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Procter & Gamble’s Deb Henretta is tackling the task of reigniting the company’s global beauty care business with her trademark disdain for accepting prevailing wisdom.
This story first appeared in the February 8, 2013 issue of WWD. Subscribe Today.
“I have a very healthy dissatisfaction for the status quo,” says the group president of global beauty care at Procter & Gamble, who, when she describes herself as a “change agent,” means it. “I like to keep one foot in the past to make sure that you’re rooted to the brand’s equity and heritage, but I like keeping the other foot leaping forward into the future to find what comes next,” says the 28-year P&G veteran. “How else are you going to keep the brand or business relevant to new consumers and future worlds with emerging needs?”
She later adds, “Sometimes, brands are allowed to get old and stale, because they’re not staying relevant. People aren’t pushing the boundaries of what innovation can deliver.”
P&G was once the darling of the mass beauty industry thanks to its virtuoso flair for technological innovation coupled with advertising dominance. With powerhouse brands like Olay, Cover Girl and Pantene, the company hurtled up through the industry rankings. In recent years, though, the giant seems to have lost its verve. It’s now up to Henretta to reenergize the once-mighty machine.
She comes to the challenge fully armed with a keen perception of shifts in the whims of consumer desire, a belief in global brand building and no lack of self-confidence. Henretta thrives on speed and decisiveness. Her ambition is to build big global brands that will find relevance both in Cincinnati and New Delhi, and to do this, she has assembled a hand-picked team across the globe, with the mission of maximizing the potential of innovation—quickly.
“Deb is the perfect leader for our beauty business,” says P&G’s chairman, president and chief executive officer, Bob McDonald. “She comes into the role with a deep understanding of beauty and great experience driving double-digit growth in our Asia beauty business each year during her seven years leading the region.”
In Henretta’s view, the ability to push for change is a key element of leadership. “The most important thing to do is to courageously lead change,” she says. “We live in a dynamic, unpredictable world. Change is happen- ing fast, and those who are in touch with the market, adaptable and fast will succeed. Businesses that don’t change won’t survive. Businesses that adapt to change may survive, but they won’t win. Businesses that lead change will thrive and win.”
It’s a lesson she never forgets. “Companies that are really big, like P&G, have to always be careful that you’re not so internally focused on your process or structure that you lose sight of what happens externally. You need to be forward-looking, anticipate where the future is heading and capitalize on the trends and need areas that consumers have. ”
Henretta’s gung-ho attitude was inspired, in part, by a decidedly un-P&G source, former U.S. Secretary of State Colin Powell. She recalls a presentation he gave called the Leadership Primer and being so struck by some of the points that she incorporated them into her personal creed. One of his positions was to challenge the cliché, “If it ain’t broke, don’t fix it.” Powell posited that the saying is “basically for the complacent,” Henretta remembers, “because you can’t live in a world where, if something isn’t broken, you don’t try to see future possibilities.” She says it’s better to lead the charge of change “before someone obsoletes you.”
Henretta believes in firing on all cylinders to avoid such a fate. “You need your head because you have to envision the future and analyze trends to come up with a vision,” she says. “You have to have heart because you have to inspire your organization to follow that vision and you have to use your hands because you’ve got to be able to make the tough calls.”
The executive has accrued a reputation for decisiveness during her career at P&G, most of which has been spent in top posts in laundry and baby care before being named president of the Association of Southeast Asian Nations, Australia and India in 2005, then group president of all of Asia in 2007. “She is strong, passionate and as smart as hell,” says one P&G exec, speaking not for attribution. “She has a clear picture of where she wants to go.”
Bill Schmitz, an analyst at Deutsche Bank, observes, “She’s taking over where many others have failed. P&G’s beauty business is one of the glaring indications that things aren’t what they used to be [at the company].” He adds that improvements in the beauty business would signal a broader turnaround. “If she can’t do it, I’m not sure who can,” says Schmitz. “She’s competitive, she likes to win and people like working for her.”
Henretta plans to prove to a hostile Wall Street that she can bring the luster back to P&G’s beauty business, which has been suffering from a lack of innovation and market share losses. In fiscal 2012, the company’s beauty sales fell 4 percent to $4.8 billion, although organic sales grew by 1 percent. Unit volume decreased 1 percent and price increases added 4 percent to sales growth.
