Interview transcript: Douglas R. Conant
Campbell Soup Co. President and CEO Douglas R. Conant
TEXT OF INTERVIEW
Kai Ryssdal: Doug Conant, welcome to the program.
Douglas Conant: Thank you.
Ryssdal: Let's take care of the apostrophe right off the bat. It is not the Campbell's Soup Company, we've got the Campbell Soup Company. Right?
Conant: That's correct.
Ryssdal: Just want to make sure I didn't mess that up.
Conant: No, no you got it. Campbell Soup Company.
Ryssdal: When you got here, six years ago. You were the biggest soup company in the world that was having a tough time actually selling soup. How did, how did this company get to where it was when you got here?
Conant: Well this company was uh . . . trapped in what uh . . . a friend of mine calls the circle of doom. It had consistently over-promised its ability to deliver results. As a result, they kept cutting the services they were offering and became less competitive in the market place. And, by the year 2000, they had lost half their market value; and the company was very troubled . . . in fact, it was the poorest performing food company in the world from 1997 to 2001. I was recruited in on January 8th, 2001. Who's counting?
Conant: And, uh, and we've, that's what we started to deal with in January of 2001.
Ryssdal: When the headhunter called . . . to talk to you about this job, what was your gut reaction?
Conant: I was excited about it.
Ryssdal: In a nowhere to go but up kind of way? Or, or in a . . .
Conant: No. I've worked in the food industry for the better part of my adult life, uh . . . over 30 years . . . and, this is an icon company. With icon brands, in what I think are great categories and really has all the fundamentals required to be successful. The company, like many other companies had simply lost its way.
Ryssdal: Being iconic though, uh . . . can be a blessing and a curse, because what tends to happen, and uh, what I understand happened at this company was that you guys sat back on your laurels and said, "come on . . . we're Campbell's!"
Conant: Uh . . . we, we did become, in some ways complacent in the late 90's and we were very aggressive with our pricing and we weren't competitive in the market place and that was something that simply had to change when we started. When we started we had been compared to a buggy whip by a leading analyst. Basically talking about how our core soup business had lost its relevance with consumers, and might go the way of the buggy whip if we didn't get it in gear and, and really focus on committing ourselves to revitalizing it.
Ryssdal: Before you agreed to take this job, you did some extensive research on Campbell and the problems and . . . and the promise of the future. What were some specific things you looked at as you thought about whether or not to take this job?
Conant: Well, there are four things you need to have a successful food company in today's time. The four things are: You need to be competing in large, attractive categories that have good growth potential. The second thing you need to have is number 1 or number 2 brands. Jack Welch is right. You have to have a power brand to compete in today's world of consumer package goods. The third thing you need to have is a good financial structure with good cash flow because in a brand driven culture, it takes money to make money. You've got to support the brand in order to keep it vital and keep it growing. The fourth thing you need to have is an organization that has the character and the competence to pull the right levels . . . levers at the right time to get the category to grow or to, to grow the brand and to leverage the financials. Campbell's had three of those four it had the categories, the brands, and a financial structure that if it was set properly could drive innovation. The fourth thing . . . we had an organization that was in disarray, and we needed to rebuild the organization and the culture.
Ryssdal: You did that in, in large part by letting some people go and, and reassigning some people . . . it . . .
Conant: It was a massive change. We were in a tailspin. If you can imagine being in a troubled work environment for four years as an employee, seeing it go from bad to worse; all your options under water. We had lost a lot of our best people and we needed to replace them.
Ryssdal: You come across in person as very nice, calm, measured individual. Is there a little bit of beaurocratic knife-fighter in you?
Conant: I wouldn't . . . I wouldn't characterize it that way, but what I would say is I'm known around here as being very tough on standards but being tender with people. We had a level of activity and a competence that was required to do the job, to dig out of the hole. People needed to get up to that . . . to that level of competence. If they couldn't, we'd help them find a role in the organization or outside the organization where they could succeed.
Ryssdal: Is there a difference between running a food company and running say, a widget company? I mean, you . . . you reeled off the list of things you need in, in a food company these days. Don't you need the same things to sell widgets or Buicks or whatever?
