategy is based on sustainable superiority, we must attract superior talent, meaning we must have a superior employee value proposition. When I got into this role, I wanted ESG owned by the business units, not just owned by the corporation. A couple of resources in corporate weren’t going to make the change that needed to be made.
Q: You’re not done yet on the transformation. What’s next in a transformation for P&G?
Moeller: We cannot rest on our laurels. The world around us isn’t resting. It’s changing very quickly, and we need to be responsive to the needs of that changing world. We have to organize against outcomes, not tasks. Heavily siloed functional organizations are an economic dinosaur. They’re expensive, slow, and make decision making inefficient because each person only sees a small sliver of the business.
Q: What advice would you give to this group about things that they can be thinking about now, working on now, to prepare them to drive transformation and have impact, hopefully in a similar way to what you and the team have been able to achieve at P&G?
Moeller: One of the key requirements of my job is communication, and I spend deliberate time developing my communication skills. I’m dead in the water if I can’t communicate. The biggest mistake I see people make is believing you are speaking to the people right in front of you. It’s critical also to think about those who aren’t in the room—the consumers, retailers, employees, and shareholders.
Also, we all over the course of our careers have to transition from a mindset of doing to a mindset of leading. These are very different behaviors. A mistake I see is that people are unwilling, unknowing, or unable to make the transition. But humans are capable of remarkable things if you get out of their way.
Finally, you need to become comfortable with prioritization. Every Sunday I sit down and ask myself two questions: How is the business going to be stronger as a result of what I do this week? How is the organization going to be better off as a result of what I do this week? Everything else is just noise.