P&G Has No Hit-Product Mentality: It's a German Army, Not a Guerrilla Force
P&G doesn't rely on creativity or hit products. Instead, every 30 to 40 years, across a major cycle, it uses brand management plus category management to twist user research, supply chain, and brands into one rope.
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P&G has only two principles, and the second is up or out
P&G has just two principles: Promotion From Within, only promoting from inside; Up Or Out, leave if you don't get promoted. On day one, new hires are told, you are a class, and if you don't get promoted twice a year, you know it's time to go. No one will say Congratulations. That cohort included people from Harvard Business School, a Navy captain, Northwestern's business school, and Cornell, but only one or two of you will survive. The elimination cycle is 6 to 12 months. Aile says today's talk of 996 or 007 is just about hours; P&G's hours aren't as long, but the competition is unbelievable. Those who were eliminated are all doing very well today; some went to Johnson & Johnson to run the Olympic team, managing tens of billions of dollars.
— AileHe beat everyone by going to focus groups every week
Aile made brand manager in two and a half years, when the average was five. His method wasn't knowing American culture better—he didn't understand baseball or football—but knowing users better than anyone. P&G ran focus groups across the US every week, and the schedule was posted on the internal community, but few brand people actually went. He applied to go every week, running nonstop for half a year, sitting behind soundproof glass watching Midwestern housewives buy snacks, watching their tone and speech when they were at a loss, impatient, or genuinely pleased. After six months, he had basically become the user; on any question, his answer matched the users'. He says this is the same as ‘go out, the answers are all in the field’.
— AileP&G was built by German immigrants on the Ohio River
Proctor and Gamble were two German families who moved from the Rhine to America. When they reached the Ohio River, it felt like home, so they stopped heading west and settled in Cincinnati. They had made industrial goods in Germany, were asked to make gunpowder during the war, and after the war discovered that compressing the powder could make soap, giving rise to their first hit product, Ivory Soap. The lesson of Ivory Soap: purity is hard to express, but ‘pure means light’—it floats on water. Lightness must be demoed. Aile says P&G inherited the German spirit of striving for perfection, so the company is a bit clumsy, but it endures.
— AileWhen attacked, first tell if it's a shell or a barrage
P&G has a theory: when attacked, you must distinguish whether it's a shell that can destroy you or a barrage that you can survive by hiding in your fortifications—Germans are especially good at building fortifications. Aile uses this framework to look at Anta's acquisition of Maya Active: that company was founded in 2016, reached 100 to 300 million in the first four years, then did poorly for four years, and the founder probably didn't want to keep going. Anta said, I won't retrace your old path, and directly acquired it; on the day of the acquisition, the stock rose 12%. From the longer cycle of a big company, being attacked once is nothing; it wants a certain segment of your doing well or poorly, a good time for it to enter. P&G has gone through five or six major risks in 190 years, basically one every 30 to 40 years.
— AileP&G is not a flexible force, it's a German army
P&G doesn't have much hit-product thinking; the products it sells are not very stunning, but when a housewife sits down and does the math, she finds it still has the best value for money. It's not good at capturing users' fleeting moods, not great at incredible packaging, not great at playing with channels and traffic. You can't see it as a flexible force; it's a German army. It comes with 1,000 tanks and 100 planes, overwhelming. You are a guerrilla; you might win the first battle, but it wins the second, it wins the third, and you can't survive. It wins on overall cost—production cost, channel cost, marketing cost bundled together, others can't beat it; and it runs saturation attacks like bidding for CCTV prime time all day long, with twenty or thirty brands constantly bombing.
— AileBrand, supply chain, and R&D teams mix, but brand is heard
P&G places great importance on the combined capability of brand, supply chain, and R&D. When Aile was a brand manager, he had to spend several days at the factory every month—not to learn, but to adjust the supply chain from the brand's perspective. He gives the example of potato chips: chip flavor comes from frying, but Pringles are pressed and then powdered, so powder falls off and the taste is uneven—one bite salty, one bite tasteless. So the R&D team, brand team, and supply chain team mixed together for three days. Among these three, brand is generally heard, because P&G believes that in the end, only brand power remains in any business; product power, channel power, and service power exist, but none can form lasting power.
— AileBrand managers are the axle, in their twenties managing people with twenty years' seniority
P&G's structure is built around brands. Brand managers and assistant brand managers are the axle of the wheel; sales and R&D are the spokes beside them. In a room full of people, Chinese will always look at the oldest, but P&G will always look at the youngest, because he is very likely the brand lead. Brand managers manage indirectly; the supply chain head may have been there over 20 years and earn more, but on projects he reports to the brand manager. What if he doesn't accept it? If he doesn't accept it, he can't survive and leaves. Aile says the brand manager's confidence comes from listening to users and speaking with data. A 20-year supply chain veteran has seen countless assistant brand managers and knows they don't last long either, but the really good ones will one day be his boss.
