His experiences running the exchange reinforced a key part of his stance—his view of himself as a problem-solving business manager—and convinced him that he needed to upgrade his tools if he was going to continue to progress. The upgrade process started at Harvard Business School and continued when he joined P&G after graduating in 1977. Starting as an assistant brand manager on Joy dish detergent, Lafley spent sixteen years working his way through Tide, Cheer, Downy, Bounce, and the rest of P&G’s laundry and cleaning products business, rising to president of the division, P&G’s biggest and most profitable.
Through this period, Lafley continued to accumulate experiences that strengthened both ends of the mastery–originality continuum. In particular, he continued to deepen his understanding of consumer behavior, a process begun at the Navy Exchange. The depth of that understanding strengthened his hand during an internal battle in 1984 over the naming of the new liquid version of Tide laundry detergent.
Usually, when P&G developed a substantial innovation of an existing product, the new product got a new and entirely different name. For example, when P&G came up with a new way to clean hard surfaces, it also came up with a new brand name, Swiffer, rather than use the brand name of its leading hard surface cleaner, Mr. Clean. So organizational precedent was firmly on the side of giving the liquid detergent a new name.
Lafley saw good reason for breaking precedent. “We had convinced ourselves that powder Tide was for particulate soil remover and liquid detergent was for greasy, oily food removal,” he says. But Lafley had done enough loads of laundry at home to know that the distinction was meaningful only to the scientists who developed P&G’s detergent formula. “The issue was,” Lafley says, “how does the consumer see it?” The consumer saw the detergent as the same old reliable Tide in a convenient new form. Why not, then, call the product liquid Tide?
The logic of Lafley’s argument prevailed, and thus, liquid Tide arrived in the marketplace. Within twenty years, the U.S. market for liquid detergent was more than three times the size of the powdered detergent market, and liquid and powdered Tide had claimed more than four times the share of the next biggest brand. Had the liquid detergent been branded under a separate name, it’s not likely that Tide would be an immediately recognizable brand, a sixty-year-old mainstay towering over an array of brands with twenty or fewer years on the shelves.
Lafley’s mastery helped him make the right call on liquid Tide. His originality came into play when he faced another big decision about packaged laundry soap. In 1993, P&G’s R&D folks had devised a way to compact the big fluffy granules of powdered detergent into a form that was less than half the volume. Boxes of the detergent would take up half the space on store shelves and in shopping carts, as well as in the laundry room.
As is its time-honored practice, P&G subjected the new detergent to its usual extensive consumer testing. To nearly everyone’s surprise, including Lafley’s, tests showed that consumers did not exhibit a strong preference for compact detergent, despite advantages that seemed obvious to Lafley and his colleagues.
The findings placed the product’s future in jeopardy. P&G customarily would not launch a new product unless a rigorous quantitative consumer test had deemed it a clear winner over the product it was meant to replace. For a master of consumer understanding like Lafley, the test data should have doomed compact detergents.
But that verdict didn’t sit right with Lafley. Everything in P&G’s carefully planned and structured experience argued against launching a compact detergent brand. With his carefully nurtured capacity for originality, though, Lafley focused on what was potentially unique about the situation that might call for a novel response from P&G. He saw that unlike the majority of product upgrades, this one had the potential for massive cost savings for retailers. The dramatically smaller boxes would take up half the space in warehouses and on store shelves for the same dollar of sales, resulting in huge cost efficiencies for the retailers. So retailers would love the product, whatever consumers might think of it. And P&G’s manufacturing and logistics operations would reap the same cost benefits as the retailers.
But what about the consumers? The quantitative research showed that compact detergent wasn’t a clear winner with them, but neither was it an obvious loser. The data worked out to a wash, which under most circumstances would put the kibosh on a product launch. But Lafley decided to dive into the voluntary comments that some of the consumers added to their quantitative research forms. The voluntaries were not statistically significant and ordinarily carried little weight in P&G’s deliberations. But to those who knew how to read them, they afforded a much deeper insight into consumers’ sentiments than quantitative answers allowed.
Lafley took many evening and weekend hours to pore over more than four hundred handwritten voluntaries. He came to the conclusion that while consumers weren’t wildly enthusiastic about compact detergents, few were actively hostile to the idea. In fact, more than 80 percent of the voluntaries cited at least one positive thing about compact detergent.
Lafley totted up the data points. Retailers saw compact detergent as a big win, and so did P&G manufacturing. Consumers were neutral at worse. So despite the lack of conclusive consumer evidence, Lafley argued for converting all powdered detergents to compact. It was a massive undertaking that required an appropriation of $250 million of corporate funds, by far the biggest single investment Lafley had ever advocated.
