Procter & Gamble, after its game-changer of a turnaround led by A. G. Lafley, seems to be drifting again. And, according to Christopher Steiner in FORBES, not in the right direction [key in "P&G" on FORBES.com.]
Steiner notes that Lafley has raised - yes, raised- prices. This is an era when private-label merchandise is eating brands's lunch, dinner and breakfast. He has also boosted the dividend. These moves are contrarian. There could be a shrewd strategy behind them. But many don't think so. As Steiner headlines his article, "The Tide Changes."
The professional-services industry in Manhattan might be called The House that corporations such as P&G built. Law, public relations, management consulting, accounting and more - these frequently received hefty monthly retainers, just to be available to advise the Fortune 500. These retainers could average about $60K per month. Then, add on special assignments.
This could all vanish if the tide continues to change. Already professional services in Manhattan has lost much of its swagger. Corporations have demanded discounts, pay for performance options and detailed itemization of what's being done. But not all of them, of course. There are been those still doing well.
That's what alarms P&G watchers. If this solid leader makes decisions which turn out to be bad, that could signal that the Fortune 500 still don't get it: The world of global business, driven by technology, is continually mutating. No one really understands what's occurring. That's exactly why major companies have eliminated quarterly earnings estimates.
The chatter among The New Barbarians, that is the Davids, is that the monolith BigProfessionalServices is vulnerable. It can go under in Manhattan and other major metro areas. Faster, value-priced, more innovative, the Davids could unleash a model which old-line professional services leaders wouldn't even be able to reverse-engineer and apply to their own bloated empires. An example of a David is virtual law firm Rimon. Its reach is already global.
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