P&G CEO McDonald says opportunities for growth abound among the world’s newest consumers

By Dan Sewell, AP
Thursday, March 4, 2010

P&G’s McDonald anchors future with new consumers

CINCINNATI — Consumer products giant Procter & Gamble is resisting the recession with new products and lower-price versions of standbys; it’s beaten Wall Street expectations for the two quarters CEO Bob McDonald has been in charge, and sales are trending better.

Good, but not good enough: Now, McDonald is targeting markets that are just blossoming, where hundreds of millions of people have yet to buy their first bottle of Tide, their first Pampers diaper, or a Gillette shaver.

McDonald, who has spent much of his adult life overseas with P&G and the U.S. Army, is anchoring the 172-year-old company’s future in places like China, India and Brazil.

“The strategies are starting to work,” McDonald said in an interview at P&G’s downtown Cincinnati headquarters. “We’re not there yet, but it’s starting to work.”

A Gary, Ind., native and West Point grad who joined P&G in 1980, McDonald worked his way up in a process that University of Michigan business professor Noel Tichy said exemplifies how executives should be groomed. A.G. Lafley, CEO for nine years, helped prepare McDonald for the role, stayed on as chairman until Jan. 1, then retired Feb. 25.

McDonald is “his own man,” however, and will leave his own imprint on P&G, said Tichy, who is writing a book on executive succession.

To P&G’s “Touching and improving lives” slogan, McDonald has added “more consumers’ lives in more parts of the world, more completely,” as a statement of strategy, for instance.

Not a radical departure — but new thinking.

McDonald, 56, rises around 4:30 a.m. to exercise and often ends the day feeding a voracious reading appetite; right now, he’s working on the new releases “Too Big To Fail” by Andrew Ross Sorkin and “Yalta” by S.M. Plokhy on his Kindle e-reader.

He discussed strategy, growth, fear and his favorite baseball player’s influence on his attitude. Here are some excerpts:

Q. Why would investors think your strategy statement makes P&G likely to give a better return on their dollar?

A. The purpose of our company since the beginning has been to touch and improve lives. We’ve now turned that purpose into a strategy that provides guidance to our employees and also our external partners for what’s important. And if anybody is working on anything that doesn’t tie directly back to the purpose, then they should stop doing it.

The companies that are successful are those that have strong purpose, have strong values and preserve them, but are willing to change everything else in order to grow.

Q: You’ve set some high goals, such as adding 1 billion consumers within five years (to the 4 billion P&G claims globally); how do you reach them?

A: Touching more lives means we get to more people. We’re now trying to extend our distribution around the world. In a place like China, we reach about 60 percent of the Chinese people. We’d like to get to all 100 percent. So we have a program to extend down into rural areas where stores and economies don’t exist today.

While certainly some of our growth will come from taking market share from our competition, a good part of that growth is going to come from simply creating an economy where one doesn’t exist.

Q. Why did your Olympics advertising highlight P&G as the sponsor, instead of individual brands as your U.S. advertising usually does?

A. We think there’s some advantage to making Procter & Gamble as a company more like a brand. If you look at investors, they buy our company; you look at the various lists out there — ‘Most Admired,’ ‘Most Respected’ companies — they’re about the company, not about the brands.

In the 10 years I spent in Asia, we always had a Procter & Gamble statement at the end of our advertising: Improving the lives of Filipino consumers, or bringing world-class technology to Japan. We think there are times that we should take advantage of the scale of our company.

Q. How does your experience as an Army captain influence your leadership style?

A. One of the things that I certainly learned in the military is how you can accomplish more as a team than you can as an individual.

When you’re going on a parachute jump and somebody else is checking your equipment to see that it’s safe and you’re checking someone else’s equipment, when I’m taking my unit for Arctic warfare training, or to the jungles of Panama in rainy season, I have to care for those other people’s lives. And I have to rely on them to care for my life. I think you learn an interdependency there that you don’t forget.

Q. What are some of your outside interests?

A. I’m a former Scoutmaster. I spoke (recently) at an Eagle Scout ceremony. My son introduced me, which made me proud. I did not make Eagle Scout, but my son did.

I had a fear of swimming. I almost drowned when I was young. I couldn’t get swimming or lifesaving merit badges.

But I overcame that fear. At West Point, you have to be able to swim. You have to be able to swim in fatigues, a backpack with a brick in it and a rifle; you have to be able to jump off a 10-meter tower, go through all kinds of survival swimming to become an Army Ranger. So I had a goal that was bigger than my fear.

Q. Are you a baseball fan?

A. I am. Growing up in Chicago, Ernie Banks was my boyhood idol. He was a famous optimist; here’s a guy who was on perennial last-place teams, yet he was the most valuable player two years in a row, 1958 and ‘59, … and he would always say ‘Let’s play two today!’

So I actually keep a baseball card of him on my desk, just to remind me every day to think about, ‘Let’s play two today’: Let’s have a positive attitude.

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