It turned out to be a big win for P&G. “We ran and we won the race,” Lafley says. “It was huge, absolutely huge.” So was the risk Lafley took in championing it. Had it not worked out, Lafley could have been fired. But his accumulated mastery and originality gave him the confidence to take the risk. Had Lafley cultivated only his mastery, the results of the consumer research would have convinced him not to order the conversion. But while Lafley has the highest regard for quantitative research, for which P&G is justly famous, but he doesn’t let the data do his deciding for him. “I trust judgment,” he says. “Research is an aid to judgment.”
Originality alone would not have supplied a basis for the decision, either. Lafley had to marshal all his accumulated mastery to understand what the voluntaries meant, how the retailers would react, and what the impact would be on P&G’s manufacturing and distribution. Without that mastery, Lafley’s originality would not have withstood the rigors of the real world.
Lafley’s success in packaged soap earned him a 1994 promotion to president of P&G’s Asia-Pacific region. He headed back to Japan, where he’d served his apprenticeship in management and retailing. He had amassed years of experience as a P&G executive, bringing his mastery and originality to bear on opportunities and problems. Through experience, Lafley had also become highly skilled with the tools of consumer understanding and competitive strategy. As his capacities expanded, they reinforced his stance as an executive able to convert challenges, complexities, and contradictions into creative resolutions.
Japan presented Lafley with many opportunities to put his mastery and originality to work. Before he arrived as regional president, P&G’s experience in Japan had been something of a disappointment. In many business lines it was second- or third-ranked, an unfamiliar spot for a company that dominated its home market in the United States.
In Japan, Lafley exercised his mastery to establish marketing and selling discipline and build the P&G business in an orderly process. At the same time, he gave his originality a workout. When the company launched concentrated Joy dish liquid against the twin dominant Japanese players, each with over 40 percent of the market, the convention in the marketplace was to sell dish soap in large bottles of relatively diluted soap. P&G had figured out how to concentrate about three times the amount of soap into the same volume, allowing the product to be packaged in much more compact bottles. In the previous couple of years, P&G had conducted major launches in the dish cleaning category in the United Kingdom and Germany and both had failed quite miserably against the entrenched home-country competitors,
so Lafley had to be wary.
Lafley realized that innovative tactics were called for if concentrated Joy was going to mount a serious challenge to the entrenched market leaders in Japan. P&G positioned the detergent as a superior grease-remover with advertising copy featuring a well-known Japanese comedian conducting a “doorstep challenge” with his bottle of Joy. More surprising was the new product’s price. Lafley dispensed with the usual low introductory price and priced Joy concentrate above the two leading brands, on the theory that a premium price signaled a premium product. And instead of launching a line of various sizes and fragrances, Lafley introduced a single item. That focused consumers’ attention and allowed the retailers to sell in high volumes using relatively little shelf space.
Lafley reckoned the smartest strategy for the two leading brands would be to promote its regular-strength lineup heavily. That would encourage consumers to reject the whole category of concentrated dish liquid before P&G could establish it. Instead, both competitors appeared to panic, quickly bringing a concentrate to market and promoting it heavily. In effect, both were doing P&G’s work by endorsing the idea the concentrate was a better product. That could only help Joy, the first product to market in the category. Lafley admitted his audacious gambit was “a crapshoot because if both had been smarter, if they had picked the right defense, they could have stopped us. But they didn’t.” As a result, Joy achieved leading market share in the category; a position it has defended since.
Lafley’s approach to decision making always takes advantage of mastery, whether his own or another’s. “I like experts and masters,” he says. “They are invaluable—the proxy for experience that I don’t have personally.” But mastery in no way diminishes his commitment to originality. After his promotion to CEO in 2000, he engineered a significant overhaul of P&G’s culture to make attention to design a core value, championed the Connect & Develop initiative discussed earlier, dramatically expanded P&G’s participation in the beauty care business, and made the biggest acquisition in P&G history, the $53 billion purchase of Gillette.2 “I am quite comfortable with taking risks,” Lafley admits.
The first thirty-three years of A. G. Lafley’s managerial career teach us several lessons about experiences. The first is that stance and tools influence experiences. Experiences, in turn, influence tools and stance. Experiences can deepen mastery and nurture originality, and those that combine to deepen mastery and nurture originality are the most powerful in enhancing integrative thinking capacity. Let’s now take a closer look at those lessons.
How Stance and Tools Influence Experiences
We have an inclination to accumulate experiences that reinforce the stance and tools we start with. That’s because stance guides the acquisition of tools, and tools guide the sort of experiences we have. So people who believe that existing models are identical to reality and fear opposing models aren’t likely to believe that better models exist. Having a low tolerance for multiple models, they’ll be impatient to choose an available model, whatever its shortcomings. They will use only inductive and deductive reasoning, will build highly simplified models, and will advocate their own point of view rather than dispassionately consider multiple points of view. The experiences they gather will tend to reinforce their initial stance and suggest to them that they have all the tools that they need.
