The chief executive of this iconic brand discusses how he turned his wounded company around
Douglas R. Conant likes a challenge. The president and CEO of the Campbell Soup Company, Conant picked up the reins nine years ago when the company's share price was down and customer loyalty was on the wane. He knew that he could assemble a team to revitalize the company, revamp the product line, fuel innovation, win back customers, and make Wall Street love soup (and cookies and spaghetti sauce and juice) again.
In part one of this two-part interview, Conant described how engaging the workforce was integral to his plan. Engagement, he believes, creates trust and inspiration -- and trusting, inspired employees can accomplish extraordinary things. But he knew it would be difficult work. In fact, he predicted that it would take a decade to get the company firing on all cylinders again and the workforce engaged top to bottom.
"You need disciplined people. You need disciplined thought. Then you need disciplined action."
And Conant was right -- his strategy boosted engagement, productivity, and profitability, just as he'd expected. But before he could take a victory lap, the recession hit. In 2008, consumer packaged goods median shareholder returns dropped 25%. But as Conant explained in the first part of this series, tough times motivate and energize both him and his team at Campbell. Furthermore, as he explains in this second part of the interview, as the economy worsened, Campbell was prepared. The workforce was highly productive, innovation was bubbling, and leadership was tightly focused on winning in the workplace so Campbell could win in the marketplace.
This long process was not effortless, though. As Conant notes in this discussion, at the outset, it required assuaging Wall Street's impatience, pushing an unpopular program through a resistant workforce, and rescuing an unhealthy company -- in other words, overcoming a series of difficult challenges. Read on to discover how Conant and Campbell turned those problems into a remarkable success.
GMJ: In your first 18 months on the job, you replaced 300 of your top 350 leaders.
Douglas R. Conant: Yes, and it took about another year to get all the right people in the right seats on the bus.
GMJ: About the same time, an initial assessment of employee engagement at Campbell found that the company's scores were among the lowest of any Fortune 500 company Gallup had ever studied. Soon, though, your engagement program started showing results. What was the result of a more engaged leadership team?
Conant: The team became self-governing. As people get engaged, they get engaged in more than just their departments. They start getting engaged in the enterprise, and they have conversations with each other about how the company can move forward, not about how IT moves forward or how supply chain moves forward or how Pepperidge Farm [one of Campbell's subsidiaries] moves forward. When you're engaged in trying to do something special to lift the entire company up, all of a sudden the conversations change. People feel more accountable to each other, and they don't want to let each other down.
It actually gets easier to lead, because the flywheel starts to work. As in the Jim Collins' model, it's simple. Collins says the good-to-great model must have three things. You need disciplined people, which requires getting the right people on the bus. You need disciplined thought, which is how you will compete, and we built the strategy to do that. Then you need disciplined action.
Once you get everybody on the same page and they're all thinking about the enterprise, all of a sudden, the actions naturally become more aligned, and you become more effective in the marketplace. Then people feel even better about it. Then they want to talk to each other more. Then they want to work together more. That's the flywheel effect.
We've gotten to a point where higher executive engagement has brought a focus to the enterprise, not just to pieces of it. That just didn't exist before. My challenge now is to keep the flywheel going, to keep engagement up throughout the entire company, to make sure we have the right people on the bus, and to make sure that, at a high level, the strategy is right.
GMJ: These evolutions take time, and it's hard to explain to Wall Street -- which thinks quarter to quarter -- that you need two or three years to make substantive changes.
Conant: Well, you can't talk your way out of something you behaved your way into. This is a very mature industry. If you're a wounded company, the other companies that have been around for a hundred years will smell it, and they will take advantage of you in a heartbeat. It takes a long time to get back in fighting form. Jim Collins said it takes seven years to take a company from good to great. He said it would probably take us ten years to go from bad to great, because it takes three years to get the right people on the bus in the right seats. And he was right -- there are absolutely no shortcuts.
