How P&G Uses The Possibilities Method To Solve Big Problems

AG Lafley of Procter and Gamble reached back 500 years to reinvent strategy development. He discovered a method that can help us make better decisions in all walks of life.

“When we are too critical, it restricts creative thinking, and we neglect less obvious but brilliant ideas.” — A.G. Lafley

P&G’s Problem

The job of a product manager is to keep shelves stocked, but when it came to skincare, P&G’s products were nowhere.

Sir Francis Bacon, founder of the Scientific Method

Strategy Teams

AG Lafley (former CEO P&G)
  1. Diversity: Oddballs to oracles. Include people who worked in unusual environments, and mix them with operational types, a poet or two, and people from outside the firm’s culture. And yes, diversity in race and cultural demographics matters.
  2. Expertise: Gray hairs and nose rings. The outspokenness of the novice can be as helpful as the skepticism of the experienced hand. Cut across generations. A team of experts age 40 or younger is a blueprint for an echo-chamber.
  3. Leader: Bosslessness. Choose a respected problem solver or an expert outsider as a leader, but never the team’s boss.

Debate Ground Rules

  1. Some ideas will make people uncomfortable.
  2. No one dominates, especially the idea proposer.
  3. Conditions pass the “must-have” test.
  4. Ask questions, not demand explanations.
  5. Consensus moves the debate forward (does not limit)
  6. Truth is about discovery, not opinion.
  7. No bosses — teams run the show.

Five Steps to Strategy Making

There were five steps in P&G’s strategy, just as Bacon proposed, and Lafley changed the terminology to reflect a modern view: establish possibilities, frame conditions, test conditions, analyze results, and the final choice.

1. Identify Challenge

Lafley said teams often substitute a motto like “go global,” “be number one” and think that is strategy. It is not. What he was looking for were strategic possibilities.

2. List Possibilities

The possibilities framing stage requires uncritical acceptance of ideas.

  1. Reinvent Olay as a prestige brand that would appeal more broadly to younger women (age 35 to 50) but sell in the traditional mass channels.
  2. Replace with P&G’s successful cosmetics brand, Cover Girl, and build a global brand on that platform.
  3. Transform Oil of Olay into an upscale brand and competitor of L’Oréal, Clarins, and La Prairie and take it into the prestige distribution channel like department stores.
  4. Maintain Olay as an entry-priced, mass-market brand, and strengthen its appeal to its current older women demo by leveraging R&D capabilities to improve its wrinkle-reduction performance.

3. Set Conditions

The team should review a list of market conditions required for success and test each before deciding on a final list of possibilities. The way to think about it is to ask what will make each one work. If you are going upmarket, you need an affluent audience. You aren’t questioning the logic (that comes later).

  1. P&G could produce the product at a lower price than competitors.
  2. Competitors could not easily copy the strategy.

4. Evaluate and Analyze

Evaluations should be by outside experts or internal people who do not play a role in the strategy debate. If testing is accurate, the results are final.

  1. At $15.99, purchase intent dropped. The price point was in no-man’s land — expensive without signaling differentiation, and for a prestige shopper, not fancy enough.
  2. At $18.99, the team learned that consumers were crossing over from prestige department and specialty stores to buy Olay in discount, drug, and grocery stores. That price point sent precisely the right message.

5. Choose Probability

CODA

Although most people believe P&G creates strategy in its sleep, the company goes out of its way to show when it is asleep. According to P.R. Week, a display at P&G headquarters called a “wall of failure” is a veritable timeline of products that bombed. It includes a porky like Febreze Scentstories, the air freshener that looked like a CD player. When the brand team decided to have Shania Twain sing in the commercial, it only added to the confusion.

Professor of Leadership. Extraordinary Lives Project. Author “Be Somebody” (2021); 2019 Telly Award IconicVoices.tv; ex-publisher Forbes

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