Are you curious about how Bounty, a P&G brand, became the leading paper towel brand in North America? Do you want to know how Charlie Pierce turned around Bounty's fortunes in the early 2000s? Are you intrigued by how P&G's strategic choices have led to the success of brands like Olay and Glad? Read about P&G's strategic journey, its innovative management systems, its approach to industry analysis and competitive strategies, and the importance of defining winning aspirations in this comprehensive account.

Playing to Win: How Strategy Really Works

In the late 1990s, Procter & Gamble (P&G) faced a critical challenge in the skin-care market. Skin care, a quarter of the total beauty industry, was a lucrative yet competitive field. P&G's big player, Oil of Olay, was in decline, derogatorily dubbed "Oil of Old Lady." The brand needed a revival to compete with emerging, trendy alternatives.

P&G's options included launching a new brand, acquiring a competitor, extending an existing brand, or revamping Oil of Olay. They chose the latter, believing in its potential. The first step was rebranding; "Oil of Olay" became simply "Olay." The mission was to redefine Olay's image, product, and market strategy.

Led by Gina Drosos, the team researched consumer needs, discovering a growth potential among women aged 35 and above, who were just starting to notice signs of aging. P&G scientists, leveraging their tech, created VitaNiacin, addressing not just wrinkles but dry skin, age spots, and uneven tone. This led to the launch of Olay Total Effects in 1999, a game-changer that bridged mass and prestige markets, a new "masstige" category.

To reposition Olay, the team revamped advertising and packaging, aiming for higher-quality, performance-driven products. They set the price at $18.99, striking a balance to attract both mass and prestige shoppers. The strategy worked. Olay's sales soared, leading to further premium lines like Olay Regenerist and Olay Pro-X.

P&G's success with Olay was built on a solid strategy framework, answering five key questions: What is our winning aspiration? Where will we play? How will we win? What capabilities must be in place? What management systems are required? This framework, a cascade of choices, ensured alignment at every organizational level, from brand to corporate strategy.

Olay's journey from a stagnant brand to a $2.5 billion powerhouse highlights the power of strategic choices. By understanding their market, leveraging core capabilities, and integrating these choices seamlessly, P&G turned Olay into a symbol of innovation and quality in the skin-care industry.

How Did P&G Transform Oil of Old Lady into a $2.5 Billion Olay Powerhouse?

Aspirations are the guiding purpose of an enterprise. Consider the Starbucks mission: “To inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.” Or Nike’s: “To bring inspiration and innovation to every athlete in the world.” McDonald’s aims to be “our customers’ favorite place and way to eat.” 

These lofty missions reflect their reasons to exist but aren’t strategies—they’re starting points. The first step in strategic planning is defining your winning aspiration. What does winning look like for your organization?

Peter Drucker argued that the purpose of an organization is to create a customer. Look at Starbucks, Nike, and McDonald’s—they frame their ambitions around their customers. Winning means more than just competing; it means playing to win. Companies must make tough choices, dedicate effort, and invest substantially to achieve this.

Consider General Motors’ decision to launch Saturn. In the 1950s, GM was the biggest and most powerful company on earth. But by the 1980s, it faced declining sales and increasing costs. In 1990, GM tried to compete with Japanese imports by launching Saturn, a new brand aimed at the small-car market. Despite innovative approaches, Saturn failed because GM’s aspirations were too modest. They aimed to participate, not to win, unlike Toyota, Honda, and Nissan, who made the hard choices and substantial investments needed to succeed.

Contrast this with Procter & Gamble’s (P&G) approach under Filippo Passerini. In the early 2000s, P&G faced decisions on outsourcing IT services. Rather than choosing a single large BPO, Passerini proposed a best-of-breed approach, outsourcing various activities to specialized partners. This strategy created flexibility, innovation, and interdependency, benefiting both P&G and its partners. The result? Higher quality services, cost savings, and improved employee satisfaction. P&G’s GBS team could then focus on innovating and building strategic advantages.

Winning aspirations should be crafted with consumers in mind, not products. Take P&G’s home-care business: its aspiration isn’t to have the most powerful cleanser but to reinvent cleaning experiences, leading to market-shifting products like Swiffer and Febreze.

P&G’s approach to strategy is about making clear, tough choices and defining winning robustly. In the late 1970s, P&G struggled with too many laundry detergent brands. Today, it has fewer brands but has grown its market share and become the clear leader in the US market. This success is the result of a series of strategic choices made since the early 1980s.

In the early 2000s, P&G was overextended and not winning with consumers or customers. CEO A.G. Lafley focused on achievable ways to win by making real strategic choices and teaching leaders at all levels to become capable strategists. For Lafley, strategy means disciplined thinking, tough choices, and winning—not just growing or building market share.

