A Year in, P&G CEO David Taylor Holds Fast to Company’s Historic Strengths
Despite success of upstarts, David Taylor vows to stick with big brands and massive ad budget
A year into his job atop the world’s largest consumer-products company, David Taylor said he is confident that P&G’s best prospects remain rooted in fundamentals. PHOTO: BUSINESS WIRE
CINCINNATI—The quick ascent of Dollar Shave Club and upstart online services blindsided some Procter & Gamble Co. executives and stunned an industry that viewed P&G’s Gillette as impenetrable.
But P&G Chief Executive David Taylor is unperturbed. A year into his job atop the world’s largest consumer-products company, the 58-year-old observes that Dollar Shave Club’s share is “flattening out,” and the startup’s market is “very targeted.”
“If you have superior performing products and you communicate it well,” he said in an interview, “you tend to win over time.”
At a time when consumers’ changing habits are upending the way people shop and many of the world’s most entrenched corporate giants are re-creating themselves, Mr. Taylor eschews talk of reinvention. He aims to keep P&G on top by playing to its historic strengths.
A 36-year P&G veteran, Mr. Taylor hasn’t sought out a big-name startup to acquire. The company hasn’t launched major new brands or planned for a seismic shift in how consumers buy household staples.
To some on Wall Street, the strategy comes off as cavalier. The maker of Pampers diapers and Tide detergent has been struggling with years of anemic growth and slipping market share.
“The whole world around him is changing and they want to keep doing what they are doing, at some point that comes to a head,” said Bernstein Research analyst Ali Dibadj. “It feels like the arrogance of P&G is back.”
Soft-spoken and deliberate, Mr. Taylor, presents as the opposite of arrogant. The Charlotte, N.C., native is a former manufacturing-plant manager who switched to brand management and worked his way up P&G’s ranks.
Sitting in his office at P&G’s headquarters, Mr. Taylor said he is confident that P&G’s best prospects remain rooted in fundamentals. That means selling to the masses by way of big retailers on the strength of meticulously collected consumer research, a massive research-and-development operation and the world’s biggest advertising budget. P&G, he says, needs to learn to do these things faster and more effectively.
“We always respect our competitors and we will learn,” he said. “At times we have to address value and at times we have to address performance.”
Asked about the recent $1 billion acquisition of Dollar Shave Club by European rivalUnilever PLC—heralded as a way for Unilever to mine shopper data—Mr. Taylor notes that P&G already has troves of consumer data and insight at its disposal. Gillette’s market share has fallen 10% since Dollar Shave Club came on the scene though it still commands close to 60% of the U.S. market for men’s razors.
On a recent earnings call, finance chief Jon Moeller responded to a question about direct-to-consumer sales by noting the business is tiny. “How many people do you really know who want to satisfy their household shopping needs by going to 40 different websites for 40 different products?” P&G has experimented with direct-selling in the past, such as a subscription service for Tide Pods, but hasn’t made it a major initiative.
In his first year, Mr. Taylor has doubled down on cost-cutting, announcing in February a plan to eliminate an additional $10 billion over the next four years. The company has cut more than more than 20,000 jobs since 2012 and sold off more than $20 billion in brands, including Duracell and CoverGirl. Much of the new savings will come from an overhaul of the company’s North American and European supply chains. P&G has stemmed market share losses in China, which Mr. Taylor described as an “unacceptable” result of the company’s failure to stay atop of local trends.
Since he took over, P&G’s stock is up 13%. Still, Mr. Taylor acknowledges that P&G has stumbled. The company continued to expand into the recession and became stretched too thin, he said. Then it cut investment in R&D and brand building and tried to combat slow growth by raising prices, ceding market share along the way.
“We got out of balance and we’re trying to get back in balance,” he said. Key to getting back on track, Mr. Taylor said, is eliminating layers of bureaucracy that slow the process of creating new products.
Executives say they are seeing results. Take the company’s new environmentally friendly laundry soap, Tide Purclean. It was conceived and brought to market in nine months, while a new product at P&G typically takes two to three years to develop.
A big time saver was a new process in which leaders from different areas work concurrently. So instead of completing the chemistry of the product and handing off to the team that makes the bottles, those parts of the business work side by side.
At one point Mr. Taylor intervened to head off what could have turned into a long deliberation: determining the color of the bottle cap. The team worried a cap the color of Tide’s signature orange would distract from the environmental message. But they wanted to be sure the detergent was still recognizable to customers. Mr. Taylor told the team to go with orange.
Lori Hudson, a portfolio manager at Bahl & Gaynor in Cincinnati who has owned P&G shares, likes that Mr. Taylor admitted failures in China since P&G, “never seemed to be the type of company that admitted mistakes.”
“But he’s a lifer P&G person and that can be good or bad because things have changed so much in terms of what customers want,” Ms. Hudson said. “Is he a visionary? I don’t know.”
