The Most Successful Decision Of A.G. Lafley’s Career

P&G former CEO A.G. Lafley, attributes the most successful decision of his career to a qualitative judgment:

In 1990, as the general manager of laundry products, he had to decide whether to move to compact detergents, which were transforming the market in Japan. The new format would cut P&G’s production, packaging, and transportation costs as well as retailers’ shelf-space and warehouse needs, all while maintaining revenues. Unfortunately, analysis of consumer surveys suggested that only a small percentage of customers preferred the new format. But, Lafley decided to dive into the voluntary comments that some of the consumers added to their quantitative research forms. The voluntaries were not statistically significant and ordinarily carried little weight in P&G’s deliberations. But to those who knew how to read them, they afforded a much deeper insight into consumers’ sentiments than quantitative answers allowed. After reading comments from hundreds of consumers, he found that although only a few expressed a desire for compact detergents, the rest were indifferent–not negative. Lafley totted up the data points: Retailers saw compact detergent as a big win, and so did P&G manufacturing. Consumers were neutral at worse. So despite the lack of conclusive consumer evidence, Lafley decide to go for converting all powdered detergents to compact.

It required an investment of $250 million, the biggest single investment Lafley had ever advocated. And, it eventually turned out to be a big win for P&G!