In short, winning aspirations are essential, but they’re just the starting point. Without explicit strategic choices, a vision is unfulfilling. The next step in strategy is determining where to play. Always aim to win, with clear, consumer-focused aspirations and strategic choices that drive your organization forward.

Winning Strategies: Lessons from Starbucks, Nike, and P&G

In the 1970s through the 1990s, Bounty, a P&G brand, became famous with TV ads featuring Nancy Walker as Rosie, the diner waitress. The slogan "The quicker picker-upper" was as iconic as "Don't leave home without it" for American Express. 

Bounty's proprietary technology made it the leading paper towel brand in North America. But by the late 1990s, global expansion efforts had strained the brand, leading to a decline.

When Charlie Pierce took over in 2001, he saw the need to refocus. The family-care team had been distracted by developing unrelated products like plastic wrap and paper plates. Pierce's challenge was to steer back to core products and markets. He recognized that while global markets were problematic due to manufacturing overcapacity and low willingness to pay for premium products, North America remained structurally attractive.

Pierce decided to concentrate on North America and focus on three specific consumer segments for Bounty. The brand retained its traditional product for customers who valued strength and absorbency. It introduced Bounty Extra Soft for those who preferred a cloth-like feel and Bounty Basic for price-sensitive consumers who still wanted strength. This segmentation allowed Bounty to cater to different needs without diluting the brand's value.

This strategic narrowing led to renewed growth and innovation. By understanding and catering to specific consumer needs, P&G's family-care business thrived, consistently delivering industry-leading growth.

The essence of strategy lies in choosing where to play and where not to play. Companies like P&G have shown success by making targeted choices, whether geographic, product-based, or consumer-focused, and avoiding the pitfalls of trying to be everything to everyone. This focused approach has allowed brands like Bounty to remain strong and relevant in a competitive market.

Can Charlie Pierce's Strategic Shift Revitalize Bounty's Legacy in North America?

When Jeff Weedman, P&G's VP of global business development, demonstrates the technology behind Glad ForceFlex trash bags, his enthusiasm is contagious. 

He stretches the bag past his elbow, showcasing its strength and flexibility. "This uses less plastic and stretches significantly more," he explains, highlighting P&G's diaper expertise in film manipulation. This innovation, built on quilting technology from paper towels, revolutionized trash bags, offering consumers a stronger, more cost-effective option.

P&G's technological prowess didn’t stop there. They also developed a self-sealing plastic wrap, branded Impress, which could hermetically seal food with just a press of a finger. Despite being the less compelling of two new technologies, Impress impressed test-market consumers, quickly capturing a significant market share.

However, past experiences, like the failed Citrus Hill orange juice venture against Minute Maid and Tropicana, taught P&G caution. They knew entering established markets with these new technologies would provoke fierce competition from strong brands like Glad and Saran Wrap. The high capital costs and operational challenges also posed significant risks.

Instead of launching a full-scale battle, Weedman sought a creative solution. After exploring various bids for the technology, an intriguing offer came from Clorox. Despite being competitors, Clorox proposed a deeper partnership. They needed P&G's technological expertise to revitalize their Glad products and fend off competitors like Hefty.

This partnership, launched in 2003, was groundbreaking. P&G provided the technology and expertise, while Clorox managed the business. The joint venture thrived, growing Glad from a $400 million to a $1 billion business in five years. This collaboration marked a significant shift for P&G, signaling a new approach to winning through strategic partnerships rather than outright competition.

This story exemplifies the importance of strategic thinking in business. It's not just about having superior technology or products but finding innovative ways to leverage them for a sustainable competitive advantage. Whether through partnerships or unique market positioning, as seen with Gain and Febreze, successful strategies require understanding the full playing field and making thoughtful, creative decisions on how to win.

How P&G's Jeff Weedman and Clorox Turned Trash Bags into Treasure

Most corporate mergers fail to create value, with infamous examples like AOL Time Warner and Quaker-Snapple. However, P&G's 2005 acquisition of Gillette bucked the trend. Merging $11 billion of Gillette sales with $57 billion of P&G business, the acquisition delivered over $2 billion in cost synergies in just two years.

Clayt Daley, P&G’s former CFO, explained the acquisition's success by emphasizing three key criteria: market growth, structural attractiveness, and strategic fit. Gillette's powerful brands (Mach 3, Venus, Oral B) and significant cash flow complemented P&G’s beauty and personal-care businesses. Furthermore, Gillette’s strengths in emerging markets like Brazil, India, and Russia aligned with P&G’s global strategy.

Chip Bergh, then P&G’s president of men’s grooming, spearheaded the integration. Unlike many mergers, this was a successful company buying another successful company. Bergh focused on blending Gillette’s strengths with P&G’s core capabilities in consumer understanding, brand building, innovation, go-to-market ability, and global scale.