In stark contrast, people like Lafley believe existing models are just the best anyone has come up with to date and relish opposing models. Not only do they think a better model is waiting to be found, they think they will find it, by wading into complexity and staying patient. They will use generative reasoning, causal modeling, and assertive inquiry. The experience they gain building new models will reinforce their initial stance, and the skill and sensitivity with which they deploy integrative thinking tools will increase.
Even as an inexperienced Navy officer, Lafley did not accept the existing models for how to run an exchange. From the outset of his managerial career, his stance was that better models could be created. He was happy to wade into complexity to find out how to serve his customers better, how to find unique merchandise, and how to compete with other exchanges and win.
His stance caused him to accumulate experiences that raised his skills. As he added to his understanding of customers, he improved his chances of pulling off merchandising coups like the ceramic elephants. Had he accepted the conventional model of how to run an exchange, he would not have accumulated any of those rich learning experiences that strengthened his personal knowledge system.
How Experiences Influence Stance and Tools
Lafley’s experiences taught him both that he liked business and that he needed more sophisticated tools to guide him. His performance as exchange manager was outstanding, but his experiences made him painfully aware that he had little in the way of formal tools. That motivated him to head to Harvard Business School, where valuable additions to his tool kit worked a subtle but significant change in his identity. No longer a kid with zero business experience, he saw himself at graduation as a young executive with years of experience and a set of tools to apply in the business world. The experiences and tools he had acquired reinforced his identity as a manager adept at understanding consumers. Not surprisingly, when he graduated from Harvard Business School, he chose a job in marketing at P&G rather than a competing offer from a strategy consultant.
The feedback loop from experiences to tools happened again during his time as president of P&G’s Asia-Pacific region. Based in Japan, he observed how the best Japanese firms typically had an obsessive concern for the design of the consumer experience—from the product itself to its packaging to the experiences of shopping for it in a store. The experience led him to believe that design could be a competitive advantage for P&G. He set out to improve his personal understanding of design by creating the post of vice president of design, establishing an external design advisory board, and developing a close working relationship with IDEO, a leading industrial design firm. As his skills and sensitivities deepened, he became a champion of design in business.
Experiences Can Deepen Mastery
Mastery requires repeated experiences in a particular domain. Because masters in their domain have seen particular phenomena before and know what they mean, they don’t have to interpret every sensation or input from scratch as a novice would. In the essentially infinite morass of data, they can pull out the few salient data points that make a difference and mentally map their causal relationships. And because they have done it many times before, they know from experience how to structure the problem in order to create a resolution.
A masterful doctor may be able to diagnose appendicitis after a brief examination of a patient, while a newly minted intern may have to work through dozens of potential options before recognizing what is causing the patient’s abdominal pain. The intern might recognize the vague categorical level of “abdominal pain,” but the master physician—with her sensitivity to small differences that only experience can teach—recognizes the precise category of “appendicitis-induced pain.” From their vast databank of experiences, masters develop pattern-recognition skills that open up shortcuts to solutions.
Mastery isn’t gained by accident. It comes only through planned and structured repetition of a consistent type of experience. That is why I argue that experiences don’t necessarily deepen mastery. When you’ve hit one hundred thousand tennis forehands, you have a better chance of hitting a good forehand in the middle of an important match. But to become masterful, the tennis player who hits one hundred thousand forehands needs a plan for carrying out the forehand stroke and a structure for observing and reflecting on the results of each hit. The player who lacks a plan and a structure is likely to develop bad habits and make inconsistent shots.
From his time running the exchange for the Navy, Lafley structured his experiences to continually deepen his mastery. He would hold a sale midweek rather than on the weekend, then “mine the hell out of the data” to see how the sale p
erformed. The learning he acquired from the experience deepened his mastery. At P&G, he continued to deepen his understanding of consumers by repeatedly listening to needs and wants, taking responsive action, and measuring the results against expectations to hone his understanding. Through a conscious campaign of repeated, structured, and planned experiences, Lafley over the course of his career has become a past master of creating, branding, and selling consumer products.
Experiences Can Nurture Originality
Some contexts don’t reward the repetition, structuring, and planning that are the hallmarks of mastery. Those nonstandard contexts require the creation of a new approach or solution—that is, originality. Originality demands a willingness to experiment, spontaneity in response to a novel situation, and openness to trying something different than perhaps first planned or intended. Rooted as it is in experiment, originality openly courts failure. It’s important to become comfortable with the process of trial and error and iterative prototyping, or you’ll be tempted to focus on the less risky mode of mastery, to the exclusion of originality.
Throughout his career, Lafley made a conscious effort to nurture his originality. At the Navy Exchange, he had the spontaneity to seize the opportunity when he got word of the oil price increase. Later he showed openness when he spent endless hours reading the voluntaries from the compact detergent consumer research. The information he gleaned from them helped him engineer a novel response to the consumer research findings. Still later he boldly experimented with the launch of Joy dish liquid in Japan, accepting that he had to engage in a crapshoot to have the chance of accomplishing his goals.
The Opposable Mind Page 16