The Thought Leader Interview: Douglas Conant

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In this Thought Leader interview, the coauthor of TouchPoints and former CEO of Campbell Soup Company explains how companies build capabilities by cultivating people. Douglas Conant turned around a …

In this Thought Leader interview, the coauthor of TouchPoints and former CEO of Campbell Soup Company explains how companies build capabilities by cultivating people. Douglas Conant turned around a moribund company in part by focusing the portfolio, redesigning training, setting high standards, and writing dozens of notes of praise every day.

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  • 1. strategy+businessissue 68 AUTUMN 2012The Thought LeaderInterview: Douglas ConantThe coauthor of TouchPoints and former CEO of Campbell SoupCompany explains how executives build their company’s capabilitiesby connecting with people more effectively.by art kleinerreprint 00128
  • 2. THOUGHT LEADER The Thought Leader Interview: Douglas Conant The coauthor of TouchPoints and former CEO of Campbell Soup Company explains how executives build their company’s capabilities by connecting with people more effectively. BY ART KLEINER high level of appeal to customers craving comfort food. Making these shifts takes a fair amount of sophistication — in tech- nology and process, and in leader- ship and human management. In- stead of trying to gain those capabilities through acquisition, Douglas Conant, CEO of Campbell from 2001 to 2011, sought to build them from within. Conant was hired as a turnaround artist after se- nior executive stints at General Mills, Kraft, and Nabisco, but his approach focused on investing in people, including paying deliberate attention to his own leadership style. Jon Katzenbach, who writes regularly on organizational culture C ampbell Soup Company has uct lines to gain scale during the in this magazine, regards Conant as long been an iconic enter- 1980s and early 1990s. Then, in the one of the few leaders who under-thought leader prise. Founded in 1869 in mid-1990s, its financial perfor- stand not just the importance of Camden, N.J., its basic logo and can mance began to decline. It adopted personal impact, but how to deploy design have not changed since 1898. a more coherent strategy in the it in practice. That’s the subject of Andy Warhol’s paintings of those 2000s, seeking global growth with a Conant’s book TouchPoints: Creat- cans, which began as an irreverent sharply reduced portfolio focused ing Powerful Leadership Connections Photograph by Peter Gregoire comment on their emblematic na- on three brand families: Campbell’s in the Smallest of Moments (Jossey- ture, are themselves half a century soup, V8 beverages, and Pepperidge Bass, 2011), coauthored with execu- old. The company’s recent business Farm baked goods. Finally, in recent tive coach Mette Norgaard. The history is also iconic, at least in the years, as is becoming common in book describes how to reframe inter- way it evokes the overall drama of the food business, it has had to meet actions with people — even annoy- the consumer products industry. two seemingly contradictory imper- ing interactions, like interruptions Like many other food compa- atives in its product line — the pro- — as opportunities to raise the qual- nies, Campbell diversified its prod- motion of health and wellness, and a ity of a leader’s connection with 1
  • 3. people, and thus to further the pur- posed to do.” OK, you think the don’t want to sign up for that, youpose of the enterprise. (Conant’s suc- world’s never dealt with that before? shouldn’t be here.”cessor as CEO, Denise Morrison, Nonprofits and for-profit com- That spirited desire to do betterwas formerly the executive champi- panies might look different on the resonates with employees. But overon of the company’s signature well- surface, but they have the same chal- time, you run the risk of becomingness initiative.) lenge: trying to create high-perfor- too ambitious. Your reach exceeds We sought Doug Conant out mance communities that will make your grasp. You create anxiety andbecause the Campbell story and the an impact on the world. And they stress in the system, and it compro-anecdotes in TouchPoints have par- both break down the same way: mises your ability to execute.ticular relevance for one of our own They fall short on bringing strategicongoing inquiries: How can compa- thinking to life amid the day-to-day S+B: In other words, if your reachnies build the capabilities they need work of the enterprise. exceeds your grasp, you’ve got toto distinguish themselves? The in- improve your grasp.terview was conducted at the offices S+B: Why is that? CONANT: And vice versa. If yourof Conant’s Philadelphia-based not- CONANT: It begins with the aspira- grasp exceeds your reach, you shouldfor-profit group DRC LLC, which is tional nature of their strategies. Ev- be more ambitious. You need todedicated to raising the quality and erywhere I’ve worked — at General search for that sweet spot whereimpact of leadership among senior Mills, Kraft, Nabisco, and Camp- your company can grow and prosperexecutives. bell — we have always talked about and seek greatness, but in a well- being the world’s best: the world’s executed way.S+B: What are you trying to accom- best cookie company, snack com- Ideally, you should