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Legendary Leadership Dilemma
by Andy
August 14, 2009

Legendary leadership is not about who they are, but who we believe them to be.

Last month, Robert “Bob” McDonald replaced AG Lafley as CEO for The Proctor & Gamble Corporation.  Big shoes to fill, indeed.  The same shoes Jeffrey Immelt is still trying to fill at GE and he’s been at it for quite a few years now.

During Lafley’s nine-year reign, P&G not only revitalized its financial performance, it re-built its purpose and corporate brand to rock star status and back where it belongs.  Not that long ago, P&G was suffering from some serious image issues:  their stalwart brands being marginalized by an onslaught of competitors and store brands, commodity price issues, currency fluctuations, and more.  And while change was certainly needed to repair its financial performance and corporate culture, Lafley’s predecessor – Durk Jager – was guilty of trying to do too much too quickly, and not getting the enough buy-in from all the stakeholders.  The grand vision was not adequately explained.

A massive restructuring that ensued left employees confused, new products launch became high-priced bombs and not well-linked to P&G’s heritage, and their famous brands (Tide, Ivory, etc.) were left adrift.  Within 18 months of Mr. Jager’s appointment to CEO, he was out and AG Lafley took over.

Since then, AG’s patient and persistent approach to rebuilding P&G’s corporate culture and its legacy brands has paid huge dividends.  2008 revenues exceeded $83 Billion (up 22% from ’06) with corporate performance dramatically improving with a 38% increase in their EPS over that same period.  And while P&G has been hit by the current recession, they are well positioned to rebound beautifully.

As Business Week points out (6/22/09), Bob McDonald must now take over.  He’s known as a “skilled executor, but doesn’t have Lafley’s reputation as a visionary.”  This could bode quite poorly for Mr. McDonald.

What’s interesting here are the different roles CEOs must take when coming into good vs. bad situations.  Those coming in to remove the stench from their predecessor’s bad decisions, financial performances, and cultural malaise have a much easier job.  They have nothing to lose and are given broad reins to do what’s necessary to repair the damage. Bob McDonald has no such luck.

Rather, Mr. McDonald takes over with implicit marching orders of “don’t screw up.”  A much more difficult challenge.  One way to do that is to take a page from Microsoft.  While Steve Ballmer (P&G alum BTW) runs the show, it’s still Bill Gates who represents the embodiment of where the company and its vision for success.  While AG Lafley stays on as Chairman of the Board, it would be smart for Mr. McDonald to leverage the public’s love for Mr. Lafley.

Mr. Lafley, don’t be a stranger.  You’ll be missed.

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