Conant: Well, I never sold widgets or Buicks. I think in a consumer package goods environment, those are the four things you need; but I've been in the food industry all my life, and what I know is those are the four things you need in food.
Ryssdal: How long did it take before you felt comfortable that you were on the right track?
Conant: It took us the better part of the first three years to get on track.
Ryssdal: So fully half your time here so far.
Conant: I'll be seven years in January, so it took about half-way through, about three years to, to get on track because . . . we had a lot of organization resetting to do and a lot of changes that had to be made; and then we had to demonstrate that we could move the company forward. And that took a better part of three years.
Ryssdal: How did you know . . . you were . . . you were having success?
Conant: Well, I knew it on a couple levels. One is . . . I have visibility into our innovation pipeline years before it gets to market. And I have a seasoned eye for innovation in food and consumer products, and I could see the pipeline growing. I see . . . I could see our capabilities building. I could see the consumer test results that suggested we . . . we were going to get traction with things like reduced sodium, or improved shelving systems for our . . . our canned products; so I knew we were on the right track and . . . by year three, just viewing the innovation pipeline. The other thing I do believe is . . . you can't build an extraordinary company without extraordinary people, and I knew we had attracted the best and the brightest in the food industry. So I knew we had the right people, I knew we had the right innovation pipeline. And so after about three years, I had a sense that this was doable.
Ryssdal: You've got a track record of turning around some brands and some products that had been troubled . . . Fig Newtons and Planters, or some, some items that are point to in, in your biography as successes. Is it fair to call you a turn-around guy?
Conant: Well I measured . . . in a measured way, yes! I believe every business is a growth business; and I believe if you dedicate yourself to really understanding the consumer and the customer in a most competitive way; if you understand it better than anyone else on the planet, you can find a way to grow your business and we found a way to grow our Planters nut business . . . our Life Savers business at Kraft before I came here; and then coming here I honestly believed soup is just going to be a great growth engine for this company for the next several decades.
Conant: Why? Because it's such a core behavior. Not just in the United States, but really globally. It is in every culture. Soup is one of the oldest foods they have. After they would slay the wooly mammoth, they would boil the bones and make soup. It's before bread; it's before any other prepared food. It's meat . . . vegetables . . . soup. That's what they made. And it's deeply embedded in virtually every culture around the world; and there's just great growth potential wherever you go.
Ryssdal: Why has it taken so long then for Campbell to get overseas to some of the great soup-eating cultures in this world? And . . . and I'm thinking now specifically of China and of Russia.
Conant: Well, first of all China and Russia are terrific opportunities for us. The . . . we are the worlds' largest soup company and we only compete in countries that represent six percent of the worlds' soup consumption. Russia and China, alone represent fifty percent of the worlds' consumption; so there's a huge opportunity there. Now, we were focusing on trying to export our soup brands the way we enjoy soup in this country to other countries. What the company has learned over the years is that we needed to tailor our offerings to be very relevant to each individual culture, because each culture's quite different.
Ryssdal: So, explain to me for example how . . . in Russia, where you have everybody from young men to grandmothers making soup at home from freshly bought materials in the store . . . you're going to go in there and sell them pre-packaged soup?
Conant: Well, we help them start the soup experience. Our plan in Russia is, is all about helping uh the person making the soup make it faster and better. All we do in, in Russia, our proposition first of all, they consume soup six times a week. They make soup twice a week. They make the broth for about three hours and then they make, put the fresh ingredients into the soup every other day. And our entry in Russia is focused on helping them make the broth. And then they add their own ingredients to make their soup just the way they want it. And so we're helping with soup preparation, we're not trying to replace the soup habit.
Ryssdal: How are you doing your market research over there? Are you sending Campbell's folks out into the countryside to talk to people in the kitchen?
Conant: In, in both Russia and China where we've gone and entered this year, we had teams on the ground, living with consumers for over two years studying soup consumption habits and doing the, the most leading edge ethnography consumer research around soup consumption and how we could participate in a, in a way that honored the housewife and honored the habit.
Ryssdal: When's that going to start paying dividends for you?