find a jobplish now, in your writing and your pany, and so on. People naturally that lasts. My kids, who are 30, 28,work with companies? aspire to be part of something bigger and 25 years old, have heard all theirCONANT: My goal is to contribute than they are, to not just draw a pay- lives that they live in a chaotic, en-to the conversation about leadership, check but find meaning in their trepreneurial world, where they’llfrom a practitioner’s point of view. work. Jon Katzenbach made that probably work for seven or 10 com-For the first time, there are five point in his book [Why Pride Matters panies during their career. I don’t“generations” of people in the work- More than Money: The Power of the think that’s their first choice…and itplace, with an unprecedented diver- World’s Greatest Motivational Force doesn’t have to be. They should besity of backgrounds and perspectives (Crown Business, 2003)]. able to find a quality work experi- thought leaderacross the globe. Executives have to I’ve been building aspirational ence in a company where they aremanage people connected through strategies my whole life. At Camp- appreciated, where they can learnhandhelds and broadband. Tradi- bell, one of my big moments came at and grow, and where there’s an en-tional hierarchical management the start of my third year, during during sense of contribution. I’vestructures that evolve at a glacial our global leadership meeting. I re- worked for four companies duringpace are being stress-tested in pro- alized that I had to raise our level my career — about nine years eachfound ways, and it’s taxing leaders. of engagement and commitment, — and that worked out all right. But the real issue is community. and I opened by saying, “Enough isI recently asked someone at a social enough. I hope all of you want to be S+B: For those four companies, didmedia company to name one of the part of this company going forward, their grasp exceed their reach or didbig management problems they have but you have to lead in a way that’s their reach exceed their grasp?to deal with. “Well, so-and-so down going to build the world’s most ex- CONANT: They were reasonably bal-the hall is not doing what he’s sup- traordinary food company. If you anced, and their grasp exceeded 2
  • 4. Art Kleiner kleiner_art@ strategy-business.com is editor-in-chief of strategy+business. their reach. That’s typical of the S+B: How was it that you came to join 500 company they’d ever surveyed. food industry. It’s a mature 150-year- Campbell? It was a little less than two-to-one; old industry; its consumption grows CONANT: The company was in a for every two people engaged in the with population, but individual peo- very tough spot in 1999. The world work, one was looking for another ple don’t appreciably eat more every was changing; the food industry was job. In other words, about 6,000 of year. So the businesses are managed consolidating. Campbell was a mid- our 20,000 employees were actively in a conservative way. The brands sized, US$10 billion to $12 billion dissatisfied. I had been in toxic envi- and the competition don’t materially company, with the one thing food ronments before; I had gone into change from year to year. companies need most: several large Nabisco with Kohlberg Kravis Rob- and growing categories with the erts just after the events described in S+B: And yet you were involved in number one or two brand. But it Barbarians at the Gate [KKR’s 1989 turnarounds at every one of them. At was failing miserably in execution. leveraged buyout of Nabisco]. But Campbell, for instance, once you de- Sales, earnings, market share, and that was nothing compared to what clared the goal of being extraordi- employee engagement were waning, we encountered at Campbell. nary, you had to change the company and the company was involved in to match. several prickly legal situations. S+B: How did it get that way? CONANT: We followed Jim Collins’s In the year before I arrived, the CONANT: The company had fallen hedgehog model from Good to company had lost half its market into what Jim Kilts, the former Great: Why Some Companies Make value; it had gone from $60 to $30 CEO of Gillette, calls “the circle of the Leap…and Others Don’t [Harper- per share. The leadership team had doom.” You overpromise and under- Business, 2001]. Fundamentally, you tried to grow and diversify in unpro- deliver, and in trying to make up thethought leader choose to do only the things that ductive ways; the board felt a change difference, you make bad short-term you can do better than anyone else was clearly needed. I’d been director decisions that compromise your in the world, that you can make of strategy for Kraft, and I’d helped ability to continue to deliver. At money at — that Collins says “drive rebuild Nabisco. I think the board Campbell, the executives had ac- your economic engine” — and that would have preferred someone who quired a group of diverse companies you can be passionate about. We set had been a CEO already, and who to keep the growth track positive, out to build that kind of business at had done this before, but I had skills but they didn’t adequately integrate Campbell, and the results are still and experience that suggested I [those companies], and they started strategy+business issue 68 playing out. We were coming from could figure it out. to miss their numbers. So they raised such a difficult starting point that it We did a survey of employee en- prices in core categories like soup. took 10 years to put the building gagement soon after I arrived, and Sales went up, but volume actually blocks in place. We’ll see what hap- Jim Clifton from Gallup said we went down. This invited private- pens in the next 10. had the worst levels of any Fortune label competition, and enabled a vir- 3
