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A. G. Lafley joined Procter & Gamble (P&G) in 1977 asbrand assistant for Joy dishwashing liquid. From this beginning, heworked his way through the firm’s laun- dry division, becominghighly visible due to a number of successes including the launchingof liquid Tide. A string of continuing accomplishments throughoutthe firm resulted in Lafley’s appointment as P&G’s CEO in June2000, a post he held until retiring in mid-2009. Bob McDonald, whojoined P&G in 1980, was Lafley’s handpicked successor. McDonaldtook the top position at P&G in July 2009, but resigned underpressure in May 2013. Lafley, revered by many, was asked to comeout of retirement and return to P&G as president, CEO, andchair of the board of directors. Lafley said that when contacted toreturn to P&G, he agreed immediately to do so, committing toremain “as long as needed to improve the company’s performance.”However, speculation is that Lafley likely would not remain beyondthree years. What went wrong for McDonald, a long-time P&Gemployee who seemed to know the firm well and who received Lafley’ssupport? Not surprisingly, a number of possibilities have beenmentioned in response to this question. Some concluded that, underMcDonald’s lead- ership, P&G suffered from “poor executionglobally,” an outcome created in part by P&G’s seeminglyineffective responses to aggressive competition in emerging mar-kets. Other apparent problems were a failure to control the firm’scosts and employees’ loss of confidence in McDonald’s leadership.Still others argued that McDonald did not fully understand theeffects on U.S. consumers of the recession in place when he tookover, and that, during that time period, P&G “was selling BMWswhen cash- tight consumers were looking for Kias.” The net resultof these types of problems included P&G “losing a step torivals like Unilever.” In turn, this caused investors to becomefrustrated by “P&G’s inability to consistently keep up with itsrivals’ sales growth and share price gains.” But why bring Lafleyback? In a few words, because of his previous success. Among otherachievements during his first stint as P&G’s main strategicleader were building up the firm’s beauty business, acquiringGillette, expanding the firm’s presence in emerging markets, andlaunching hit products such as Swiffer and Febreze. An overallmeasure of P&G’s success during Lafley’s initial tenure as CEOis the fact that the firm’s shares increased 63 percent in valuewhile the S&P fell 37 percent in value. Thus, multiplestakeholders, includ- ing investors and employees, may believe thatLafley can return the firm to the “glory days” it experienced from2000 to 2009. Product innovations are a core concern and an areareceiving a significant amount of attention. Analysts suggest thatP&G needs to move beyond incremental innovations, seeking toagain create entirely new prod- uct categories as it did withSwiffer and Febreze. This will be challenging, at least in theshort run, given recent declines in allocations to the firm’sresearch and devel- opment programs. These reductions have resultedin Case Discussion Questions 1. What makes a CEO’s job so complex?Use the mini-case to pro- vide examples that help support youranswer. 2. Is it a good practice to rehire a former CEO who hasretired? Please explain the potential advantages and disadvantagesof doing so. a product pipeline focused mainly on “reformulatingrather than inventing.” Additionally, efforts are underway tocontinue McDonald’s strong, recent commitments to reduce the firm’s“bloated” cost structure and reenergize the competitive actions itwill take in global markets. Restructuring P&G’s multiplebrands and products into four sectors, each of which will be headedby a pres- ident, is a major change Lafley is initiating.Currently, the firm has two global business divisions—beauty andgrooming and household care. Final decisions about the precisecompositions of the four sectors were not announced by mid-2013.Speculation, though, was that each sector would be formed “toreflect synergies between various businesses.” For example, oneexpec- tation was that paper-based products such as “Bounty papertowels, Charmin toilet paper, Pampers diapers and Always femininecare products” would be combined to form a sector. Moreover,Lafley’s replacement was expected to be selected from among thefour presidents who would be chosen to lead the new sectors.

Question:

What makes a CEO’s job so complex? Provideexamples.