Conant: Not soon enough. Our goal is to have turned this to being a, a highly profitable growth engine in five years, and we're only in year one so we have a ways to go here. The good news is that we are doing the pioneering work and we're first in and we'll have founders advantage relative to any other brands that come after us and also we know more about this particular category than anyone else on the planet and we have a lot of confidence that we'll be able to do the pioneering work. Interestingly, ten years ago or twenty years ago, if you were to talk to Proctor and Gamble, and they'd say, "How long does it take to get into Russia or China?" They would say, "ten years to turn profit." Today, things have changed a lot. There's an infrastructure that didn't exist then where we can ship through that infrastructure and, and reach consumers and customers a lot more easily than they could back, say ten years ago. And also, there's a growing middle class in both Russia and China that is very hungry for good consumer propositions that meet their needs. And so those two things we have going for us now.
Ryssdal: It is more than just a soup company though, you guys have V-8. We're sitting here drinking some, some V-8 Fusion juices; just to get the plug in for you. Um, but also the thing that struck my eye the other day; it, it's interesting what you learn when you do research on a company. You guys own Godiva! But not for too much longer. You want to sell it . . . how come?
Conant: Well first of all soup is our middle name. Literally is a company . . . Campbell's Soup Company so clearly we focus, we focus in three key areas: We have simple meals where we're heavily anchored in soup; baked snacks where we're heavily anchored in biscuits like Pepperidge Farm cookies and crackers; and healthy beverages where we're heavily anchored in V-8. That accounts for about 90 percent of our business. We also have Godiva who has been . . . Godiva has been part of our company we've owned it completely since 1974. It's been a great growth engine for us; but it's not in our core sweet spot in terms of what we do well and it was our observation we basically had choices: did we want to invest in Russia and China and growing soup? Or did we want to continue to try and grow a, a niche product like Godiva, which is a good niche but a limited niche product. And we've chosen to look at strategic alternatives for Godiva and focus our investment on what we do really well.
Ryssdal: But it brings in, Godiva brings in 500 million dollars a year. That's a, that's a whole boatload of money.
Conant: Well, that . . . that we don't publish the numbers but Godiva has that's more on the sales basis not on an earnings basis. And Godiva's a very healthy business. When we bought Godiva in 1974, we paid 5 million dollars for it, roughly, it was 2 million dollars in sales and losing 400,000 dollars a year; and we built the enterprise value of it up over 20 percent per year for 40 years. So we have done a nice job of building it, but as we look forward, we have to make choices on where we're going to invest our money; and our choice is to be a focus food company focused on simple meals, baked snacks, and healthy beverages.
Ryssdal: How do you get the employees to come along in your vision for this company?
Conant: Well, hey . . . I think you have to lead from in front on this. We had inherited a situation where we had a, a group of employees that were not actively engaged in what we were trying to do and the first hour of the first day I met with the employees, I said "our commitment to them was that we were going to tangibly demonstrate that we were going to be valuing their personal agendas, and hope that in time we would inspire them to value . . . the plans that we had for Campbell. And we have worked hard to demonstrate in a tangible way that we value what they're doing and over time we have lifted the engagement from what was one of the poorest levels of engagement that the Gallup organization who measures this for us had ever seen to one of the best; and it's just by consistently demonstrating that we value the people.
Ryssdal: What does that tell you about a company when you read an employee engagement survey and the numbers are terrible; I mean what does that mean for you as a CEO?
Conant: Well it says you lost connections with the employees and you can't be a high-performance company without a high-performance orientation and level of engagement with your employees so it says you're in trouble . . . and we were clearly in trouble . . . and our employees know that we are going to do anything and everything we can to advance their situation and trust that they will do anything they can to help us improve our performance in the marketplace. And it's worked very well. We have gone, as I've said, from poor engagement to top quartile engagement. We have got a spring in the step around here that is absolutely unmistakable when you walk the halls, and it is a totally different place. We're starting to look like winners again!
Ryssdal: Is it um, something you can fix by putting slogans on the wall? We were down in the employees cafeteria not too long ago and you've got, you've got placards up there with, with your mission statement, your philosophies . . . how do you go beyond that though to get these guys to be engaged?
