P&G's Growth Wizard
By Erick Schonfeld

(Business 2.0) – By the time A.G. Lafley became Procter & Gamble's CEO, the company had lost its magic. Once a paragon of marketing and brand building, the consumer-products behemoth didn't seem to have many fresh hits up its sleeve. Sales were sputtering and earnings were slipping. Today, five years later, P&G is the envy of its industry, turning out winner after winner. Its fiscal 2004 revenue surged 19 percent, and its earnings jumped 25 percent. For a company of P&G's size—annual sales of more than $51 billion—that kind of growth spurt is all but unheard of.

How did Lafley do it? He found ways to get more out of P&G's core brands. He revived the sleepy Crest line by pushing it into whitening products. Crest Whitestrips and Night Effects gel have helped build Crest into a $2 billion brand, double its size four years ago. Adding single-serving packages and a line of chips emblazoned with trivia questions quickly boosted Pringles's market share 14 percent. Similarly, Lafley breathed new life into the 47-year-old Mr. Clean brand with a wildly successful line of car-washing products. Under Lafley's watch, the number of billion-dollar P&G brands has jumped from 10 to 16. Half of those gains came in the last 18 months.

To juice the pace of innovation, Lafley is breaking down the company's storied insularity. When P&G researchers came up with the technology for a better plastic wrap—a new category for the company—Lafley decided that more profit lay in joining forces with rival Clorox, whose Glad brand was already well established. The result, Glad Press'n Seal, grabbed 20 percent of its market in a year and a half. Lafley has also been going outside P&G to buy ideas, reaping winners like the Swiffer Duster and the Mr. Clean Magic Eraser. Already, more than 35 percent of new products are licensed; Lafley wants to boost that to 50 percent. When asked recently how he chose that goal, Lafley chuckled. "It's just a number I made up," he said. "For me it's a metaphor for the fact that we don't care where the ideas come from." — ERICK SCHONFELD