The CEO of Procter & Gamble is not your typical Proctoid. A.G. Lafley, 58, has spiky white hair, paddles a kayak, and has a sunny, doorless office filled with examples of well-designed products. And after running P&G's Asia operation from Japan for four years in the mid-1990s, Lafley came to a very un-Procteresque conclusion: that design, not simply price or technology, should be P&G's key differentiator. Here's his take on his radical attempt to put design "into the DNA" of P&G.
What set you off on this quest?
Japan is definitely a civilization where design is important. The department-store beauty sections are as good as it gets in the world. [When I came back here in 1998], it became quite clear to me that design was not only important in beauty, it was even more important in household care and consumer care, where products were arguably underdesigned.
We have to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion. We try to make [a customer's experience] better, but better in her terms. If you stay focused on experiences, I think you will have a lower risk of designing something that may measure well in a lab but may not do well with the consumer.
I want P&G to become the number-one consumer-design company in the world, so we need to be able to make it part of our strategy. We need to make it part of our innovation process.
I just spent a day on our Valentino [perfume] launch, "V". It's awesome. The fact that there are only four couturiers at the top of fashion, and that Valentino chose P&G to do this fragrance, blew people away in Paris. I didn't know if we were going to get it. . . . But I think we were able to demonstrate to him that we're really pretty good at design and we have a process that integrates design and innovation.
This is a major change for P&G employees. How do you even know where to start?
We created the design function [run by Claudia Kotchka; see page 58] and kept it outside the business units so I could drive design across the businesses. But the seed is only going to grow into a strong plant if it grows in the businesses. We need to develop marketers and product researchers and general managers who know it when they see it. And we need to have access to the best designers in the world. So we recruited almost all of our design team [from the] outside. There aren't many of the top design firms in the world that don't work with us in one form or another.
What has been the hardest part so far?
I've been in this business for almost 30 years, and it's always been functionally organized. So where does design go? We want to design the purchasing experience—what we call the "first moment of truth"; we want to design every component of the product; and we want to design the communication experience and the user experience. I mean, it's all design. And I think that's been hard for people to come to grips with.
I don't think anybody thinks we're not seriously in the design business. But it has taken time. Remember that one of the disciples had to put his hand in the bloody wounds to believe. We have some businesses that are doubting Thomases. We have other businesses that couldn't wait. Some got into it in a reasonably disciplined and strategic way with good results. Others sort of leaped into the middle of the lake and are having problems trying to go too fast.
There are so many little things that can be so much better. The consumer can articulate what she doesn't like about [a product] sometimes, but she can almost never articulate what you need to do to remove the dissatisfier or to create delight. That's what we have to work on.
Now you're merging with Gillette. How will that affect your design revolution?
It's going to be exciting. If you look at [Oral-B's] toothbrushes, they are some of the best designed in the world. We will be able to help them in their personal-care businesses because I think we're a little bit further along. And frankly, they will be able to help us in the device businesses.
How do you respond to the notion, popularized by Wal-Mart and others, that price rules the world?
I think it's value that rules the world. There's an awful lot of evidence across an awful lot of categories that consumers will pay more for better design, better performance, better quality, better value, and better experiences. Our biggest discussion item with a lot of retailers is getting them to understand that price is part of it, but in many cases not the deciding factor.
What we keep reminding them is that the real key to driving same-store sales is innovation. The beauty of the Crest SpinBrush was that we could sell an electric toothbrush for $3 and it was reasonably well-designed. We went from nowhere to a 15% to 20% market share. It's little things like the purple Prilosec package. It's amazing how the little purple pill in the purple package stood out.
How do you measure success?
We've won a few [design awards], and I really feel great when we've won on products the consumer loves. So yes, I occasionally put the design awards out here. But I don't care if we never win a design award.
I care if consumers think our brands and products create a better experience and they buy us more regularly. Design is part of brand equity. We stand for election every day, and design's an important part of it.