Pulling Campbell’s Out of the Soup

Douglas Conant is an introvert.

But when he took over as president and CEO of struggling Campbell Soup Co., he realized he had to break out of his comfort zone, get in front of his staff, and make some bold declarations from the get-go.

"As introverts, we assume everyone knows what we're thinking. But people aren't mind readers," Conant told a roomful of CEOs during the second Higher-Ambition CEO Leadership Conference, held at Harvard Business School in January. "I had to go out on a limb and talk about my vision for going forward in an uncomfortable way. I needed to get out there and tell them that we were taking the company to higher ground. We were going to get the workplace and the marketplace right. I think every CEO needs to do that in a smart way."

Campbell was in rough shape when Conant joined the company in January 2001. In the late 1990s, the company increased prices and lost many consumers to less expensive soup brands. Rather than bring prices back down, to maintain earnings Campbell cut costs by reducing advertising and laying off employees--moves that resulted in even lower sales. By the time Conant was recruited, the company's share price had dropped from a high of $60 in 1998 to $30.

Conant took a good long look at staff morale and didn't like what he saw.

"We had a toxic culture. People were understandably jaundiced with management," he said. "It was hard for me to imagine that we could inspire high performance with no employee engagement."

Conant decided to grow the soup business, and he championed the idea of "winning" on two fronts--in the workplace and in the marketplace.

To improve the culture in the workplace, Conant started at the top. He held weekly staff meetings and used a scorecard that evaluated each leader's performance. He created a leadership model that outlined expectations. The number one expectation was inspiring trust--and that meant managers had to have a certain level of both "competence and character," he said.

"You have to know what you're doing, and you have to do what you say you're going to do. Before you have the moral authority to lead your team, you have to inspire trust," he said. "Trust is the one thing that changes everything. In a high-trust culture, it's so much easier to get things done."

Conant put together a two-year leadership development program that he personally ran, requiring leaders to attend five major sessions of two or three days each, giving them homework and reading assignments, and requiring them to work with a peer coach.

"People would send in their homework, and I would try to get back to them in 24 hours," he said. "It was the single most important thing I did. I wanted them to go out and lead in a more inspired way. How could we be a higher-ambition company if we didn't have higher-ambition leaders?"

“HOW COULD WE BE A HIGHER-AMBITION COMPANY IF WE DIDN'T HAVE HIGHER-AMBITION LEADERS?”

Many people weren't cut out for the job. In the first three years, 300 of the top 350 leaders at the company exited. Conant focused on making those who stayed and were committed to the mission feel good about their work. In fact, he went so far as to write 10 to 20 handwritten personal notes to employees at all levels of the organization each day to recognize those who were performing well. During his 10-year tenure as CEO, that added up to over 30,000 notes to his 20,000 employees. Conant started to feel a change in the work atmosphere.

"We needed to reach employees on four levels: People needed to make a living, they needed to feel loved, they needed to learn, and they needed to feel like they were part of something special and leave a legacy behind," Conant said. "Hitting on those four cylinders, we were able to create a very powerful culture."

Conant established two performance metrics to measure progress, one based on economic value, measured by shareholder returns compared to competitor companies; and the other based on social value, measured by the Gallup Employee Engagement Index.

The company made steady progress in both areas. For the six years preceding July 2010, Campbell's cumulative total shareholder return was 64 percent, nearly five times the 13 percent return of the S&P 500. And by 2010, the Gallup Employee Engagement Index showed that for every 17 engaged employees, only one was disengaged, a ratio that exceeded Gallup's "world-class" benchmark of 12:1. More impressively, the engagement ratio for the top 350 leaders was an amazing 77:1.

Once the company was solid in both the workplace and the marketplace, Conant strongly encouraged corporate social responsibility efforts, including investing in solar energy and environmentally friendly farming with his sights set on reducing the company's carbon footprint.

"The more we leaned into development in the community, the better we performed. I started to experience this flywheel. I didn't realize how powerful it was," he said. "People shared our CSR report with their friends, their parents, their kids as a way of saying, 'Look at how we're helping to build a better world.' "

And ultimately, Conant found that as CEO, taking center stage and leading the efforts made all the difference. Perhaps just as importantly, he knew his company subscribed to what he preached.

"CEOs must lead from in front. And we have to behave our way to more credibility," said Conant, who retired from Campbell in 2011 and is now founding CEO of ConantLeadership. "It's not what you say, it's what you do."

Harvard - Working Knowledge