— AilePringles and feminine pads are the same technology
P&G's R&D platform has a counterintuitive grafting ability: the technology for Pringles and the technology for feminine pads are the same. The people making pads said, if you press potato powder like this, doesn't it become a saddle shape, and a saddle shape won't break in a can. So P&G built a new factory in the potato-growing region of the US. Aile says, when you buy a can of Pringles and take one out, it really is a feminine pad, but we won't publicize that fact. Another example is high-end cosmetics: P&G found that high-end brands don't manage sales well, so it became the operator for 99% of the world's high-end luxury skincare brands, like Marriott managing hotels—the brand licenses to you, I manage the staff, you pay the salaries, I decide his salary.
— AileIn their own words · checked verbatim
Anyone can fake it, but you can't fake it 10 or 12 times. So we look at your credibility in the middle of your answers. This is about character.
任何人都可以伪装 但你不可能伪装10次和12次 所以我们要看你在回答中间的可信度 这是看人品的
Aile9:04
He said you can read anything, just don't read the market, because all the outside market methods and P&G's methods are not necessarily consistent. We need to write you on a blank sheet of paper.
他说你可以阅读任何的东西 就别阅读市场 因为所有外面的市场的方法和保洁的方法都不一定一致 我们是需要在一张白纸上来书写你
Aile14:05
I think there's a lot of politics because the fighting isn't fierce enough, people die too slowly. In battle, you rarely see warlordism.
我觉得政治多是因为战斗不够激烈 人死的慢了 战斗中你看很少有什么山头主义
Aile38:16
You can't see it as a flexible force. It's a German army. It comes with 1,000 tanks, 100 planes, and just rolls in. If we are guerrillas, we might win the first battle, but it wins the second, it wins the third, and we can't survive.
你不能把它看成 是一个灵活的部队 它是德国的军团 过来就是1000辆坦克 100架飞机 反正就哺里哺里就来了 我方是游击队的话 第一场仗估计咱们赢 但第二场仗他就赢 第三场仗他就赢 我们就活不下去
Aile44:20
I don't think P&G is a very entrepreneurial company. I think entrepreneurship isn't its foundation. I think its true ability is a deep, clumsy, long-term understanding of your customers, your users, your production, your supply chain.
我不认为宝洁是个很有创业的公司 我觉得创业不是他的基 我觉得深深的笨笨的 长期的理解着你的客户 你的用户 你的生产 你的供应链 是他的真正的能力
Aile47:50
He looks at the big cycle. What, you still have to look at three months' results? He doesn't. He looks at the big cycle. Its market cap is over 300 billion US dollars. Right, the market cap hovers between 300 and 400 billion. Alibaba was once 500 or 600 billion, but now Alibaba has only a little over 100 billion left.
他看大周期 咋了还不得看三个月的结果 他不 他看大周期 他的市值是3000多亿美金 对 市值就是在3000到4000亿美金上晃悠 人家阿里曾经是50006000亿 但是阿里现在只剩1000多一点了
Aile1:22:44
Figures
| P&G China alumni network size | 6,000 to 7,000 graduates | 11:04 |
| Time for Aile to become brand manager | two and a half years (average was five at the time) | 18:06 |
| P&G founding year | the 17th year of the Daoguang reign (1837) | 32:10 |
| P&G chairmen and CEOs to date | 12 | 32:10 |
| Peak number of P&G brands | over 600 | 1:10:37 |
| Number of P&G brands in North America | over 300 | 1:10:37 |
| P&G global employees (when Aile was there) | 30,000 to 40,000 | 1:12:38 |
| P&G China management trainee salary at the time | 6,000 yuan or however many thousand yuan | 1:27:48 |
Glossary
- Promotion From Within
- One of P&G's two principles: all executives are promoted from within, step by step.
- Up Or Out
- One of P&G's two principles: if you are not promoted twice a year, you leave on your own.
- Brand House
- P&G's framework for defining user personas; the bottom layer is who the user is.
- OGSM
- A one-page tool for objectives, strategies, and measures; each person's projects do not overlap.
- Category Management
- Above brand management, using multiple brands to occupy the entire category shelf.
- Soap Opera
- A name P&G created to sell soap, referring to serial dramas watched by housewives.
How to listen
Founders and investors in consumer goods, brands, or channels, especially those who want to understand P&G's methodology, multi-brand playbook, and Chinese consumer going global.
After 1:26:46, the discussion of P&G globalization and Chinese consumer VC opportunities has low information density.