Conant: Well, the key is you've got to do what you say you're going to do; so you have to walk that talk. And we have declared ourselves . . . we have something we call the Campbell Promise: Campbell valuing people . . . hopefully, inspiring people to value Campbell. We have a lofty mission. We have a set of core values; but we hold ourselves accountable to living those values and walking that talk and the . . . the employees can tell within a nano-second whether you're genuine about this or not. There was a recent article in the Wall Street Journal about Bill George and his two great books on authentic leadership and the book True North. Bill spoke to our group last year and he's got it right. You know, you have to be authentic with people. If you're authentic and you mean what you say you mean, they'll follow you. If you're not, they won't.
Ryssdal: We are sitting here in your office and I look around it . . . at the bookshelves, and you have quite possibly the largest selection of . . . of books on leadership outside maybe some big Borders bookstore someplace. What do you get out of these leaderships books?
Conant: Well, it's been an area of interest for me my whole career . . . and certainly over the last 20 years I've become a voracious reader on the subject. I think if you really want to excel at something, you have to be a student of it. And you have to work it. And I find reading is one great way to do it. I also find other avenues for learning in . . . in a . . . in a hands-on way with other . . . other leaders; but reading is a core part of what I do. I commute about 4 hours a day . . . (Kai: 4 hours!) . . . so, so I have plenty of opportunity to do my reading.
Ryssdal: Wait. Wait, back up a minute. 4 hours a day!
Conant: 2 hours each way. Yeah!
Conant: Because I love where I live and I love where I work an unfortunately the two places aren't very close to one another.
Ryssdal: (laughter) So you have a lot of time to read and I imagine you have a lot of time to think too about where this company is going to go.
Conant: Not as much as I'd like. Quite frankly, I've got to block time out to take time and to have some down time, and to get the thinking time because, between all the reading and all the work, there's very little time to do the . . . the kind of quality reflection you'd like to do every year. So every year I try and get off for a couple days by myself and reflect on what I'm doing, and how I'm doing it, and how I can do it better, and where the Company's going and it's important to block out time to do that; otherwise it won't happen.
Ryssdal: Do you have somebody to help you? Do you have a professional coach?
Conant: I have several coaches and mentors that have evolved over the years. I've got a network of people that I can turn to; and I think that's awfully important for a CEO. You . . . you got to be very careful! You can start breathing your own exhaust very quickly! You need to have good, bright people you respect who can call you on your stuff and make sure that you're seeing the world in a very clear-eyed way. And so I have several friends that do that for me.
Ryssdal: Pick a word, and describe your management style for me.
Conant: Um . . . uh, relentless.
Conant: We . . . we . . . the . . . the two words I . . . I would pick are humble and relentless. There's always more to learn, there's always more to do; that's why I'm reading and studying and trying to do better every day. I don't have all the answers but I . . . we have together, crafted a clear vision on where we want to take this company, and we are going to be relentless in terms . . . in the pursuit of that mission. Those are the two things that I would say . . . characterize the way I lead.
Ryssdal: How do you unwind, though?
Conant: I sleep very well at night, I'll tell you that! And actually, I love the work! So, it's not really like work, it's more like play. I love what I do so I get energy from doing it, so I don't really need to unwind.
Ryssdal: How much of your day do you spend managing expectations...whether it's your Board, your executives, Wall Street, other employees?
Conant: I don't think about it that way. It's an interesting question. I just try and do the . . . I've discovered that what works for me is I just try and do what I believe to be the right thing every day. And I do it in a humble and earnest way, and I let the chips fall where they may . . . and that has worked for me for the better part of the last two decades and that's the way I'm going to continue to manage. I don't worry about expectations. I try and be, I'm honest. I'm direct. When I first came here, the expectations were . . . well you're going to turn this around in a quarter! And I you know . . . troubled company, quick fix, all this and I said No! I shared a story about a fellow who, . . . I know who's . . . used to . . . when he would come home late after curfew . . . talk to his father and he'd say, "Dad, you don't understand? The traffic was horrible." And . . . and . . . and the father would say, "Son, you know you cant' talk your way out of something you behaved your way into. You simply have to behave your way out of it, and you're grounded!" (Kai: laughter) And, when we took this job, we said we can't talk our way out of it. It's going to take 3 years to go from being troubled to being competitive. And . . . and . . . and we were very clear-eyed about it, very direct, very honest. The street bought it. They worked with us and they held us accountable to delivering at the end of those 3 years and held us accountable to the milestones in between; but we were very clear that your can't talk your way out of something that you behaved your way into.
