If you take a look in your kitchen cupboard or maybe even in your office desk drawer, you'll probably find something produced by the Campbell Soup Company. Campbell's brands -- Pepperidge Farm, Prego, Swanson, V8, and of course that iconic red and white soup label, among others -- can be found in more than 120 countries in Asia, Europe, and North America.
But early last decade, the company was struggling. The stock price was down, the company wasn't meeting earnings expectations, and Wall Street was whispering that Campbell was for sale. Sometimes, it didn't even bother to whisper. That's when Douglas R. Conant stepped in. Having spent his career in the packaged food industry, including a stint as the president of the Nabisco Foods Company, Conant knew something was wrong with Campbell and was confident that he could fix it -- but first, he'd have to win the trust of his employees.
"To me, the recent economic climate has raised the bar to another level -- but that's what makes it exciting."
The ethos is that "you can't win in the marketplace unless you win in the workplace," as Conant relates in the discussion below, the first of a two-part interview. He signaled his intent to change the company's culture by shaking up the leadership team. Conant courted employees' trust, building bit by bit, until he created an extraordinarily engaged company.
And not a minute too soon. The recent recession has hit his industry hard: In 2008, consumer packaged goods median shareholder returns were down 25%. But Campbell has fared pretty well -- its adjusted net earnings per share rose 7% in its fiscal year 2008 -- because of what Conant and his people have accomplished. Read on to discover how they did it.
GMJ: This has been a tough couple of years for companies in any industry. How do you keep moving forward?
Douglas R. Conant: I've worked for thirty-three years, and every year has felt challenging -- and every year you're not quite sure how to make it all work. Every year, there were external forces that were beyond our control. Every year, there were internal issues that had to be wrestled with to get things done. And every year, the competition has been formidable.
To me, the recent economic climate has raised the bar to another level -- but that's what makes it exciting. You have to engage in the work, and when the challenge gets bigger, you have to pick your game up a notch. You can't have your tail between your legs, saying, "Woe is me. It's a difficult recession. I don't know what I'm going to do." Who wants to follow a leader with that kind of perspective?
You have to lead from out front and be ready to engage in the challenges of the day, especially in tough times. That gives me energy. If you're not excited or energized by this kind of thing, you shouldn't be in the job. The whole world had to find its footing when things started to unwind in the fall of 2008, and we did too.
GMJ: Are the challenges of today much different than they were two years ago? Or are they just more intense?
Conant: They're not much different, but they are more intense. This has been the most challenging year I've had in my career. But, you know, there aren't a lot of easy years. The packaged food business environment is very Darwinian. You're fighting for survival every year; you evolve and grow or you die. It's really that simple. I think the intensity is up a bit and the challenges may be more substantial. But it's always been a tough game.
GMJ: How would you characterize your leadership style? Has it changed since the recession began?
Conant: The essence of my leadership philosophy is very much the same as it was before. We have what we call our Campbell Leadership Model, and we drive off of that. It basically says you have to inspire trust, and once you earn people's trust, you have permission to do some amazing things. Trust gives you the permission to give people direction, get everyone aligned, and give them the energy to go get the job done. Trust enables you to execute with excellence and produce extraordinary results. As you execute with excellence and deliver on your commitments, trust becomes easier to inspire, creating a flywheel of performance.
I strongly believe that you can't win in the marketplace unless you win first in the workplace. If you don't have a winning culture inside, it's hard to compete in the very tough world outside. Our mission is to build the world's most extraordinary food company by nourishing people's lives everywhere, every day. You can't ask employees to achieve extraordinary results if they're not fully engaged. That's why we focus a great deal on getting the workplace right so that people are engaged and proactive -- so that people are moving forward arm in arm and competing with a spring in their step. As they become more engaged, they find ways to win in the marketplace that are sustainable. You do have to shift your tactics every once in a while. You always have to bring something new to the engagement mix to bring it to life again. It can be a big thing or a little thing.
"Talking about engagement is one thing, but bringing it to life in a repeatable process every year is what makes it real."
GMJ: Can you give me an example of those tactics?
Conant: In this economic environment, I decided it was important for me to be more visible in my leadership. Although the company knows me pretty well, having been here since 2001, I started walking around headquarters every day. I have a pair of sneakers, and whenever I have a half hour free, I put on my sneakers and I start walking the halls. I stop and talk to people. And it gives me a sense of the pulse of the company. But the main reason I do it is because when the world's feeling a little shaky, it's important for the leader to be more physically present.
GMJ: A minute ago, you mentioned the importance of engagement. Discuss that some more.
