WE GO BEYOND THE HEADLINES
Each week, Sunday Business Editor Henry Unger has a candid conversation with a local leader as part of our commitment to bring you insightful coverage of metro Atlanta’s business scene.
How do you run a big company with unrelated brands? It's not easy, even for a Ivy League-educated branding veteran like Michael Polk.
Polk, 52, became CEO of Newell Rubbermaid 18 months ago when the Sandy Springs-based company was going through tough times. The company, Georgia’s 12th largest publicly traded firm with $6 billion in revenue, is made up of three dozen global brands, from Sharpie markers and Paper Mate pens to Irwin tools, Calphalon pans and Graco car seats. But it was suffering from a variety of problems, including inconsistent revenue and earnings, a beaten down stock price, high debt load and too much autonomy in each of its business units.
Polk is reshaping the company by making some hard choices, including cutting costs — 2,500 layoffs have been announced — while investing more in the brands with the most growth potential. So far, the company’s profit and stock price have improved significantly.
For nearly three decades, Polk sharpened his branding and operations experience by working for some of the best known marketers in the world — P&G, General Foods, Kraft and Unilever. He talks about drawing on those experiences, as well as on his education, as he continues to drive change at Newell Rubbermaid.
Q: Some CEOs attribute much of their success to their business school education. Others say it was of limited value, especially when compared with their real world experiences. Which side are you on?
A: When I was getting my master's at Harvard Business School, there was a very diverse cross-section of people from around the world. I got to hear different perspectives developed from different businesses.
People in that environment, with that type of self-confidence, are always certain — but they’re sometimes wrong. The whole process, the Socratic method, is designed to shine a light on that.
There are multiple solutions to any business challenge. The best way to get to the strongest set of options is to engage in debate. It’s important to be open to that and not be too linear in the way you think.
As a leader, you have to encourage active debate and then you have to be prepared to actively listen. There are two sides to the equation.
Q: After working in different General Foods and Kraft businesses, including coffee, beverages and cereal, you ended up running Kraft’s operation in Asia, which took in some 20 countries. What did you learn?
A: It was a phenomenal experience. I lived in Australia. It was the first time when I could not lean on pre-existing relationships. I was starting from scratch. It was almost like going to an entirely new company.
From a leadership perspective, it required me to find the people who were prepared to embrace change. The charter I had was to build a regional organization in Asia, which didn’t exist. It was a very disaggregated set of country leaders.
I leaned very heavily on an HR veteran there who really wanted to help. He was very, very objective. Everyone else was trying to sell themselves, but he was committed to helping me build something that could last.
You have to find those folks. It’s about building followership behind an idea. It’s also about making sure that you’re preconceived notions are the right choices. It’s easy to make judgments from a distance. It’s another thing to get into the mud, and wallow around for a little while, to really understand what’s going on.
For example, there were a number of people choices where my initial instincts would have been bad calls. But the HR guy said, “Slow down, listen, immerse yourself. Get out into the markets and see people on their home turf, as opposed to just in conferences.”
It’s about not making judgments too early.
Q: Before heading Newell Rubbermaid, you led global brands for Unilever. Any key lesson?
A: The huge gift I got from Unilever was the awakening that came through access to the international markets. It was extraordinary. I got a global perspective that can be applied wherever I go.
Whenever I go to an international market today, I like to sit with a consumer in their home. I get a translator and talk with them about how they use our products in their lives.
I was in a Brazil middle-class family’s home and a middle-class home in Shanghai. I asked them what is the most important thing to you. The most important thing to both families is that their kids get more out of life than they did.
An important enabler for that is access to education. Our writing-instrument business is an education-tool business in emerging markets. Positioning the brands — Paper Mate and Sharpie — against that opportunity is what we’re trying to do.
Q: How do you build a brand?
A: When you think about branding, you first have to think about your target audience. For example, we research tools used by professional contractors, who are important to our business. We'll go talk to them to find out why they choose what they choose — not brand specific, but the category of generic tool. You have to understand the "preference drivers" for a category.
Then you have to assess how your products deliver against those preference drivers. Then you wrap a brand positioning around that product to bring it to life for the user.
But in the professional arena, there are typically two constituents — the person using the product and the person buying the product — namely the owner of the business who might be buying the tools for the contractors to use. In many cases, they have different criteria, so you need to market it differently to them.
The preference of the owner of the business is driven by cost, productivity and work-flow optimization. But you have to sell it to the contractor by celebrating the ergonomics, how the product fells in his hand.
Also, you need to assess your competition against the same criteria. Look where their gaps are. Is there an opportunity in a local market to own the category driver?
And don’t try to be all things to all people. Decide what you want to be famous for.
Q: You’re company has gone through some time tough times, and you’ve been trying to reshape it so it becomes more famous for the brands with the most growth potential. Would you please discuss?
A: We were in the (stock market's) penalty box and we're earning our way out. We were running the company as a loose federation of autonomous businesses. The company did not have a corporate strategy.
We were sell writing instruments in Home Depot. We also sell power tool accessories, commercial products for cleaning and containers for storage. All those things cut across the retail channel. But each business unit had its own sales force, its own finance and HR functions. Too much of our costs was tied up in that infrastructure and not enough was tied up in the brands.
We needed to get those costs out and put that money into the brands. Fourteen brands represented 85 percent of our revenue. That is a big deal when you’re looking to efficiently deploy brand support.
My belief is that all of these businesses are not created equal. We needed to be less democratic about how we allocated human capital and money to businesses, based on their growth potential. We created brand categories, including the “win bigger” category. Those brands get the first call on resources.