  • 5. tually nonexistent brand, Progresso, your way into,” I told the staff. “You price dropped almost to $19. But weto establish a foothold in the U.S. have to behave your way out of it.” were building for the future. Now they had to keep profits To get the right people onhigh in the face of competition, so board, we turned over 300 of the top S+B: How did you do that?they cut marketing spending, which 350 leaders in the first three years. CONANT: We reworked things onis the lifeblood of a brand. Short- This was unheard of in large con- multiple fronts. For instance, we ad-term earnings were maintained but sumer packaged goods companies, dressed the two biggest consumervolume slipped further, and then which typically have well-established issues with Campbell’s soup. To helpthey went too far in raising produc- cultures. We promoted 150 people people find the soup they were look-tivity to a point where they compro- from within and we hired 150 next- ing for, we developed an innovativemised product quality. They literally generation, high-performance lead- shelving system. We also improvedbegan to take some of the chicken ers from outside; they’re running the the healthfulness of our soups by re-out of the chicken noodle soup. Not company now, or out successfully ducing sodium without compromis-surprisingly, volume kept coming running other companies. ing on taste.down, and they took their cost- Our next step was to establish a We revamped our executivereduction efforts to another level by clearer, focused agenda. We were al- compensation with longer-termcutting overhead. They fired 250 ready the world’s largest soup maker goals. A major share of a leader’s sal-R&D people in one day. — so we focused on expanding our ary was linked to long-term com- With R&D cut, the product soup capabilities into the broader pensation, based on Campbell’s to-pipeline faltered. People kept getting simple meal category and on build- tal shareholder returns versus a peerlet go. The best people left. Those ing out our healthy beverage plat- group of companies, over a rollingwho didn’t leave were discouraged. form with a focus on vegetable-based three-year period. That kept peopleThis went on for several years. The beverages. Vegetables came into the sufficiently focused on the future. Iorganization’s malaise was tragic.S+B: What was your first year like? “ To get the right people on board,CONANT: I came in with a few prin-ciples: a belief in the power of being we turned over 300 of the top 350a focused food company, and the leaders in the first three years.”belief that we needed about three conversation thought leader thought leader thought leaderyears to become fully competitiveand several more years to be in a po- plant; we sent them in one direction think that kind of balance needs tosition to drive quality growth in an to make soup and in another to find its way more fully into the cor-enduring way. There were no silver make our best-selling V8 juices. porate sector. Yes, people need to bebullets. I also knew that you can We also owned a couple of tremen- rewarded in the short term; theyonly win in the marketplace if you dous baked-goods assets: Pepperidge have bills to pay. But they also needwin in the workplace first. You’ve Farm in North America and Ar- to be sufficiently dispassionate aboutgot to get “the right people on the nott’s in Asia/Pacific. We built the everyday issues, so that they canbus,” as Jim Collins put it. They’ve number three position in baked build a greater company tomorrowall got to be sitting in the right seats, snacks in the world. We shed every- as well.and they have to be highly engaged thing else. Engagement was especially im-in the work. “You can’t talk your While we were downsizing and portant to me in the leadership area.way out of something you behaved making these changes, the share If your top people are not wildly en- 4
  • 6. gaged in the work, you can’t expect growth. By the time I left in 2011, where we brought leaders together commitment from the people on the we had record high returns on in- from around the world, to work in front lines. So we worked hard on vested capital. We had a good P&L, teams on real cases, from Campbell getting the organization mobilized great cash flow, and a good balance and elsewhere. They would tear and self-directed. We built the en- sheet. And we were still building the apart the strategy issues, employ a gagement of our top 350 people up business for the future; we had re- common process approach with the from that two-to-one ratio to 77-to- cord high investment. Our stock same language, and present their ob- one. We did this while shedding as- price came back up, but not to $60 servations to senior executives. Sepa- sets and tightening the organization. again; it reached $40 just before the rately, I developed a program where After it was clear we would re- economic crash, and it’s in the mid- I took 20 to 25 young, promising cover, we made two big, long-term $30s now, in 2012. We were also leaders and met regularly with them bets, which we could have delayed able to raise the shareholder divi- over two years, with homework fo- — and our near-term earnings dend in each of the last 10 years. cused on significantly lifting their performance would have been better leadership profile. I taught this as a result — but which we needed S+B: What capabilities did you need course for three separate cohorts. to do. First, around 2007, we invest- to build back, and how did you do it? We also developed our own ed $135 million in an enterprise CONANT: First of all, we made a ma- Campbell leadership model for resource planning (ERP) system. jor commitment to training and de- managerial behavior. We had func- This, over time, would allow us to velopment, which was part of a phi- tional excellence programs targeting manage our cost structure as effec- losophy we called “The Campbell manufacturing, leveraging proven tively as other large food and bever- Promise.” If you’re asking people to methods. We began to create com- age companies. Second, in 2008, we do extraordinary things, they have mon ways of doing things across all opened offices in Russia and China, to see you leaning in to help them our functions — supply chain, IT, the two largest soup-consuming learn and grow. Otherwise, your marketing, and sales — along with countries in the world. Neither coun- message will fall on deaf ears over more disciplined HR and financial try had a major commercial soup time. We had high expectations of planning systems, so people knew manufacturer; it was all homemade. But we believed that their growing number of middle-class consumers “We had said we wanted to win would soon want convenience foods. We invested $50 million to $60 mil- first in the workplace, and then in lion a year building our capabilities there. To justify the investment, the marketplace. Now, we said we only one of the two countries had to would win in the community.” “work,” and after I left, Campbell Soup doubled down on China andthought leader pulled back on Russia. people, and we couldn’t expect them what was expected of them. We had to value the company’s agenda if we tight budgets, but every year we S+B: How did you know that making didn’t tangibly demonstrate that we found ways to improve the learning this long-term investment was the valued their agenda as well. opportunities for virtually everyone. right thing to do? Moreover, we had brought in CONANT: All our analysis suggested many new executives with different S+B: What other investments did you that we couldn’t sustain our growth backgrounds; we had people from protect? profile for the long term without Pepsi, Procter & Gamble, and Gen- CONANT: We restored product qual- strategy+business issue 68 these measures. I was willing to take eral Mills, all speaking the language ity. We put more chicken back into the risk. While the decision has yet of their old businesses. There wasn’t the soup, for instance. We started to be proven out completely, we de- a “Campbell way” to think about a continuous improvement program livered quality sales growth and 10 strategy. So we set up a strategy and so we were making better products straight years of earnings-per-share management training curriculum, every year, not worse. Products are 5
  • 7. important to our employees. Neigh- diet. So we developed world-class porate citizenship as measured bybors would talk to them about their sodium reduction capabilities in the Ethisphere Institute, which pub-favorite soup, or what they liked soup, and then applied them across lishes a list of the 100 best corporateabout a new Pepperidge Farm prod- our entire portfolio: juices, Prego citizens in the United States. Afteruct. We also restored our marketing pasta sauces, and even baked snacks. we were included on that list, we be-spending to competitive levels — We also developed marketing in- came more recognized as a high-from about 16 percent of sales back sights around the world in the same integrity company. This, in turn,up to 20 to 22 percent. way, and harvested global views of did wonders for our employee en- To pay for this, we shed under- our customers that improved our gagement, and that had a positiveperforming or less-connected assets, ability to compete. impact on our performance in theincluding a very large food business Then we incorporated a corpo- marketplace.in the U.K. and Ireland that went rate social responsibility program We put our arms around theback 100 years. We sold Godiva into the Campbell success model. city of Camden, N.J., where Camp-Chocolatier, which was a magnifi- We had said we wanted to win first bell was founded. Camden is one ofcent brand but made no sense for in the workplace, and then in the the poorest, most dangerous cities inour portfolio. We weren’t a confec- marketplace. Now, we said we would the United States. It had nearly 40tions or retail company. win in the community and that we murders in 2010, in a population of We lowered some of our systems would continue to bring a high level only 75,000. Most of the 23,000expenses. For instance, we realized of integrity to everything we did. kids in the public school system arethat we had been overinvesting in obese but still hungry. The foodtransactional costs, so we outsourced S+B: Do you think of corporate social they get is not conducive to a good, thought leader thought leaderprocesses to which we couldn’t add responsibility as a capability? well-balanced diet. We launched avalue. Although our new ERP sys- CONANT: Yes, and it’s a necessity. 