How P&G’s CEO Turned Problems Into Possibilities
If a man will begin with certainties, he shall end in doubts, but if he begins with doubts, he shall end in certainties.
— Sir Francis Bacon, 1626
It is a careless author that does not check the rearview mirror. In our case, the five guiding principles sounded a wee bit familiar and it turns out they have a venerable heritage.
In our study of extraordinary lives, we discovered an ancient scientific decision-making method that was invented by Sir Francis Bacon in the 16th century. It led the Elizabethans to light up the English Renaissance and predicted the industrial revolution and modern science. When you take a selfie, you are benefitting from a long line of thinkers that began with Bacon and leads directly to Steve Jobs. It is how we figure out what to do next.
We updated his version, calling it the Five Personal Strategies of Extraordinary Lives.
Unless you are watching the BBC biopic, Wolf Hall, starring Damien Lewis as Henry VIII, you probably are not aware of the role of Lord Chancellor. Sir Thomas More played by Anton Lesser is the Lord Chancellor to Henry VII, who sentences him to death because of a conflict over who calls the shots, the king or the papacy.
More argued for the supremacy of the Pope over the King of England. This was illegal, according to the Oath of Supremacy, an Act of Parliament which in 1529 made it a crime to support any authority that would be considered superior to the King’s. More had other problems. He refused to sign a letter asking Pope Clement VII to annul Henry’s marriage to Catherine of Aragon. Then he refused to attend the coronation of Anne Boleyn as the Queen of England, and later refused to acknowledge “the spiritual validity of the king’s second marriage.” He was becoming a pain. While it did not constitute an Act of Treason, as he had written the King confirming Anne’s Queenship, his refusal to attend the Coronation was a rebuke.
More was arrested and imprisoned in the Tower of London where he refused to reconsider after being beseeched by Thomas Cromwell (played by Tom Rylance) and finally, convicted of treason at the trial which began on 1 July 1535. Unfortunately, his judges included Anne Boleyn’s father, brother, and uncle. Hence the verdict took less than fifteen minutes. His punishment was to be “hanged, drawn, and quartered (standard for traitors) which Henry commuted to execution by decapitation. Lucky for More, right? While kneeling, the executioner begged his pardon, More forgave him after giving him a kiss, his last.
What makes the story of Thomas More so compelling today is that we still grapple with the big decisions of right and wrong. While we no longer have a single person to advise the King, we can adopt a set of principles that will help us make better decisions.
The word “chancellor” comes from Old French (Latin cancellus) and refers to the lattice he worked behind. Think of a barred window in a railroad ticket office or an old post office. In the early days of the Roman Empire, the chancellor was like a notary who would permit dignitaries to enter the court. In grew in status, especially in England, where the term referred to the person who prepared the documents for the crown and keeper of the Royal Seal and was an intermediary between the courts, judges, and the Crown. Think of it as the U.S. Attorney General sits between the President and the Justice Department.
In the 16th century, Queen Elizabeth’s Chancellor was Sir Francis Bacon, the English philosopher. He was the highest-ranking of any of the Queen’s appointments, higher than the Prime Minister. As her most trusted servant, important petitions were sent to the Lord Chancellor. It soon developed into a tribunal (justice court) in which the “Chancery” was called upon to determine the fairness of a case (called “equity” courts) that might be too complex for common law. It is where the United States gets its Delaware Chancery court, the court of business that forgoes the jury system for a tribunal faculty.
Bacon Well Done
Truth is the daughter of time, not of authority.
— Francis Bacon
Sir Francis Bacon was a scientist and philosopher in addition to his royal duties. He had trouble with the scientific orthodoxy and chose a different method to make decisions, which today we call the scientific method. Bacon’s point was that a scientific argument should rest on the findings of observation of events, not religion or traditional belief. The method he employed was skepticism until proof was found. By this approach, scientists would avoid misleading themselves. Bacon the father of the scientific method.
- State The Problem
- Form a Hypothesis
- Test the Hypothesis
- Analyze Results
- Form a conclusion
P&G Turned Bacon’s Method Into Strategy
“When we are too critical, it restricts creative thinking, and we neglect less obvious but brilliant ideas.” — A.G. Lafley
AG Lafley, the former CEO of Procter and Gamble, realized no one has a monopoly on success. But if he could find a way to help his teams come up with the right ideas, it could light up a new era. His case study is an example of the old scientific method, or our modern version, the Five Guiding Principles, are used in a modern context to help decision-making.
Lafley’s objective was to action was to “incubate” untested ideas to the point that problem solvers could take a whack at fixing them.” This is right out of Apple’s mantra, “adios the critics,” which suggests that those who knock a product can only help in the final stages. Creative people must look at solutions in an open-minded setting first.
Oil for Old Ladies
As P&G’s Lafley pondered the problem of what led superior teams to make inferior decisions, it was clear this wasn’t just an academic question. He needed to come up with a radical shift in the way the company was dealing with a major category. Skincare was the fastest-growing segment of the beauty business, and P&G’s only entrant was an aging product called Oil of Olay. It competed with Nivea, L’Oreal, and Clinique, and all anyone needed to know was that the market snidely referred to it as “oil for old ladies.”
Lafley decided to look at all the factors that contributed to the success of teams at P&G. He started by asking if it was the people or the process that made the difference? The answer turned out quite differently from what he expected.
