Fine fragrances, however, were important to hang on to, for two strategic reasons. First, a fine-fragrance presence was an important component of a credible and competitive beauty business. P&G wanted to be a beauty leader, on the strength of hair care (Pantene, Head & Shoulders) and skin care (Olay). But to be truly credible with the industry and consumers as a beauty player, the company needed a position in cosmetics and fragrances as well. The knowledge transfer between the different categories is significant, meaning that what you learn in cosmetics and fragrances—through both product R&D and consumer research—has a lot of spillover into hair care and skin care, and vice versa. In other words, just being in the fragrance business makes you better in beauty categories overall.

Lafley refocused the company of its top ten brands, the bestsellers that each generated over $1 billion in sales combined to make up more than half of P&G’s total revenues. “It’s a basic strategy that worked for me in the navy,” said Lafley, who, as a supply officer, ran a department store for servicemen. “I learned that even when you’ve got a complex business, there’s a core, and the core is what generates most of the cash, most of the profits. The trick was to find the few things that were really going to sell, and to sell as many of them as you could.

The Corporation in the 21st Century- John Kay

PART 1: The Background

1: Love the Product, Hate the Producer

“Some of these billionaire executives are no superstars: individuals such as Philip Green, who extracted nine-figure sums from retailer BHS before selling the company to multiple bankrupt Dominic Chappell for £1, Mike Ashley, the domineering boss of the retailer Sports Direct, and Eddie Lampert, who inflicted similar destruction on Sears, for a century America’s leading store chain. The lifestyle of these executives contrasts with the fate of their businesses. The 90-metre yachts of Green and Lampert make good newspaper pictures. Green’s is moored in the harbour of the tax haven of Monaco, where he is resident, while Lampert’s is named Fountainhead, after Ayn Rand’s turgid paean to individualism.

The Fortune 500 list did not include retailers. If companies had been ranked by sales, the list would have then been led by America’s three great shopping giants: Sears Roebuck, Montgomery Ward and JCPenney. Their fate was one of steady decline. In 2000, Montgomery Ward filed for bankruptcy. In 2019 Sears did the same and in 2020 JCPenney followed suit. The disappointing fortunes of these businesses are not the result of being in declining industries. Global demand for automobiles, food, oil, steel, chemical products and particularly electrical goods has continued to grow. Consumers still shop. But none of these 1955 companies is today the dominant firm in its industry. Cars are Toyota and Volkswagen; food is Nestlé; steel is ArcelorMittal, which took over much of the excess capacity located in the former Soviet Empire. Germany’s BASF is the world’s leading chemical company. And electricals – well, it depends on what you mean by electricals but, whoever you regard as market leader, it isn’t GE. Within America, cars are still General Motors – unless you look at market capitalisation and hence to Tesla. But food is PepsiCo and Tyson, steel is Nucor and Pfizer leads in chemicals. Retail is Walmart – and Amazon. Only ExxonMobil and some of the DuPont and GE subsidiaries remain among the global leaders in their fields.

23: The Finance Curse

“But between 1981, when Welch took control at GE, and 2005, when Lampert took control of Sears, a new approach to business developed. Managers like Sir Denys Henderson and Simon Marks, Alfred Sloan and Owen Young, had seen themselves as public figures with associated responsibilities to a wide range of constituencies. The generation that succeeded them had a narrower conception of their role. A successor generation of corporate executives paid close attention to quarterly reporting and the stock price.