By - Bill Saporito

(FORTUNE Magazine) – John Smale's greatest accomplishment has been rejuvenating P&G's aging culture. When the marketing giant's grip on certain key markets -- toothpaste, for example -- began to loosen, he pushed for new ways of doing business that emphasized project management by groups of workers, speed in product development, and efficiency. He thinks he's succeeding: ''I feel terrific about it. It's really accelerating. All of these things fit this corporation like a glove because of the employee-management relationship -- employees trust the company.'' An example: P&G's new premium diaper, Luvs Deluxe, got to market in nine months, half the usual time, under the guidance of a multidisciplinary team that broke down barriers between departments.

Smale, 59, knows the old, more hierarchical ways well. Born in Canada and educated at Ohio's Miami University, he was only three years out of school when he joined P&G in 1952 as an assistant brand manager. From there on it was pretty much straight up through P&G's toilet goods and soap businesses. In company lore he is credited with securing Crest's endorsement from the American Dental Association and with spearheading efforts to fight off a ban on phosphate detergents. He was named CEO in 1981. Smale still likes to stay close to the consumer action. He has cassettes of all the company's commercials sent to him and keeps up with customers by listening to tapes of conversations on P&G's product hotlines. The news isn't all good. Most P&G products are in slow-growth markets bitterly contested by Unilever and a revived Colgate. Still, Smale is surprisingly unworried about the managerial challenge. ''It isn't as complicated as it sounds,'' he says. Don't mistake that for smugness. Procter & Gamble will celebrate its 150th anniversary this year, and longevity breeds a certain confidence. The trick, as Smale knows better than anyone, is to keep the company from acting its age.