Ryssdal: What can you imagine that might not necessarily derail, but . . . but slow down or impede in some way the turn-around that Campbell has going on?
Conant: Well, the circumstance . . . the, the world is changing so fast; but I think we have a clear-eyed view of what we need to do, and there's nothing on the horizon that we can see that is fundamentally going to change our direction. We ought to be able to . . . there are commodity pressures that all companies are facing now; we ought to be able to manage those. There are lots of opportunities for investment; we ought to be able to pick the right ones. Consumers are concerned about wellbeing in their food products and food safety and we ought to be able to address those issues so . . . I, quite frankly, I don't see anything that's going to get in the way.
Ryssdal: Who's your competition?
Conant: We don't really have any direct competitor. The next largest soup company in the United States is one-sixth our size, and is nestled in a few core pieces of geography. We have a unique portfolio with our vegetable juice that competes with other healthy juices, but no clear direct competitor. We have Pepperidge Farm which competes in the bakery space, but there's no clear direct competitor. We are basically the 800 pound gorilla in all the categories in which we compete.
Ryssdal: Sounds a . . . a little bit like a company that . . . that's ripe for the picking. I mean if somebody really wanted to gun for you, you'd be the . . . you'd be the target. Right?
Conant: Well, we are going to be the best performing food company in this sector in my opinion . . . and it'll be clearly on the table in the next 3 to 5 years; but we have a . . . we have a great opportunities in front of us and I . . . I'm not worried about anybody trying to get a piece of our action.
Ryssdal: Why did it take you guys so long to figure out the whole sodium thing?
Conant: Well, sodium has been a challenge, but we've been addressing it for the better part of 40 years. The challenge is to reduce the sodium, and . . . and . . . and maintain the taste profile. It's interesting. I've been doing this food industry work for over 30 years, and we've found, as an industry, we've found solutions for uh . . . sugar . . . with aspartame, and Splenda, and a variety of things. We found how to get fats out of foods; we . . . we found how to, solve just about every kind of taste issue you can imagine except for sodium. It is one of the dominant flavor systems that people are used to having in their food. And it's hard to pull them away from it. So, it has been a real challenge; but I will tell you, nobody in the world knows more about this than we do, and we will crack the code on the sodium issue.
Ryssdal: When you read the market research, and you say, "oh God! Consumers want this out now and this thing out." Do you just throw up your hands and say, "C'mon! We're making food here, people. Just eat it!"
Conant: Well, that's the nature of the business. Our goal is to meet the needs of the consumers faster, better and more completely than anyone else in our . . . in our area. And consumers have always been the . . . it's, it's a shifting landscape always, I've . . . they were worried about cholesterol at one point, they were worried about fat, they were worried about sugar, they were worried about sodium, and . . . systematically the food industry is built, and Campbell's is built to evolve to meet their needs; and I have every confidence that we are going to be able to do that for the next 20 years.
Ryssdal: It was a near thing, you getting into um . . . a consumer package goods or becoming a professional tennis player. How . . . how did it come to pass that . . . that you're not out there with the guys . . .
Conant: That was . . . I wasn't a very good player . . .
Ryssdal: Oh c'mon now! That's not . . . that's not what I read!
Conant: Well there were two things: number one, I wasn't a very good player and number two, the lifestyle of a . . . of a professional athlete was challenging! And I was more built to work in the corporate world. When I started my first day at work, I started at General Mills 32 years ago and I . . . I'd come right off playing tennis and I remember my first day of work, and I started in a khaki suit with a bright, yellow shirt and a big, wide madras tie. I had long hair and a Fu Manchu mustache . . . (Kai: laughter) . . . and I had a . . . I had a headband line from where my headband had been, and I was wearing brown Earth shoes. And about 3 weeks later I had the Brooks Brothers look . . . (Kai: Yeah.) . . . and I had made the shift; but I love, I love the work in corporate America. I love working with people, all kinds, sizes and shapes. It's . . . it's been a . . . thrilling ride.