Before I took the job, I told the search committee, "It took years to get into this; it's going to take us years to get out." We talked about the need to create a three-year set of expectations about how we would get the company heading in the right direction again. I thought we could do it in less time, but it did take about a decade. I told the search committee, "Look, we will improve every year, but let's be realistic: We're starting out uncompetitive every day right now. At the end of three years, we will be competitive on a good day. You can take that to the bank, and we will improve every year on all the key measures."
"This recession provides a unique opportunity to seize the day, leverage the momentum we're building, and do something really special."
We communicated our three-year transformation plan to Wall Street. We set the expectations to a reasonable level. And we said, "We'll grow off this base every year." We have grown every year now for nine years.
GMJ: And now you're facing the worst economic downturn in many years.
Conant: That's just the nature of the beast. That's the challenge -- but that's what makes it exciting. That's why you need to be more engaged now. Now is the time to lift yourself up and take advantage of the strength you've created. Then get out there and do better than all these people who are saying, "Woe is me. It's a tough world. What am I going to do?"
This recession provides a unique opportunity to seize the day, leverage the momentum we're building both in the marketplace and the workplace, and do something really special. My mindset, and I would argue it's the mindset of most of the people in this company, is that we devote more of our waking hours to our work than anything we do, oftentimes more than to our families. If we can't make that work special -- meaningful in some compelling way so that we get excited about doing something special -- shame on us. Why are we devoting so much time to it? Just to earn a paycheck? That's just not enough. For me and many others at Campbell, it's about leaving a legacy.
GMJ: How do you keep engagement levels up?
Conant: You have to model the behavior; you have to be the change that you want from the company. I write a ton of personal, handwritten notes to people every day. I'm more visible. A few years ago, we started a CEO institute for some of our top leaders, and I'm very involved in mentoring. I'm actively involved in advocating diversity and inclusion work. So I'm modeling the kind of behavior that I want people to bring to the workplace.
Ultimately, you have to do the work. We measure engagement every year, and then managers meet with their teams to create action plans to improve on their results. While our managers play a critical role in building engaged teams, we know that every employee demonstrates leadership by actively taking part in their team's engagement planning. Action planning is essential for us to continuously improve our engagement levels.
GMJ: Do you think that focusing on engagement now will make Campbell a stronger company when the economy improves?
Conant: I'm hopeful, but you never take engagement for granted. I'm always worried about what's lurking around the next corner. We actually had a big blip with our global leadership team one year; their engagement dropped. When we did the work around it, we understood why.
GMJ: That's scary.
Conant: No, it was a gift. We learned what was not working, and we were able to remedy it and go forward. I think if we do this kind of thing right, we'll be even better positioned for the future as a result.
But you know, I'm not afraid of making mistakes. The one thing you must have in this work is humility. You have to talk about mistakes and then talk about what you have learned and how to move forward. You acknowledge missteps right away, you deal with them, and you move ahead. If you don't bring a lot of humility to this work, you lose credibility.
Bill George [former CEO of Medtronic and author of Authentic Leadership and True North] is a man who did amazing things. He's also a guy who will own a mistake in a nanosecond and say, "Yeah, I made a mistake. How can we work together to fix it?" I think that's a big part of being an effective leader, because organizations can sniff out a lack of accountability. They know you made the mistake, so who are you kidding? Acknowledge it. Customers know too.
GMJ: Campbell has been around for 140 years. Over that time, it has built up many traditions, which is great -- but it can also make a company hidebound. Did you have trouble inserting a systemized plan for engagement? Or was the culture ready to accept it as much as you were ready to start?
Conant: The company wasn't ready to do this when I got here. But, you know, we didn't really have a choice. People felt as if we were on death's doorstep, and everything they had tried wasn't working. When I got here, I'm sure they thought that the engagement program wasn't going to work either and that I wasn't going to last. So the organization wasn't initially responsive to my plan. But you just have to keep working the territory and keep pushing as far as the organization is capable of going. You have to bring fierce resolve to the work. As a result of that resolve, engagement is embedded into our culture. For me, there simply is no other way.
-- Interviewed by Jennifer Robison