A G Lafley will be more proctor than gamble. Bringing back the former P&G chief executive doesn't guarantee the Pampers-to-Scope giant can reclaim its former glory. After all, his last decision - choosing the person to follow him in the job - didn't turn out so well. But unlike the turnaround facing J C Penney's returning ex-CEO, Lafley's task is somewhat simpler: oversee cost cuts and brand building.
Procter & Gamble's failure to live up to the expectations of shareholders is partly the fault of Robert McDonald, Lafley's hand-picked successor four years ago. Profit warnings became too common. Worse, P&G's renowned efficiency has suffered. Maybe the brevity of the call the $224 billion company hosted on Friday for its abrupt management change - all of four minutes, with no questions entertained - is a sign of more fine-tuned operational functioning to come.
Its sheer scale - some $85 billion of sales this year - and globally recognised brands mean profitability should easily exceed that of rivals. It doesn't, though. Colgate-Palmolive's operating margin was almost seven percentage points higher last year. Not surprisingly, Colgate's stock also performed better during McDonald's stewardship.
Existing plans to slash $10 billion of costs will help. Lafley should be able to find more, however, if the company's slack margins are anything to go by. Moreover, Lafley earned a reputation during his near decade-long tenure of finding ways to turn small brands, such as Febreze, into bigger ones. Repeating the feat with a couple more products on P&G's ample shelves would go a long way to mollifying antsy shareholders.
Neither duty should be a stretch for Lafley, in stark comparison to the endeavor confronting another major investment of activist hedge fund manager William Ackman. Myron "Mike" Ullman recently returned to J C Penney after a failed experiment with Apple's retailing guru Ron Johnson at the helm. There, a full makeover is needed to recover from a precipitous decline in sales and weakened balance sheet.
Ultimately, both returning CEOs will need to lay fresh groundwork for their replacements a second time. From that vantage point, Lafley and Procter & Gamble look like the safer bet.