More recently, though, for the second fiscal quarter, the consumer giant pickedup some momentum. Earnings from continuing operations in P&G’s beauty business rose 9 percent to $877 million for the quarter ended Dec. 31. Sales for the segment inched up 1 percent to $5.4 billion.
Henretta is unfazed. She describes herself as “a strong, decisive leader,” noting “I believe in being very choiceful on what you’re going to work on and being very decisive and that helps you build strong businesses and strong organizations.
“I am a passionate brand builder,” she adds. “I love working with consumers and understanding what they want, how they think about a brand and how you need to evolve and keep it relevant for the future.”
When Henretta was made group president of beauty care last May, she inherited a far-flung empire, encompassing Olay, the mass skin-care franchise with retail sales estimated by Brand Finance magazine at $11.8 billion; the DDF dermatological brand; the predominantly North American–oriented Cover Girl and global Max Factor makeup brands; Safeguard hand sanitizer; Old Spice, and Gillette Personal Care for men. She also oversees Secret, Olay Personal Care, Camay and Ivory.
One aspect of beauty that impressed Henretta early on was the size of the global market, which P&G estimates at $350 billion to $365 billion. “The market is so big, there’s room for lots of people to play,” she says. “Where we can help is with the global footprint with beauty care, creating brands that are relevant and meaningful around the globe. There’s such extraordinary potential.” P&G has wasted no time in making the necessary changes to realize that potential, including redeploying management overseas, most symbolically in Asia. The leadership team of P&G’s skin-care business has been moved out of the Cincinnati home base to Singapore under the leadership of Nayantara Bali, vice president of global skin care. The cosmetics group is headed by Esi Eggleston-Bracey, vice president of global cosmetics, based in Geneva. The personal care, antiperspirant and deodorant group—headed by Janet Allgaier, vice president of global personal care—is anchored in Cincinnati. All three report to Henretta, as do the regional vice presidents. Each command office has a secondary center in another region. Bali’s skin-care operation has a mate office in Cincinnati. Eggleston-Bracey’s Geneva operation has R&D links in London and Hunt Valley, Md. P&G also has two regional hubs in China and in Caracas, Venezuela, and offices in Guangzhou, China, and Panama.
Henretta calls this the “hubbing system.” “It allows me to stay very tapped into the trends around the world,” she says. “I’ve got an Eastern hub and a Western hub, and we share information on trends and consumer learnings. We’re going to have a better business because we’re looking at both sides of the world.
“I have put in place very talented franchise managers who not only are change agents, but they’re very good collaborators,” she continues. “I don’t mean consensus managers. These folks have great collaboration skills: They listen well, they will thoughtfully consider input, but they will make the decision. That’s what I and my beauty leaders need to do. If you’re waiting to get to consensus where everybody agrees, you’ll never go anywhere. The combination of good change agents who are good collaborators and who are agile is the winning combination of what we need to be doing in order to win in the beauty business.”
Asked how she would decide a divided opinion from the East and the West, such as conflicting shade demands for a skin-tone product, her response is swift. “I need to find what’s common, and what’s common is that everyone wants to have an even tone,” she says. “The art of beauty is finding what can be common and what has to be different. That’s the goal of winning in business right now. Our job is to find the balance between diametrically opposed concepts, the balance between short and long term, the balance between top line and bottom line, the balance between East and West.”
Henretta talks about “broadening the amount of discontinuous innovation,” and advocates thinking bigger and faster. “We need to broaden our definition of innovation because it isn’t just the juice in the jar. It’s the juice in the jar plus great design, plus great aesthetics, plus great marketing. All of that has to come together and has to be faster than before.”
Clearly a quick study, Henretta doesn’t believe in dawdling. “The speed of innovation is going to help define winners from losers,” she says. “We’re going to have to go back a step before innovation and start to look at trends. Trends will set the direction for innovation in the future, and those trends are going to come from all over the world.” Henretta notes that P&G has formulated a process called “trendovation, which is a process to spot trends, regardless of where they start in the world, and then quickly set those insights into action.”
One example of broadening the marketing viewpoint came out of research into different kinds of sweat conducted by Secret Clinical deodorant. The most odious variety was sweat induced by stress. Hence P&G launched a new Stress Response product last month.
Henretta dismisses the suggestion that global brands are cast with different personalities around the world. “Big global brands like Coca-Cola, McDonald’s, Pantene and Olay don’t have a different brand equity or brand character around the world. You have to find ways to make your brand relevant. You have to be relevant for young and old, rich and poor, Eastern and Western consumers. You have to bring relevant innovation.
