Written by Steve Boehler with special guest John Pepper
Last week we shared former P&G CEO John Pepper’s famous speech at the 1981 Procter & Gamble year end meetings. The title says it all: Three Principles to Achieving Good Results in Business.
The three principles are compelling:
- There is a limited number of things which either we, personally, or our organizations can focus on consistently over time — so we better make sure that those things we do concentrate on are the most important.
- Know the reality of your business and your consumer and your competitor.
- Take full advantage of all the talents and energies of our people – the people reporting to us, staff groups, peers, agencies, whoever is involved in making our business succeed.
Beyond how impressive these principles are on the surface, is the depth of each one. John and I had a wonderful discussion about his speech and how his time since then as CEO of P&G and Board Chair at Disney and Yale may have added to his perspective.
The speech that you gave in 1981 is like an old friend because I’ve repeatedly revisited it over the years as a bit of a reminder of “What would John do?” I’d love to hear you talk a little bit about how you may have changed over the last 40 years or so, and how that may impact how you look back at that speech. (John’s speech is here.)
John: Well, it starts out on the subject of focus, and focusing on things that really matter and can make a real difference. I talked about focusing on volume growth, profit growth, and people development. I wouldn’t change that, but as I think about it today, I would amplify a couple of areas.
I would put much more emphasis on making choices that would achieve sustainability. The word sustainability probably was not on my mind then. However, I certainly was of a mind that when I was on a brand I wanted to help keep it alive and stronger for the next generation.
The importance of sustainability is much greater today than it would’ve been then. I think it also grows out of a servant leadership mentality. We’re here to take care of an institution, whether it is a university, a brand, or a company, for a period of time, and it’s our job and our opportunity to do things that will preserve it and make it better. I would be more intentional and bring more thought to exactly what we needed to do to be sustainable over time in a very competitive and changing world.
The P&G website today takes a strong stance on sustainability
I would also place even more emphasis to the matter of strategic focus. My time at Disney, starting in 2007, provided me one of the great examples of strategic focus. Bob Iger didn’t talk much about strategic focus, but he knew exactly what Disney’s focus areas should be, and there were three of them. One was, “get more creative content.” He was convinced that they were not getting the creative content they needed. And with the right creative content, they could build it out into games, parks, and consumer goods. So, his number one goal was to get more creative content, and he concluded it couldn’t just be internal. Disney needed to acquire it, which led to the acquisitions of Pixar, Marvel, and Lucas Films in a period of about four years. Brilliant leadership: an extreme and intentional focus on a crystal-clear strategy, followed by asking, “What do we need to do to operationalize it?”
That’s similar in many ways to the P&G focus on product. While we received so much acclaim for our marketing, P&G has really always been a product company. It sounds like Mr. Iger looked at his product and thought “we need a jolt.”
John: I think that’s where you always have to start. That’s where Steve Jobs started with Apple. It’s to improve your product in every sense. Technically, aesthetically, as perfect as perfect can be. But, on your point, you rightly say P&G’s focus has been on superior product to provide superior service to consumers. That’s been it. We’ve become much sharper over time, including right now with Jon Moeller, on what does that mean? How do we know it? How big of a competitive gap should we need? It can’t just be better. It’s got to be irresistibly better. It’s got to be a magnitude better if it’s to overcome price differentials and high inflation. We’ve become much more focused, crystal clear, concrete, on exactly how do we know we’ve got a superior product and being unrelenting in achieving that. This, as you said, Steve, is absolutely essential.
Yes, we’ve got to be superior in our messaging, it’s got to honor the product, we’ve got to be superior in our product supply system, and we measure all those. But, going back to Disney for a moment… If Bob Iger’s first emphasis was on the product, his second was on being first in digital. He was convinced the world was going digital, and he was going to be the first in having ESPN be on cell phones, before other people were doing it. The third focus he had was geographic, and it was China, and what did that result in? Disney Shanghai Park.
So, I’d place even more importance on the matter of focusing on a very limited number of things.
