Succession is really, really tough. It’s a decision about a person, and, in the estimation of Peter Drucker, “at most one-third” of people decisions turn out well. That’s why Procter & Gamble seems to be going for a redo.
Former Chief Executive A.G. Lafley (who himself was close with Drucker and—full disclosure—has been a friend and donor to the Drucker Institute) is retaking command, relieving current CEO Robert McDonald, who said last week that he was stepping down.
McDonald, who had taken the helm when Lafley retired in 2009, had presided over sluggish performance and, according to The Wall Street Journal, “dissent with Mr. McDonald’s leadership was bubbling up through management’s senior ranks, with some executives reaching out to board members asking for a change.” Since Lafley is not expected to stay for terribly long, he has already, according to the Journal, been charged with “running a process to find a successor.”
Drucker had a number of rules for picking people, and Lafley and P&G seem to have followed all of them in choosing McDonald several years ago. McDonald was well known, high-performing and familiar with P&G and the job requirements. In fact, as successions go, P&G’s was extraordinary for its smoothness.
Lafley himself wrote about the exemplary process, under which he and the company had developed a deep bench that yielded numerous strong CEO candidates.
But Drucker noted that even when all proper steps are taken, some people decisions still don’t work out. “We do not know how to test or predict whether a person’s temperament will suit a new environment,” Drucker wrote in The Frontiers of Management. “We can find this out only by experience.”
So it’s not surprising that P&G has returned to Lafley. For one thing, he’s a proven leader with a remarkable track record. For another, as the Journal reported, it’s the view of the board that “none of the company’s internal candidates were ready for the top job,” given a recent exodus of talent under McDonald.
The strategy, then, seems quite clear: Give Lafley the room he needs to refill the CEO pipeline. “The key to greatness,” Drucker asserted, “is to look for people’s potential and spend time developing it.”
Do you think P&G made the right move in hiring back A.G. Lafley?