Ryssdal: Is food just a . . . a curious happenstance? I mean, could it as easily have been . . . soap or something?
Conant: Well I love food! I, you know what's wonderful is when I took a job in the food industry 30 years ago, I could tell my mother what I did; and she understood it. And everyone you'd meet, everyone you'd deal with has a deeply rooted perspective on food. And so you can have incredibly rich conversations with anybody on this planet regarding food; and I . . . I've loved that ride because I can go to the grocery store every weekend as I do, and I can talk to the people in the store, and I can connect with everybody on the planet in food; and it's the only product I know where you can do that.
Ryssdal: I guess in a business sense, food's a pretty good thing to be in because people got to eat!
Conant: People have to eat and the population continues to grow. And in that sense, there's all kinds of opportunity and that's why it is the world's largest industry.
Ryssdal: Um . . . as you think about growing overseas, in China and in Russia, which one of those two places are harder for you to figure out?
Conant: China and Russia are for similar challenges because the . . . the behavior is somewhat the same although there are incredible nuances with each. All the soup is . . . is made and consumed in home; and there is no specific difference between the two in that regard; but there are cultural nuances that we believe we've captured that allow us to compete in each. It . . . it's a toss-up there. China is the bigger opportunity because of the scale there and the number of people. But Russia is . . . is a close second. It's a toss-up. We went into both markets, and we're going to find out in our early lead market experiences. Where we can get traction faster? . . . we don't know yet.
Ryssdal: What about this market? We were coming over here in the cab this morning and we were chit-chatting with the cab driver about where we were going and we said we were going to the . . . the Campbell offices over in Camden; and he said, "where?" And we told him what you guys were and he said, "oh Yeah . . . I've never heard of that." He's a guy who's a . . . a recent immigrant, would seem to be a, a key market for you guys within this country. What are you doing domestically?
Conant: Oh, domestically . . . first of all, the soup category in the store; it's the largest, fastest turning category in the entire center of the grocery store. So, we have something on the order of 98 percent consumer awareness. You found one of the 2 percent who does not know Campbell's. But we do have to make soup more relevant. The things we have done that are exciting is we brought microwaveable, uh . . . whole microwaveable platform, that people who are working can eat on the go; and we have also innovated round wellness in a meaningful way, and we continue to market our core of condensed soups and ready to serve soups to broader populations . . . so we're reaching almost every nook and cranny in the United States with our soup marketing efforts.
Ryssdal: How much credit do you deserve for the innovation in this company?
Conant: I think, I'm creating the conditions for innovation, and I think this is where it's important to be relentless and never, ever let up. And keep expecting the scale, and the pace of innovation to improve. Uh... that's what I've done. I've created the conditions for success, we've brought in the right people, and they are doing all the heavy lifting.
Ryssdal: When you set the bars for success in this company, do you intentionally set them a little high?
Conant: Well, we're practical. We want to have an industry-best performance, and we do our benchmarking in everything we do relative to best-of-class performance, and then we create a path for getting there that's . . . that's . . . that's plausible. I find that if you create standards that people can't imagine reaching, it's hard to keep their heads and their hearts in the game; so you have to say this is best of class and this is where we're headed, and we . . . we need to get there over the next two years; and then you create a thoughtful plan for getting there, but you never let go.
Ryssdal: There are a bunch of this company's products over there on their credenza, and I imagine they're probably all over the place in this . . . in this building somewhere. What's your personal favorite? Of all the things you guys produce and sell . . . pick one.
Conant: That's funny. I grew up, everyone . . . everyone I know, in this country, I talk to them . . . they have a Campbell's soup story. My mom used to bring me chicken noodle soup when I wasn't feeling well and it made my day better; or I had a bad day and she brought me a bowl of soup. In my case, my mother, she made tomato rice soup, and I, with grilled cheese, and to this day, it's still my favorite soup. I don't know if it just brings back memories of home, or it's the ultimate comfort food but tomato rice soup is my favorite.
Ryssdal: Doug Conant, is the President and CEO of the Campbell Soup Company. Mr. Conant, thanks so much for your time.
Conant: Thank you.