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P&G’s Balancing Act of Change

Procter & Gamble learned some hard lessons in finding a balance.

Change can be a tricky, double-edged deal, at least in the view of Patrice Louvet, group president of P&G Beauty at Procter & Gamble Co.

“Some change is good because it delights the people who use our products,” Lovet said. “It creates value. But not all change is good. Sometimes the changes we make simply confuse and frustrate people. As a result we erode value.”

Louvet asserted that the best way to determine whether a change will create or erode value for a brand is to see it through the eyes of those who live with the consequences — “our consumers, our retail partners, our colleagues.” He noted, “when we see through their eyes we see the impact more clearly. As a result we are able to make decisions that balance the yin and yang of change. It’s not an easy balance to strike,” he continued, ”but those who do it well win, and industries that do it well grow.

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“Without enough change, the industry loses its relevance. With too much change it becomes complex and loses trust.”

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Louvet demonstrated the perilous nature of striking the right balance after his speech when an audience member asked how a company as smart as P&G could “get beauty so wrong.”

“How much time do we have,” he shot back with a smile, then gave a long, complete and extremely candid answer. The company had overextended itself with a spate of high-profile acquisitions a decade ago, adding that P&G thought it could leverage its strengths and create value, but the calculation was wrong. “The result of that is we ended up losing sight of the core and getting distracted by a whole bunch of activities…[that] we didn’t do…particularly well, and the core really suffered.”

But now having divested 42 specialty beauty brands with another waiting in the wings, “we are relooking at our portfolio, assessing where we can leverage our strength best, assessing where we can create the most value and refocus our portfolio on the four core categories we’re calling out.”

During his speech, he observed, “change always carries an inherent risk and the secret to managing that risk is consistency — the look, the tone, the feel of a brand.”

Changes to avoid include following the competition or “giving in to pressure from retailers or suppliers or just getting bored with our products.

“When we give in to the temptation to change for the wrong reasons, we often frustrate our consumers at best and erode their trust at worst.”

These lessons taught Louvet to formulate three principles.

The first one is “understand what’s old is still new,” Louvet said, adding, “we get tired of innovations long before the people who use our products do. We move onto the next new thing when there’s still abundant opportunities to grow existing products.”

Case in point: Olay’s Regenerist product, known in-house as Red Jar, which created a sensation and became the category leader when it was launched a decade ago.

But P&G moved on in a couple years, pulling resources away and supporting new smaller initiatives. “The women who used Regenerist, loved it,” Louvet said. But only 5 percent of women had actually tried the product, leaving a huge opportunity on the table.

“Instead of launching new products, which made our shelf more complex, we should have been focusing like a laser on creating trial of Regenerist and new Olay users.”

P&G has since refocused on Red Jar and sales for the last three months have been up 15 percent.

In contrast, Louvet asserted that P&G did not make that same mistake with its Head & Shoulders antidandruff shampoo that was launched 55 years ago. By continually improving the product, P&G kept it at the top of the charts. “Clarity and consistency pay off,” he asserted.

The second principle is — “the key word in new and improved is improved. Product superiority is paramount, but we often focus on new, rather than improved. It’s a trap that is easy to fall into when change is driven by something other than consumer need.”

There was a period when P&G was restaging brands every three to four years to keep them fresh. For example, the packaging and product architecture of Pantene were redone, without a performance upgrade.

In positioning, the brand moved from “the hair you want” to the “hair you have.”

Louvet rhetorically asked, “I don’t know who wants to be stuck with ‘the hair you have.’ But I guess that’s a different talk for a different day.”

In addition, Pantene’s classic white packaging was replaced by a multicolor display, making it difficult for people to find their favorite familiar products. “We were changing for the sake of changing to bring news to the category,” he noted, reporting that the brand has been put back on track with a genuine product improvement , “and Pantene is growing in North America again.”

He noted that the company did better with is Secret deodorant brand, after the company discovered that one in four women considered themselves to be “heavy sweaters.” Secret Clinical was invented with a near-prescription strength formula. P&G had brought something “new and truly improved to a stagnant category, and built a business as large as Secret’s competitors.”

“If we don’t stay true to this principle,”Louvet said, “innovation stops being a growth driver and categories tend to commoditize.”

The third principle is “think inside the box,” so that people can discover what is the core of a brand or an organization, before tackling the new and unknown. Referring to P&G’s mass beauty divestiture, he said, “the key is to help people understand what won’t change before asking them to accept and lead what will.”