“But another thing that I’m trying to bring to the beauty business, and this is something I’m bringing over from my Asia experience, is a mantra I call ‘as global as possible, as local as needed,’” she continues. As an example, Henretta cites the global desire for an even skin tone. “In Western cultures, the desired tone is often a bronze tone, to try to safely get to a tan,” she says. “In Eastern cultures, it’s a very white or light tone. We’re trying to find what the commonalities are to get to even tone, but the particular tone that we may want to emphasize in different parts of the world may be different.”
The idea is to leverage scale where possible and make adjustments where neces- sary. “If scents need to be different for the different parts of the world, we can handle that,” says Henretta. “If aesthetics need to be slightly different, we can handle that. What we’d like to do is find as many places where our brands, formulas and marketing can be common and then make the fewest adjustments so that we can be relevant to the local consumer.”
Henretta doesn’t buy the notion that the dynamic East will be the natural cradle for the birth of brands that later will be marketed in the mature and tired West. “Trends and innovation are a two-way street,” she says. “Things are going to go from West to East and East to West. Making sure you have a handle on what trends are emerging and what segments are growing across the globe is important.”
However, brands are being developed locally. P&G has created two in China alone. The first one is a skin-care brand called Oceana aimed at young Chinese women, the Y Generation, ranging from their teens to age 30. The Chinese name for the product translates into “sea, skin, origin, which correlates to skin originally from sea,” according to a P&G spokeswoman. Created for young women who want light hydration, the formulas include sea kelp harvested from the coast of Brittany. At the other extreme is Ji, a “super premium brand” that marries principles of Chinese medicine with Western skin-care technologies. Oceana is launching this month; Ji will bow in March.
The launch activity isn’t exclusive to emerging markets. In the U.S., Olay recently introduced a youth- oriented brand, Fresh Effects, with humorous product names like Shine Shine Go Away. “It’s a fun, young brand and we know that’s an opportunity,” Henretta says. “We don’t want to have to wait until a woman starts to see the first signs of aging in order to get her in the franchise.” To complete the circle, Fresh Effects has a Chinese cousin, a sub-brand called Yu Lan You (Olay for You in Chinese). Fresh Effects sells for about $5.50 to $20, and Yu Lan You has similar pricing for China.
After spending seven years running P&G’s Asian division, Henretta knows the nuances of the region well. She points out that 65 percent of P&G’s business there was beauty care, a category she turned into a regional driver “by broadening our definition of innovation, mak- ing sure that the innovation is discontinuous, that the marketing is edgy and pro- vocative and that we’re going against a broad group of consumers, markets and benefit areas. My North American group talks about getting new faces, new places and new spaces for their business. If I think about Asia, that’s been a lot of what we’ve done.”
Going forward, Henretta is bullish on the opportunities being opened in the digital realm. “Getting into e-commerce is going to be huge and important,” she says. “The new spaces for me are all about new business models that will be more digitally based; making sure they have important social media com- ponents, but also getting into new benefit areas, new adjacencies for the products.”
One such new benefit area will soon be evident in the restaging of Olay. Research shows antiaging is only 20 percent of the skin-care market, so P&G came up with the concept of energizing the skin. “We’ve explored this area of skin fatigue,” Henretta explains, “and we have several new ingredients. Here’s one of the interesting insights: When skin gets tired, it stops being receptive to the antiaging ingredients that we’re all putting in our products. We’ve used science to figure out how to make the skin more receptive to these ingredients.”
Olay is also pushing the envelope with advertising. For the launch of a Pro X whitening product in China, ads shows pictures of identical twins, one who has used the Olay product, the other a competitive brand.
Her brand’s ad campaign may conjure up the competitive landscape, but Henretta herself is focused squarely on the future—which can’t come soon enough. “There is a real need for speed and productivity,” she says. “We used to take three to five years to develop new technology. We don’t have that luxury anymore…We must be faster and more forward-looking to survive. Past success is no longer a good formula. Gone are the days of long development and qualification time. We must be forward-looking to create and quickly turn trend insights into action.”
Henretta’s passion cascades down to her entire organizational philosophy. “I am focused on building an I.D.E.A.-based culture focused on being Innovative, Decisive, Externally-focused and Agile. We also must structure for speed. We now have glob- ally dispersed design centers in Asia, the U.S. and Europe, and all of our market operations teams continuously feed trends and insights into these design centers so we are faster and more in touch than ever before.”