Thirteen years after first taking the helm at Procter & Gamble, A.G. Lafley has been reinstalled as the company’s chief executive, replacing his hand-picked successor, Bob McDonald, after four years on the job. Meanwhile, Myron Ullman boomeranged back to J.C. Penney as CEO last month, bringing former Apple executive Ron Johnson’s controversial year and a half reign to a close. The twists and turns leading up to these transitions and the unlikely link between Procter & Gamble and J.C. Penney could be fodder for a mini-series.
High-visibility executive rebounds are nothing new, of course. Steve Jobs, Michael Dell, and Howard Schultz are all examples of leaders who responded to recalls, from Apple, Dell, and Starbucks, respectively. What makes JCP's and P&G's executive revisits so interesting is that both companies are in the midst of significant restructurings. Both also appear to have borrowed from the past, albeit for distinctly different reasons.
Ron Johnson’s scorched earth plan for Penney’s was well-documented and well underway when he was ousted last month amidst a series of sales swoons. Among other developments, denim bars had landed, the much-buzzed-about Joe Fresh shops had begun to roll out, and sizable Martha Stewart Pantry sections were being set up as recently as last week, even as Penney’s legal battles over the brand with Macy’s were still fresh on everyone’s mind.
Accounts of the effectiveness of Ullman’s previous stint at Penney’s range from unspectacular to destructive. In fact, some blame him for lulling the retail giant to sleep (ironically, a nice tee-up for Ron the Radical). In Penney’s first earnings call since Ullman’s return, he spoke of re-emphasizing private brands, a strategy that is in direct opposition to Johnson’s focus on trendy newcomers like Joe Fresh and established outsiders such as Martha Stewart.
The ads that Penney’s has popped out under Ullman’s early watch are a study in mea culpa marketing, as they practically beg customers to return to the store. Ullman hasn't said that he plans to scrap Johnson’s vision of creating “the first specialty department store” but the three-pronged segmentation that he introduced during the earnings call marginalizes the strategy by default. Private brands were referred to as “core” brands (hint, hint), national brands were the “middle bucket,” and the brand shops that Johnson banked on (literally) were referred to as “attractions.”
At this point, Penney’s revisit appears to involve slamming on the brakes or even retreating. Milquetoast reflexes are certainly understandable under the circumstances, but Penney's can't afford to give into them as competitors on every side, from Walmart to Macy’s, put the pedal to the metal on next-stage digital initiatives, while disruptors like Uniqlo broaden their U.S. footprints.
By contrast, much of the momentum at P&G was initiated during Lafley’s storied nine-year tenure, including the mega launches of Swiffer and Fabreze and its game-changing acquisition of Gillette. Under Lafley, P&G didn’t just launch new products, it created new categories. His winning streak is all the more impressive given that P&G wrote the book on CPG success with iconic hard-acts-to-follow such as Pampers, Tide, and Crest. Lafley also joined the pantheon of business thought leaders both during and after his term at P&G, as the author or co-author of highly-rated business tomes, most recently, Playing to Win.
Unlike Johnson and Ullman at Penney’s, Lafley and McDonald worked closely together at P&G, and Lafley’s anointing of McDonald as a successor would seem to have been intended to ensure that innovation would continue at a steady clip. Instead, the innovation pipeline dried up during the McDonald years, and although Penney’s would surely trade its sales nose dive for P&G’s middling performance, key P&G stakeholders haven’t been impressed. Activist investor Bill Ackman’s growing litany of complaints against McDonald, everything from what he saw as excessive participation in other corporate boards to comparatively lackluster performance in relation to competitors, put vice-like pressure on P&G’s board. In what can only be called an ironic twist, Mr. Ackman, the guy who decided that Ron Johnson would be Penney’s knight in shining armor, orchestrated McDonald’s departure.
J.C. Penney and Proctor & Gamble are both borrowing from the past in order to ensure the future, and both are must-watch barometers of retail progress during a time of unprecedented change. Will the next six to twelve months see them simply regrouping or will they leap forward?