I probably would’ve also moved up the creation of an organizational design and culture that takes full advantage of the inherent ambition and capability of our people, with an organization structure that gives them freedom to run their thing, that holds them accountable to high standards and to get rid of organizational structures, which bogged them down in bureaucracy and too many clearances.
The bane of a company like Procter and Gamble is bureaucracy. The system takes over the entrepreneurial spirit.
One other thing I would have also added if I wrote that speech today was the importance of your customer being successful, such as Walmart and Kroger for P&G. We used to take a very self-centered view of the customer. We wanted to work with the customer in a way that would get our brands merchandised and advertised, but we didn’t look sufficiently at the customer through their eyes. Learning how to do that has been a dramatic change in Procter and Gamble over the last 20 years.
We’ve learned the lesson of for us to be successful, they had to be successful. And that’s led us to look at growing the category as a primary goal, not just our share. Our growing the category will automatically build our share, and we all win.
So, with over 40 more years of experience since I wrote that speech, I would recognize that very few things really matter.
What advice would you give to executives today in how to have more focus in a world where they are pulled in so many directions?
You need to take the time to think about these things, and ask yourself each time, “What would it take to be true? What do we need to do to make this true? What do we need to do to make it true that we will have vastly superior products?” You can’t just get there by saying it. What you need to do is make sure you’re investing, you’ve got to have the right leader for R&D, you’ve got to have a reward and recognition system that honors superior achievement, you have to have little pods of innovation where new ideas can grow, some will work, some won’t. You need to think about how do you operationalize what you need to do to make the areas of focus come true.
In Disney’s case, we needed more creative content. Bob had to develop a very intimate relationship with Steve Jobs. Steve wasn’t going to sell Pixar to anybody else. He came to know Bob, and because he felt Bob would bring Pixar in and honor its heritage, and let them do their thing, he agreed to the acquisition.
How do you create that time? Have you learned any specific tricks over the years that allowed you to tune out some of the noise and help you focus?
John: I think the question of getting time to think today is harder than when I wrote this forty years ago. We are inundated with so many things demanding our attention.
I’ve found it helpful when you’re exploring ideas to just get out for a walk. Go into a new environment without anything else going on. And don’t have a podcast on. Take the earbuds out of your ear, and just think and be stimulated!
An underlying theme I’m hearing in how you might change the speech if you wrote it today is the strong role that culture plays in a company. Could you talk a little more about that?
John: I talked a great deal in the speech about interpersonal relationships. It is so important that people who work for you, or with you, see and understand you being totally authentic, and that you care about their development and are concrete in helping them develop.
One thing I’ve come to appreciate much more than I did then is the importance of the dynamism of a group culture. I was deeply moved by a talk I heard once by a professor of business at London School of Economics. He was at Davos, addressing corporate executives that thought their teams were not innovative enough. He responded by saying they were addressing the wrong issue by thinking the employees were the problem. Instead, he said, “it’s the environment.”
He contrasted environments marked by “control, compliance and contract” as opposed to environments where a group is pursuing a stretch goal, something they can be proud of, something worthy of their very best effort, something they’re excited about. They’re doing it together in a company of people who they respect, who share many of their same values, who’ve got different skills that can be brought to bear on a challenge. Everybody in this group is working to achieve excellence in what they’re doing, singularly, and working with the others.
The most important thing of all is the trust they have in each other. They know each other well enough to trust each other. They have confidence in each other. That trust releases them to say what they think, even if they disagree, without upsetting the apple cart.
Now, you might ask “how do you achieve that?” I think it has to start with everybody feeling they matter and that they’ve had a role in articulating the goals they’re pursuing, and the purpose they’re pursuing, and how they’re going to get there. They need to see their role in doing . They need to know they will be recognized, even as they are being held accountable to do it, in the best possible way. Not if, “If you don’t do that, you’re fired.” But “this is what we expect of you just as I expect it of myself as the leader”.
I assume leadership has to play a primary role in creating that culture?
