What only the CEO can do

HBR, May 09
The current issue of the Harvard Business Review contains a rare piece of commentary from a serving chief executive, Procter & Gamble’s AG Lafley. His article is called “What only the CEO can do”. It contains a run-down of the key tasks and responsibilities that fall to the organisation’s most senior manager.
Mr Lafley should be congratulated for sticking his head above the parapet and engaging in debate. Not enough CEOs do this. But then, not too many of them would be able to marshal an argument in such an interesting way.

Luckily I was able to follow up with “AG” on the phone last week. It turns out that in writing this piece P&G’s boss was repaying a long-standing debt to the late Peter Drucker. “I went to see him two or three times a year towards the end of his life,” Mr Lafley explained. “I committed to turning his notes into something.” After nine years in the CEO’s chair, he feels able to answer the question that Drucker used to put to him: what is the work of the CEO?

The central task, Mr Lafley argues, is to link the outside world with what is going on inside the corporation. This involves four main challenges. First, making sure that the voice of the consumer is heard loudest and clearest of all, above that of any other stakeholder. Second, deciding what business you are in – and equally, what businesses you should not be in. “People don’t volunteer to exit a business,” Mr Lafley told me. “That’s one of my jobs: to weed the garden.”

Third, balancing the need for performance in the short term with the need to invest for the longer term – “we err on the side of investing in the long term,” Mr Lafley said, “in fact we’re more like a Japanese company than a western one in that regard.” And fourth, the CEO has to shape values and standards. The values have to be connected to the realities of the outside world. “At P&G we’re purpose driven and values led,” Mr Lafley writes in his HBR article.

Only the CEO can achieve these tasks, he argues. This is what leadership means. Setting an example (Mr Lafley spends hours with customers all over the world on “in-home” visits). And never forgetting that you are being watched closely by all your colleagues.

“Employees are watching you even when you think you can’t be seen,” Mr Lafley says. The hugely successful turnaround of the Cincinnati-based giant since Mr Lafley’s arrival in 2000 would suggest that this is one CEO well worth watching.
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