A pivotal moment came when Bergh sent a team to India to understand local shaving habits. One skeptical scientist returned inspired, having designed a new razor on a napkin during his flight back. This led to the creation of the Gillette Guard, a razor tailored to the needs of Indian consumers, which became the best-selling razor in India within three months.

Passerini, P&G’s CIO, faced the challenge of integrating two massive IT systems. His innovative approach, including a flow-to-the-work model, enabled the integration in just 15 months, saving $4 million per day.

The success of the Gillette acquisition underscores the importance of strategic fit and reinforcing capabilities. P&G’s prowess in consumer research, innovation, branding, and global scale proved instrumental. By bringing value to Gillette’s existing strengths and leveraging P&G’s own, the merger created a powerful synergy that defied the odds.

The story of P&G and Gillette highlights the crucial role of strategic fit and capabilities in successful mergers. It’s a testament to the power of understanding and leveraging unique strengths to create value.

Can Corporate Mergers Succeed? Learn How P&G and Gillette Defied the Odds!

Strategy can be a company's game-changer, but without strong management systems, it's just a wishlist. Creating, reviewing, and communicating strategy requires robust structures, measures, and a culture that supports these elements.

At P&G, the traditional strategy review process was more like "corporate theater," as David Taylor, global home care president, recalls. Brand managers would present thick notebooks to a room full of executives, often aiming just to survive the meeting without humiliation. This old-school, sell-and-defend approach needed an overhaul.

In 2001, P&G shifted to a more collaborative, dialogue-based process. Instead of lengthy PowerPoint presentations, discussions focused on a few critical strategic issues agreed upon in advance. Meetings were smaller, more intimate, and aimed at fostering genuine conversation. This new approach encouraged presidents to engage in strategic thinking and receive valuable feedback from senior leaders.

The change wasn't easy. A culture of advocacy—where managers argued for their pre-formed conclusions—had to be replaced with "assertive inquiry," a balance of advocating one's views while genuinely exploring others'. This shift led to more productive strategy discussions and better business results.

P&G also needed systems to support core capabilities like consumer understanding, innovation, brand building, and go-to-market strategies. For instance, the Weighted Purchase Intent (WPI) metric in the diaper business revealed that absorbency wasn't the only factor driving consumer preference. This insight led to a more holistic approach to product development and marketing.

Measurement was crucial. P&G introduced Operating TSR, focusing on sales growth, profit margins, and capital efficiency. This measure provided a more accurate picture of performance than stock price alone and could be influenced directly by managers.

By 2005, P&G's new strategy review process was ingrained in the company culture, leading to better strategic choices and business outcomes. Clear communication of strategy at all levels ensured everyone understood and acted upon the core strategic choices.

Ultimately, effective management systems and measures are essential to complete the strategic choice cascade, ensuring that strategies are not just plans but actionable paths to success.

Revolutionizing Strategy: How P&G Transformed Corporate Theater into Collaborative Success

Creating a strategy can feel overwhelming with so many choices, data, and tools at your disposal. But don't worry, there is a way to simplify it – starting with defining your winning aspiration and then moving through where to play and how to win, using a framework called the strategy logic flow.

Let’s dive into the four dimensions that shape your strategic choices: industry, customers, relative position, and competition.

Industry Analysis: Understanding your industry's structure is crucial. P&G’s experience with Crest toothpaste is a great example. Initially focused on cavity-prevention, Crest was overtaken by Colgate Total, which addressed broader oral health needs. This prompted P&G to rethink their approach, ultimately revamping Crest into a full oral care brand.

Segmentation and Attractiveness: Look beyond traditional industry maps. For instance, Colgate created a new segment by focusing on overall mouth health, which gave it a competitive edge. Similarly, P&G analyzed segment attractiveness using Michael Porter’s five forces to determine where to invest resources, leading them to favor structurally attractive businesses like beauty and personal care.

Customer Value Analysis: Understanding what both your channel customers and end consumers value is essential. For example, P&G’s Gain detergent succeeded by focusing on sensory experience, which was a significant consumer need. P&G also innovated in oral care to meet retail customers' needs for high-margin, high-volume products, leading to the success of Crest SpinBrush and Crest Whitestrips.

Relative Position: Assess your capabilities and costs compared to competitors. P&G exited the pharmaceutical industry because the necessary capabilities didn’t align with their strengths. Keeping costs in check was also vital for Olay; by staying in mass retail, they avoided the high costs of department store placements, allowing them to invest in innovation and marketing.

Competitive Analysis: Anticipating competitor reactions is critical. P&G’s launch of Joy dish detergent in Japan is a poignant example. By predicting that competitors would stick to their diluted formulas, Joy was able to capture a significant market share with its concentrated format.