Imagination vs. Intelligence
The conclusion became clear, that failed teams came to decisions when they should have been exploring more possibilities. What this meant was that a creative process designed to generate ideas could not stand up to scrutiny in the early going. What was lacking wasn’t intelligence; it was imagination.
“When we are too critical, it restricts creative thinking, and we neglect less obvious but brilliant ideas.”
— A.G. Lafley, CEO P&G
How Teams Fail
Lafley knew that when strategy teams debate, it can be “difficult and even acrimonious.” He had participated in umpteen of these sessions where decision-makers typically review thick binders while everyone’s eyes glaze over. He believed that this type of meeting ends up as “negotiations between powerful executives with strong preconceptions.” And afterward, skeptics undermine the decision.
To come up with the right strategy, Lafley had to fix the group dynamics. He understood from his experience as a product manager for Ivory Snow that all teams suffer from bias, regardless of how astute or experienced. Finding them was the logical way to proceed.
Framing The Possibilities
Lafley started with a given — the goal of a team is to generate the best strategic ideas.
First, the team had to start with a “wide range of possibilities” from the conventional to the outrageous. This implied that some ideas would be impractical, some crazy, some that were tried but failed before, as in the case of Apple’s Smartwatch. The team had to learn to “incubate” untested ideas until the problem solvers could take a whack at fixing them. This meant resisting the instinct to identify finalists too early. Once they got past that stage, real winners were separated from those that sounded like winners through objective evaluation. The final choice defined itself. It was going to be a big undertaking.
That’s when Lafley realized he needed new ground rules, and developed the steps below for generating big ideas.
The Ground Rules
- Define your challenge/goal
- Identify possibilities
- Define ‘conditions’ required for success
- Convert into choices and subject to testing, debate, and refine, and evaluate
- Conclude with a Probability
- The possibilities stage is open-ended with ideas accepted uncritically and subject to testing at a later stage. The team should form a consensus around ideas worth keeping, and it should be a broad list, with some that make people uncomfortable.
- The team should review a list of conditions required for success and test it against each idea before it decides to include it on a final list.
- After arriving at a final set of possibilities that meet critical conditions, if there is still a skeptic, that person should take the lead in applying the right test for that possibility. The risk, of course, is that a skeptic might set an unachievable standard. In practice, this does not happen because people usually demonstrate skepticism because they don’t feel heard.
- Limit team size but not diversity. Lafley defines this rule as including people with different backgrounds and who worked for interesting, even strange companies, as well as operational people who deepen practical solutions, and people from outside the firm’s culture. Be sure to have individuals across generations who have the outspokenness of the novice and the status quo of the experienced hand.
- The final test of a good debate was an outcome that intrigues the group enough to make it question the existing order and one idea that stretches the group’s comfort level. If neither condition is met, it is time for another round of possibility generation.
- Finally, choose a respected inside problem solver or an outside expert as team facilitator.
The idea generation process at P&G created a team of brand champions, not challengers, at the idea generation stage. Lafley wrote about this experience in his book Playing To Win: How Strategy Really Works. He makes clear that the real problem with teams is when they reject novel ideas before we have an honest debate. It is often those crazy, out-of-the-box ideas that lead to the right solution.
Ground Rules of Debate
Strategy debate should be a “slow brain” process like a stew. Get people out of the company location and into stimulating, relaxed environments with breaks for walks and talks between sessions. Plan on meeting over subsequent weeks because the in-between periods distill the best ideas into solid concepts.
1. Accept all possibilities without debate.
2. Some ideas will make people uncomfortable.
3. No one dominates, especially the idea proposer.
4. Conditions pass the “must-have” test.
5. Ask questions, not demand explanations.
6. Consensus moves the debate forward (does not limit)
7. Truth is about discovery, not opinion.
8. No bosses — teams run the show.
P&G chose to stick with Olay among the many more expensive possibilities. It came down to reframing the product around a new market type and pricing it accordingly, about twice as high as previously. The brand that had been dismissed as “Oil for Old Ladies” was transformed into a prestige-like product that surpassed $2.5 billion in annual sales and commanded prices eventually exceeding $50.
“When the facts change, I change my mind. What do you do?” — John Maynard Keynes
When Keynes uttered these words, he wasn’t giving us a method by which to get out of a losing argument, he was telling us to be reasonable. His meaning was that if the facts change on which your assumption is based, the assumption must change. It is a recipe for clear thinking.
Keynes’ statement reflects The Reasonable Man Theory (which we can reasonably change to “reasonable men and women”). It is the body of logic on which all English law rests, “the Laws place great weight on the Reasonable Man. They will not specify exactly what ought to be done in all circumstances, and will phrase their demands in terms of what a reasonable man would do.”
A reasonable man in 1776 would have given colonists more freedom, but the British abandoned reasonable thinking momentarily. They have since recovered and empirical evidence proves they have a more than firm grasp of the subject. After all, the British people revolted against tyranny when they forced King John in 1215 to sign the Magna Carta. When Charles Ist confused religious devotion to love of the people, he lost his heart and subsequently his head. Through thick and thin, the British have reasonably rejected unreasonableness by reducing the power of the monarchy, but keeping maintained the Crown Jewels intact for the day King George VII is coronated.