August 16 2013 by Russ Banham
Down but Not Out
Lafley makes a good point. The CEO who fears that out-of-the-box ideas might crash and burn is stifling innovation. Similarly, the pursuit of perfection by the CEO may foster a culture of avoiding mistakes; yet as any research scientist will attest, it is trial and error that ultimately yields the perfect formula.
The same situation applies to running a company: The way to stand out in a crowd is to make courageous decisions, not shy away from them because of the risk of failure. Lafley recalled two of his courageous yet ultimately wrongheaded decisions at the helm of P&G that eventually turned south (the second blunder explained on page 3).
“We decided in the 1980s to take on Clorox with our own bleach product, since we were already the market leader in laundry detergents,” he recalled. “The market research indicated this would be a great plan, and we developed a brand called Vibrant, which was the first bleach to have color-safe features.”
Interestingly, P&G had once owned Clorox but was forced to divest it in the 1960s by the Federal Trade Commission. So it decided to pull a switch on the old maxim, “If you can’t beat them, join them.” “We put together a great marketing plan and TV advertising campaign but decided we also should run a test to gauge consumer acceptance before we launched,” says Lafley, a P&G board director today and co-author of the new book, Playing to Win: How Strategy Really Works.
Since Clorox was headquartered in Oakland, California, P&G selected Portland, Maine, as the test site, “as far away from them as we could get,” Lafley explains. “We wanted to fly under the radar.”
No such luck, however. Armed with intelligence about P&G’s test marketing plans, Clorox mailed a free gallon of bleach to every homeowner in Portland, delivered right to their front doors, with a coupon for a dollar off on their next purchase. “We’d already [bought all] the TV commercials and print ads, but no one needed any bleach now,” Lafley says. “They were set for the next month or more.”
The failure was instructive. “Like Don Quixote, we had charged off after the windmills—in this case, the walled city of a competitor,” he explains. “I learned that you don’t want to take on the strongest competitor unless you have to. When Clorox tried to enter the laundry detergent business a few years later, we pulled the same ploy—with the same success.”
Nevertheless, future product introductions benefitted from the “seize the city” failure. “When we entered the air freshener market with Febreze, we didn’t charge in and attack Glade and Renuzit,” Lafley says. “We tiptoed in with a laundry detergent freshener in 1993 first, before gradually building to the odor-removal category. Learning from our previous failure, we created a huge success.”