To create a robust strategy, consider these dimensions holistically. The strategy logic flow helps you map out and integrate these elements, ensuring you address every aspect. Remember, it's a team effort—collaborate and iterate to refine your strategy continuously.

In short, start by defining your winning aspiration, then analyze your industry, understand what customers value, assess your relative position, and anticipate competitive reactions. This framework will guide you to make strategic choices that lead to sustainable competitive advantage.

How Did P&G Turn Crest Into a Full Oral Care Brand and Outshine Colgate?

In strategy, there’s no such thing as a sure bet. However, framing the right questions and generating buy-in can significantly improve your odds of success. 

Traditionally, strategy processes aim to find a single right answer, analyzing volumes of data to confirm hypotheses. However, this often leads to predictable, uninspired options and weak compromises. A more dynamic approach involves asking, "What would have to be true?" This shifts focus from advocating positions to exploring ideas collectively, reducing conflict and fostering collaboration.

Consider the case of Olay, a brand facing declining sales. By framing the choice as either reinvigorating the brand or acquiring a new one, the team brainstormed various strategic possibilities. They reverse-engineered these ideas to pinpoint conditions for success, identified potential barriers, and designed rigorous tests to validate their assumptions.

The process began by identifying choices, such as transforming Olay into a high-end brand or acquiring an established competitor. They then explored a range of possibilities, like extending the Cover Girl brand to skin care or creating a masstige segment for Olay. By specifying what needed to be true for each option to succeed, they could focus on critical barriers and conduct targeted tests.

For example, P&G tested whether consumers would accept higher price points for Olay and whether retailers would support a masstige segment. These tests confirmed the viability of repositioning Olay, leading to a clear, data-backed strategic choice.

Anecdotal insights further illustrate the power of this approach. Roger Martin, a seasoned consultant, recounts how a painful experience with a misguided acquisition taught him the value of exploring what would have to be true rather than advocating for a single option. This method transformed a contentious decision-making process into a collaborative effort, enabling teams to uncover the best strategic choices together.

A.G. Lafley, former CEO of P&G, underscores the importance of an outside strategy partner who can provide objective insights and facilitate robust strategic discussions. Lafley’s collaboration with Martin helped P&G navigate complex strategic decisions, illustrating the benefits of having a trusted external advisor.

Ultimately, asking the right questions and fostering a collaborative, inquisitive environment can lead to more innovative and effective strategies. By focusing on what needs to be true for success, teams can navigate uncertainties and make informed, confident choices.

Strategic Mastery: How P&G's Olay Reinvented Success Through Collaborative Inquiry

Procter & Gamble (P&G) was faced with a challenge in the late 1990s. Their big player in the skin-care market, Oil of Olay, was losing its appeal. To revive the brand, P&G rebranded "Oil of Olay" to "Olay" and aimed to redefine its image, product, and market strategy. 

By researching consumer needs, P&G discovered a potential market in women aged 35 and above. This led to the creation of VitaNiacin and the launch of Olay Total Effects, a game-changer product that bridged mass and prestige markets. The revamped advertising, packaging, and pricing strategy led to soaring sales and the creation of other premium lines like Olay Regenerist and Olay Pro-X. 

The success story of Olay is a testament to the power of strategic choices and understanding market needs. Companies like Starbucks, Nike, and McDonald’s have created lofty missions that reflect their reasons to exist and help define their winning aspiration. However, these are not strategies, but starting points. Winning means more than just competing; it requires making tough choices, dedicating effort, and investing substantially. 

A company's winning aspirations should be crafted with consumers in mind, not products. This was illustrated by P&G’s home-care business, which focused on reinventing cleaning experiences rather than producing the most powerful cleanser. This led to market-shifting products like Swiffer and Febreze. 

Strategy can be a game-changer for a company, but it requires robust management systems and measures. P&G shifted from a traditional sell-and-defend approach to a more collaborative, dialogue-based process in their strategy review process. By changing their culture to be more open to exploring others' views, this led to more productive strategy discussions and better business results. 

To create a robust strategy, it is crucial to consider the industry, customers, relative position, and competition. This has been demonstrated in P&G’s experience with brands such as Crest toothpaste and Gain detergent. 

Lastly, framing the right questions and generating buy-in can significantly improve the odds of success in strategy. By asking, "What would have to be true?", it shifts the focus from advocating positions to exploring ideas collectively. This approach was used in the rebranding of Olay and has proven its effectiveness in coming up with innovative and successful strategies.

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Are you curious about how Bounty, a P&G brand, became the leading paper towel brand in North America?

Do you want to know how Charlie Pierce turned around Bounty's fortunes in the early 2000s?

Are you intrigued by how P&G's strategic choices have led to the success of brands like Olay and Glad?

Read about P&G's strategic journey, its innovative management systems, its approach to industry analysis and competitive strategies, and the importance of defining winning aspirations in this comprehensive account.

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