John Smale, who transformed Procter & Gamble, and then went on to turn around General Motors, died Saturday at the age of 84.
As chief executive of Procter & Gamble through the 1980s, Smale navigated the consumer products giant through a recession, initiated major acquisitions, expanded P&G's international footprint and restructured the company to make it more responsive to competitors and customers.
He was an unassuming but driven corporate chieftain who doubled sales and profits at P&G during his leadership. After he retired from P&G, Smale turned his attention to an even bigger corporate behemoth – General Motors – where he shook up a staid management culture and restored what was then the world's largest company to profitability.
Born in the small town of Listowel, Ontario, in 1927, Smale enrolled at Miami University in Oxford, Ohio, in January 1945, following his twin sister. He was social chairman of the Phi Delts, and partly financed his education by researching and writing two "how-to" books he sold to fraternities and sororities around the country: "Party 'Em Up," and its sequel, "Party 'Em Up Some More."
He got interested in marketing through a professor who also ran a business that employed Smale part-time. One of his work assignments was to gather petitions to help Cincinnati's NuMaid Margarine change an archaic law prohibiting margarine from being yellow.
"That's when I decided that's what I wanted to do," he told Miami's alumni magazine in 2009. "I wanted to get into marketing."
After graduating in 1949, Smale joined the Vick Chemical Co., selling products in 22 states from a 1949 Ford. Years later under Smale, P&G would purchase its successor company, Richardson-Vicks, a blockbuster acquisition that brought several top-selling brands into the P&G portfolio.
Passing through Chicago one day, Smale saw a newspaper ad from P&G seeking brand managers. "As soon as I got to Cincinnati, I was working until 11 every night," Smale said in an April 2011 interview with The Cincinnati Enquirer.
He made his name at P&G early on, working on what was then a new and promising brand: Crest toothpaste. Smale was convinced that earning a third-party endorsement of Crest and its new-to-the-market cavity-fighting fluoristan would boost Crest's sales. He courted the American Dental Association persistently, visiting its Chicago offices monthly to win over the dentists and negotiate the terms of an endorsement. It became the first agreement of its kind in the industry, a model for other P&G marketing agreements to follow, and is credited with pushing Crest to the head of the toothpaste pack.
Smale rose through the ranks at P&G: vice president of the toilet goods division, vice president of the detergent division, executive vice president, and in 1974, president, overseeing P&G's entire U.S. operation. In 1981, he was named chief executive, taking over the top spot when P&G faced a variety of threats to its growth. Chief among them was a double-dip recession in 1981 and 1982 that was, at the time, the worst since the '30s.
Lower-cost competitors were grabbing market share away from key brands such as Pampers, Crest and Tide. The rise of mega-retailers such as Wal-Mart meant power was shifting away from manufacturers such as P&G to the merchants.
Smale's plan to re-energize growth was to cut costs, speed the pace of introducing new products and make big acquisitions. He cut about 10 percent of the salaried workforce in the early '80s, and in 1986 embarked on a major reorganization, structuring the company around big product categories, such as oral care products and laundry detergent, rather than the specific brands.
It was considered a major change in P&G's organization, pushing decision making down the chain and improving efficiency.
"We started the brand management structure in the '20s – and it worked," Smale said. "But our customers were changing."
New twists on old products accelerated during Smale's tenure. Innovations such as liquid Tide, Ultra Pampers and tartar control Crest jump-started sales.
Smale's most enduring P&G legacy was the major acquisitions he made that provided some of its best known billion-dollar brands. In 1982, P&G bought Norwich Eaton, getting the company into the pharmaceuticals business in a big way and giving it well-known over-the-counter brands such as Pepto Bismol and Chloraseptic.
Its push into health care was expanded in 1985 with the purchase of G.D. Searle, maker of Metamucil, and then the blockbuster acquisition of Richardson-Vicks. That deal, worth $1.2 billion, was then the biggest in P&G's history and brought it well-known brands such as Vicks, Olay, Pantene and Vidal Sassoon. Just as importantly, it immediately expanded P&G's presence in many overseas countries, including several in Asia.
Smale topped that purchase in 1989 with a $1.3 billion deal to acquire Noxell Co. that brought the Noxzema and Cover Girl brands into the P&G portfolio and signaled a major foray into the beauty care arena.
Not everything Smale touched turned to gold. P&G's venture into soft drinks never paid the dividends it expected. Likewise, its 1981 purchase of an orange juice business was a disappointment. And on Smale's watch in 1985, P&G experienced its first drop in profits in more than 30 years.
But by the late '80s, P&G had rebounded. Its overseas sales more than doubled. Overall revenue doubled to more than $20 billion and so did profits, to $1.2 billion.
P&G had become a leading player in international markets, had acquired several enduring brands and remade itself into a leaner, more efficient business.
"He transformed the company," said chairman and CEO Bob McDonald. "He left the institution better in terms of the business and in terms of the people. He was particularly focused on new brands and new categories at a time when we needed to be."
Smale retired from P&G in 1990, but he remained on the board for five more years.
In 1992, he was given the assignment of turning around General Motors. As a board member since 1982, Smale had pushed the slumbering giant to cut costs and reorganize its management. But by the early '90s, the iconic automaker was losing billions.
In 1992, the board ousted chairman and CEO Robert Stempel and made Smale the first outside director to become GM chairman since the '30s. Along with Jack Smith, who was named CEO, Smale re-engineered GM's management into something similar to P&G's, emphasizing accountability in middle management and creating brand managers who were responsible for profits in individual car and truck lines.
The turnaround was swift. By 1994, GM was posting record profits of $4.9 billion. Smale stepped down as GM chairman in 1995 but remained on the board until 2002.
Throughout Smale's professional career, the one constant in his life was his wife, Phyllis. They met as freshmen in Oxford, where she was attending Western College. They married in 1950. She died in 2006.
She was instrumental in raising $1 million to beautify public spaces in Cincinnati. Sometimes on Saturday afternoons, the couple would plant together. Last June, the city revealed that Smale had donated $20 million toward construction of Cincinnati Riverfront Park in memory of his wife. The park was renamed the Phyllis W. Smale Riverfront Park.
As she neared the end of her life, the couple dug out old love letters from the Miami years and read them to each other.
"When Phyllis died, it hit me hard," Smale said in his last interview with The Enquirer.
Published in The Cincinnati Enquirer from Nov. 19 to Nov. 22, 2011
You are searching