Conant: Talking about engagement is one thing, but bringing it to life in a repeatable process every year is what makes it real. Those three-hundred-question surveys done once every three years -- I've never seen anything good come out of any of them in my career. I was determined not to fall prey to that approach. That's why I was so gratified to ultimately come up with the [Gallup] Q12 as the tool we use to measure engagement at Campbell. The Q12, with its 12 employee engagement questions, is a simple tool for creating the right focus and the right dialogue.
But you have to use the Q12 as a means to an end, not as the end in itself. If you view it as a way to see your culture and make it better, it's a very powerful thing. We measure engagement every year, because to not do it for a year would send exactly the wrong signal to our employees: that we don't care.
This connects to another idea: that you can't manage something you can't measure. There are only two things that I track at the highest level in this company, and we report those measures each year in our annual report. One is total shareowner return over a rolling three-year timeframe, and the other one is how we are winning in the workplace, as measured by employee engagement.
GMJ: How do you discuss the latter?
Conant: I go over our Q12 scores, whether they're up, down, sideways, whatever they are, and we talk about them. The Q12 allows me to bring this to life for our shareholders and our employees, and I know how the 580 managers are doing.
When we first started measuring employee engagement, we were building a process of continuous improvement. In the first year, 119 workgroups were in the bottom quartile of the Gallup employee engagement database. When our global leadership team first took the Q12, we were in the 28th percentile. These were some of the worst scores of any Fortune 500 company that Gallup had ever seen. But we created this process where people's voices are heard and managers all of a sudden become accountable. Then they sit down with their groups and develop action plans to address the issues. And then the following year, we take their pulse again with the Q12.
It's amazing how this process that we've built brings engagement to life in a very tangible, real way, ultimately through action plans that the employees create to make their world a little more productive, a little more fun, and a little more interesting. The survey and the action planning is an important tool in bringing to life what I think is a foundational component of building a high-performance culture. I don't know how you would build that culture without such a tool.
"We were very tough-minded on our standards for performance, but very tenderhearted with the people. You can be both."
GMJ: Let's go back a bit to when you arrived at Campbell in 2001. In your first 30 months or so, you replaced 300 of your top 350 people.
Conant: It took us a good eighteen months to fully activate that program. But, yes. Half of the top managers were replaced by high performers who were already in the company, people who were hungering to contribute. The other half was replaced by people from outside.
GMJ: At roughly the same time Campbell conducted its first Q12, you found out that your executive group ranked in the bottom quartile on employee engagement. Do you think there's a connection between that low engagement score and the fact that so many people needed to move on?
Conant: For a host of very understandable reasons, the company had a very toxic environment when I came in. And the company had been the poorest performing of all major global food companies for a good three or four years.
GMJ: And yet you took the job?
Conant: Yes, I did. Many of the best performers had gone to other places. Of the people who were still here, there were some very good performers and there were some marginal performers, and none of them were very happy. And it was also the lowest trust environment I had ever encountered -- they had just been through the wringer in terms of the way the business had been managed the prior three years.
I came in and talked to the executive team about creating a platform for long-term transformation and said, "We're holding people accountable to new standards, both for winning in the workplace and winning in the marketplace." That's the way we were going to win, which was not necessarily the culture that was here when I arrived. We needed to inspire the trust of all of our employees.
GMJ: How did you accomplish that?
Conant: I said it wouldn't be a top-down culture -- it would be a high-engagement culture. And then we pounded away with that for a good year and a half before we started to make a sizeable change with the global leadership team. Some of them left because they didn't want to be part of it -- they saw the change and didn't think it would work.
Ultimately, the action didn't get going until I'd been here about a year and a half and people understood that they'd either rise to the standard of performance or we'd help them find a job somewhere else. Those things are always difficult, but I believe we did it in a good, caring, transparent way, and we tried to be supportive of all the people who left.
But underneath this, we had 20,000 people working for those three hundred executives who were miserable. You want to deal with your global leadership team in a thoughtful, caring, responsible way. But on the other hand, you're accountable to 20,000 employees who are looking to you for leadership and who are anticipating for things to change -- and so were our external stakeholders.
So we evolved in a pretty careful way, but we did need to change. We were very tough-minded on our standards for performance in the marketplace and in the workplace, but we were very tenderhearted with the people. I think you can be both. In fact, I think to be effective, you have to be both.
-- Interviewed by Jennifer Robison
In the second part of this interview, Douglas Conant discusses how he implemented his strategies when his executives, employees, and shareholders had their doubts and why he believes Campbell's engagement has fortified the company during the recession.