John: Absolutely. For example, at P&G, I, as head of the US business, had concluded that diversity was not a little nice add-on, rather it’s the only way we’re going to have the people whom we need, and have those people work together. The then CEO, John Smale was very insistent on my articulating more clearly the business purpose of that goal. And I did. And he really stepped up and owned it too.
Beyond the macro influence of culture, on a micro level people simply need to work well together to produce great results. Mr. Smale, Mr. Artzt and you all ran the company in succession. You were each very, very different people in how you carried yourselves and how you worked with people. And I understand you were friends. Tell me a little bit about how such different people could be so close.
John: Well, I don’t want it to be described as total nirvana. I mean, there were certainly moments of disagreement. And I think your observation, Steve, is correct. We were different, in personality, in many ways, and we were okay with that. What held us together, what made us friends, what made us really happy working together?
I’d say there are three things. One, our total alignment around some basic principles. These are in the bone, in the blood beliefs. One was certainly the importance of Procter and Gamble and what it stood for, and the importance of, in our own role, preserving it, making it better tomorrow, and succeeding and leading in a changing environment. This was a compelling commitment to us.
Second, I would say we were united simply in our love of the company and our love of P&G people. We all said it somewhat differently. But we all felt it. If I see somebody at the airport with a P&G badge on or if somebody today tells me they work for Procter and Gamble, I feel we are members of the same family. In my first talk as CEO, at the end of the talk, I asked the P&G people in the audience to look to their left and look to their right and I said, “You may not know that person, but one thing you will know and you’ll agree with me on is you can count on that person to be doing the best job they possibly can, no holds barred.” Ed, John and I felt that. We believed that to our bones and we believed it terribly important to honor P&G people and recognize them with that spirit in mind.
Third, each of us had a fundamental belief in the importance of product superiority. We knew if we didn’t have product superiority, we couldn’t do the other things we believed in. We believed in being the leader. Crest versus Colgate, Pampers versus Huggies, Tide versus Wisk. I could just keeping going down the list. Constant search for improvement.
What surprises, if any, have you learned about working with people?
One thing I’ve learned over the years, is listen to the dissident point of view. One has to know when there’s still a question out there that’s so important that it needs to be heard out and examined. Most of the biggest mistakes I have seen us make can be traced to not listening to the dissident view.
But you can’t debate forever! I’ve also learned that in leadership one has to know when the time has come for you to make the decision. Something Ed Artzt taught me is to “move intentionally fast”.
One memory I have of being in your office was that you brought an amazing calmness to any situation. You certainly asked tough questions about the business, brand, competition and consumer. And you listened and engaged with a polite dignity that helped those around you be calm in face of uncertainty. What advice do you have for folks to be able to maintain a calm approach in the face of really difficult situations?
John: Thank you for that memory. I’m glad to hear it. I didn’t always feel calm, but I had an inner confidence in P&G people, and in our ability to work our way through things. I’d seen a lot of history. There have been some very tough times, but I’d seen us work our way through them.
I think I always tried to keep in mind why we do what we do and anchor ourselves in our purpose. I was always mindful of my own experience, of how much I had learned and gained in talking to other people in a way that, if not calm, at least was deliberative. We were having a conversation, not going crazy or antics or pointing fingers. Those behaviors get an organization nowhere.
I believe in people. I’ve always seen the tremendous benefit of listening, and how much trust can be built through how you listen to a person.
I think that the leader has to exude a sense of confidence. Great leaders like Eisenhower and Churchill, exhibited confidence in what their organizations and people could do even in times of great stress.
I learned from John Smale and Ed Artzt and other leaders, about the importance of picking, very intentionally, the right leader for a given task, a person who you trust, and who you feel aligned with in your values, even if not necessarily or entirely in how you operate.
John Smale would never have felt that I was exactly the same as him, or that Ed Artzt was, or that Ed felt I was. But we felt very aligned in our basic values: integrity, serving the consumer, doing what’s right, and being very intentional in picking the right leader for a particular task. Because having done that, you’re far more likely to let that leader go do his or her thing.
