Outrageously high targets for revenues, earnings, and market share; a bold vision based on a striking new business model or groundbreaking technology; major strategic moves, such as acquisitions or partnerships, that change the game in an industry; a new CEO, freshly arrived from the outside and committed to shaking things up. Such shocks to the corporate system are widely assumed to be necessary for transforming a company's performance.

Yet Alan G. Lafley's first five years as CEO of P&G show that none of these things is strictly necessary for achieving this sort of change. A large global company that has stumbled and lost some of its confidence can be led to new levels of performance through a more subtle form of leadership exercised by a long-term insider. Lafley's experience sheds particular light on two of the biggest challenges facing CEOs in this situation: the pace of change and the need for 'stretch' aspirations.

Lafley recalls vividly the market's initial disappointment when he took the helm, in June 2000. "I remember being in the basement of the television studio here in Cincinnati at 6 PM on the day [my appointment] was announced. I was the deer in the headlights, being grilled...