P&G made strategic mistakes in India, needs to tap emerging markets: AG Lafley

On May 24, Procter & Gamble announced that former chairman & CEO AG Lafley would be coming out of retirement to replace current CEO Bob McDonald, who will retire at the end of June 2013.

Lafley, a lifetime P&G hand who was CEO and president from 2000-09, led the company during a period of growth that saw its sales double and profits quadruple, on the back of a portfolio of more than 20 billion dollar brands like Tide, Pampers, Olay and Gillette, the acquisition of which Lafley oversaw in 2005.

One of Lafley's mantras was that the "consumer is boss", and he pushed company executives to spend time observing and interacting with consumers as a route to innovation.

In a chat for ET, a few weeks before he returned to P&G, Lafley admitted P&G had made some strategic mistakes in India: "We attacked in categories like bar soaps and laundry where Unilever and local brands like Nirma and Godrej were strong." He also said P&G faced a problem attracting talent in India in its early days - unlike Hindustan Lever, as its rival was then called, it hadn't been around long enough to be familiar.

While Lafley strongly believed the company needed to move into emerging markets and take its brands across the board, he also warned there could be no such thing as an "emerging market strategy". He said, "Every market, every consumer segment requires a winning strategy."

A trap that large companies fell into, he pointed out, was to push global brands in a one-size-fits-all strategy. "Most of our consumers shop locally and live locally," he said, and companies need to tailor products that cater to those specific needs.

Before announcing that he would return to P&G, Lafley consulted on business and innovation strategy.