I remember a conversation that Ed Artzt had with John Smale. When Ed became the head of international, and John had just become the CEO, Ed went to John and he said, “John, I’d like to be sure we’re aligned on what the goal here is.” And John said to him, “Well, Ed, here’s the way I look at it. We have many great brands which have reached leadership positions in the United States, and in a couple of other countries, but I’m very frustrated. What I’d like you to do is take us global.” And that was it. “Take us global.”
Well, John knew Ed by now very well. He knew very well that Ed would know exactly what to do. It’s not that John abandoned international and only worked on the US business, not at all. But Ed went and did his thing. Similarly when ten years later, I was leading international and Ed was the CEO, Ed gave me tremendous support as we expanded into China, and Eastern and Central Europe, India. He let me run it. He gave me a lot of running room and he supported me; in every way I needed in order to succeed.
This point about being intentional in choosing a leader you trust, and letting him or her do it well—this is a pretty good golden rule when it comes to leadership.
We live in a culture here in the US where there isn’t as much respect for older generations as there should be. At P&G, it always seemed different. In our discussions you mentioned Dupree and McElroy and Morgens with reverence. When I was at P&G, Howard Morgens would still come into the office long after he had retired. I was lucky enough that some of the memos I authored – like about the Pringles turnaround – somehow ended up in his inbox and he wrote on them. Now, he didn’t have an operating role, so some senior executives were sending him memorandum, out of respect for him and because he was still keenly interested in the business.
John: I still remember the initials HJM, EGH, ELA, JGS on notes from CEOs which found their way to me. They never lost interest in the business but in my experience never wanted to take the responsibility away from those closest to it.
Today, we aim to preserve timeless learning and principles through P&G college and the books by or about Mr. Smale and Mr. Artzt. It’s really important to be able to have an intentional system of sharing stories, learning and principles like P&G college. You’ve got to be intentional about it, and I think involving senior leaders is critical to tell stories.
(Some notes: The initials John mentions represent Howard Morgens, Ed Harness, John Smale and Ed Artzt. And, Mr. Pepper also authored two fine books; Pepperspectives in 2017 and What really Matters in 2005).
My friend Dave Kimbell, who spent his early years at Procter and Gamble and is now CEO of Ultra Beauty, seems to be in their stores every week. Talking to the associates, interacting with consumers, and taking selfies that everyone can see on LinkedIn. There’s a virtuous cycle there of him doing it, and there’s a culture at Ultra Beauty of how important the associate and the customer is.
John: Well, he’s leading it the right way, and the rest of the people in the organization see its importance. When I traveled in international, my first stop always was to be in a consumers’ homes, the second stop was to be in stores, and then finally I’d go to the office. And I’d try to get to a focus group with consumers. So, it was kind of a religion. It was fun too. People look at what you do, not what you say. And they’ll remember what they see you do more than anything you say. But above all, they’ll remember how you made them feel about themselves.
John Pepper spent much of his career at Procter & Gamble, becoming CEO of the company in 1995. Following his time at P&G, he went on to serve as Board Chair at Walt Disney as well as Board roles at other fine companies and served as Board Chair at Yale. During his tenure as CEO, John led Procter & Gamble through a period of significant growth and expansion, introducing new products and expanding the company’s global footprint. He also spearheaded efforts to improve employee diversity and inclusivity, earning recognition for his commitment to corporate social responsibility.
Notably, John also co-founded the National Underground Railroad Freedom Center in Cincinnati, Ohio, a museum and educational center dedicated to telling the story of the Underground Railroad and the struggle for freedom and civil rights in America.
Steve Boehler, founder, and partner at Mercer Island Group has led consulting teams on behalf of clients as diverse as Ulta Beauty, Microsoft, UScellular, Nintendo, Kaiser Permanente, Holland America Line, Stop & Shop, Qualcomm, Brooks Running, and numerous others. He founded MIG after serving as a division president in a Fortune 100 when he was only 32. Earlier in his career, Steve cut his teeth with a decade in Brand Management at Procter & Gamble, leading brands like Tide, Pringles, and Jif.