A reeling stock price, slumping morale, falling profits, creeping irrelevance. That was Procter & Gamble (PG) when A.G. Lafley became CEO in June 2000. The week after his appointment was announced, the stock dropped another 11 percent — "not exactly a vote of confidence," he recalls ruefully.
Nine years later, when Lafley stepped down, the picture was completely different. Revenues reached $83.5 billion in 2008, compared with $40 billion in 2000; profits had more than tripled; and the stock price had doubled. There was pain along with the gain: Many heads had rolled, and iconic brands like Crisco and Jif had been sold off. The bottom line, though, was that P&G was back.
The transformation of P&G had many twists and turns, but Lafley considers the purchase of Clairol in May 2001 a key moment in the journey. It was not an obvious move. P&G had no history in hair coloring, and the board worried that this would be an expensive way to find out if it could succeed in the category.
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