10-year program to revitalize thetem raised costs in the near term, it Companies are challenged by the city, starting with nutritional train-clearly positioned us to reduce costs public sector, by activist groups, and ing in the schools. Campbell’s em-in the mid- to long term. by consumers themselves. The best ployees are involved; they’re promot- In addition, we reduced our defense is a good offense, so you’d ing exercise and helping to attracttrade promotion profile and spent better shape your agenda and move quality supermarkets and other foodmore on advertising directly to the it forward in a visible and commit- sources to the center of the city.consumer. We built our capabilities ted way. Starting in 2007 at Camp-by leveraging our competencies bell, we began measuring our efforts S+B: How did you come to writeacross categories. For instance, we to help build a better world and re- TouchPoints?knew consumers were concerned porting on it in the annual report. CONANT: At the leadership course Iabout the amount of sodium in their We also sought to improve our cor- taught, after a serene off-site session, 6
  • 8. the key program facilitator, Mette It’s also how you bring strategies ripples out around you. Someone Norgaard, asked me, “How can you to life. As Campbell CEO, I sent 10 will tell others, “I had a really good go back to all the buzz in your office to 20 handwritten notes out a day. conversation with Doug in the lunch — the phone, the people stopping For example, I might have said, “I line,” instead of saying, “That jerk, by, the interruptions?” saw you did good work here. You got he’s not giving me the time of day.” “I don’t view them as interrup- this line up and running on time.” You can’t manage every interac- tions,” I said. “They’re opportunities Or maybe I said, “You helped us get tion well. There are times when you to help advance things. So I look forward to them.” We started talking about the “As Campbell CEO, I sent 10 to 20 “interruption age,” as she called it — the fact that every four minutes, on handwritten notes out a day. Each average, a worker is likely to have his or her concentration broken by an interaction is an opportunity to encounter with someone else. But I advance the company’s agenda.” was sincere; I liked those moments, because I actually had people com- ing to me, ready to engage on busi- into this test market ahead of sched- can’t talk to people; you have to dis- ness issues. What a great time to ule.” I avoided gratuitous compli- criminate. But if you manage three deal with them in a quality way, as ments and focused on the business encounters better today than you opposed to when I sought people out priorities; I had a part-time assistant did yesterday, every day, you can and they were not ready to talk. who collected reports about what fundamentally change the trajectory Mette and I came up with the was going on in the company. Over of your leadership profile. And we’ve “touchpoints” idea: that every con- my 10-year tenure, I wrote 30,000 found that people who take on this tact is a chance to make a powerful notes. It got to the point where I felt discipline, just one interaction at a leadership connection. The more we something was missing if I didn’t time, start to improve their ability to tested the idea with people, the more have a chance to do it; I blocked out contribute. we found it resonated. So we wrote half an hour a day just to write the Once you get good at paying at- the book. notes. I also deliberately wandered tention to people on the fly, you We developed a structure for around the buildings, asking people learn to deal with people’s issuesthought leader managing those moments: Listen, about how things were going. It cre- with empathy and efficiency. You frame, and advance. It takes some ated a platform for candor: “Well, raise your contribution profile and work ahead of time because you it’s not going very well.” Then I start to advance in the company. Ul- have to reflect on the kind of leader could ask, “Really? Is there some- timately, the way you show up in you want to be, what you aspire to thing you need?” any given moment, moment after do with your life, and how you’ll People can have 200 or more in- moment, is the behavior that defines handle it when you’re interrupted teractions a day, if you count e-mail. your legacy. + next time. If you’re just buffeted by Each is an opportunity to advance Reprint No. 00128 strategy+business issue 68 people, you tend to lose balance. But the company’s agenda. We found if you develop some perspective first, that many executives brush these in- it’s amazing how powerful you can teractions aside because they’re too be in those moments. That’s how busy trying to get the “real work” people make themselves into leaders. done. But this is the real work, and it 7
  • 9. strategy+business magazineis published by Booz & Company Inc.To subscribe, visit strategy-business.comor call 1-855-869-4862.For more information about Booz & Company,visit booz.com• strategy-business.com• facebook.com/strategybusiness• http://twitter.com/stratandbiz101 Park Ave., 18th Floor, New York, NY 10178© 2012 Booz & Company Inc.