James M. Kilts - Doing What Matters: How to Get Results That Make a Difference--The Revolutionary Old-School Approach

To my mom and dad who taught me everything that matters

James M. Kilts

To my family, the ultimate in people who matter

John F. Manfredi

To my late business partner and friend, H. Kef Kamai, who worked with me through the Kraft years with Jim and who always understood how to Do What Matters, both in business and in life

Robert L. Lorber

INTRODUCTION

I THINK YOURE GOING
TO GET FIRED

Y ears ago, I started learning the importance of doing what matters when my mother called me to the phone saying: Its the foreman at the plant. There are no more cartons. Theyre shutting down the line. I think youre going to get fired.

At the time, I held an entry-level position at the General Foods Kool-Aid plant in Chicago to put myself through the graduate business school at the University of Chicago. I was responsible for ordering supplies and simply forgot to order cartons for one of the beverage lines. I called the salesman from the box company at home that evening and pleaded with him for cartons. That same night, I helped load a truck, brought the cartons to the plant, and, fortunately, kept my job.

That simple lesson about doing what matterswhat you must do to be successful in business, and, as important, the things you should ignorehas been central for me as I eventually moved from plant assistant to CEO.

WHAT HAPPENS IN THE REAL WORLD?

Whether ordering cartons for the production line or managing big businesses, as I have for the past twenty years, the simplicity of the Doing What Matters approach works. That was certainly the case when, as the CEO of Kraft Foods, I was in charge of a $25 billion plus company that had operations all around the world. The same was true at Nabisco, whose brands were global iconsOreo, Ritz, Chips Ahoy!, Planters nuts, Life Savers confections, and many others. And most recently (2001 through 2005), the Doing What Matters approach was put to the test as I headed one of the best-known and most profitable consumer product companies in the world, the Gillette Company.

But while I have a lot of business experience, the idea for Doing What Matters didnt start to gel until I spent the time between leaving Kraft and joining Nabisco as a visiting lecturer and executive in residence at my alma mater, the University of Chicagos Graduate School of Business. Working with the students was a thrill, both in the classroom and in informal get-togethers. They are among the best and the brightest, and they absorb vast amounts of management theory, principles, and applications. However, a recurring question throughout the year was What happens when school is out and I enter the real world of business? With so many options and so much data available to me, how do I, as a manager, decide and do what really matters?

Thats when I started to think that while knowing a lot is great, knowing how to use that knowledge is what matters in business. Maybe I could help translate knowledge into the basis for useful action. Perhaps my work experience could link the school learningthe principles and theories about businesswith the old-fashioned, tried-and-true, practical applications of what really matters in business.

Over the next eight years, my mind and energy shifted from the halls of academia to the more white-knuckled experiences of helping to lead Nabisco and Gillette out of serious business nosedives that threatened their very existence. However, during those years, the question of deciding on, and then doing, what matters was an ongoing consideration for me.

RECONCILING REVOLUTIONARY WITH OLD SCHOOL

For example, the seemingly contradictory subtitle for this book, How to Get Results That Make a DifferenceThe Revolutionary Old-School Approach, came from those experiences. Old school means the fundamentals, and the importance of always having them front and center. Are the cartons ordered? If not, then the line shuts down.

But the fundamentals alone arent enough, unless theyre applied to the warp-speed environment you operate in today. Lets say that youve inherited a sales force thats gone through a $50 million reorganization, but is still on a trajectory to crash and burn, as was the case at Nabisco. You must take radical action quicklybefore the moment of impact.

You not only have to sort out what you should pay attention to and what you should ignore, you must do so with revolutionary speed and decisiveness. Yet, even with disaster staring them in the face, people from the lowest to highest levels in many organizations often prefer to rearrange the deck chairs. Theyll give lip service to stepping up performance, but in practice go about business as usual.

That was certainly the case at Gillette. Its position as the number one maker of blades and razors was virtually unchallenged in all regions of the world. Its manufacturing capabilities were unparalleled, and its engineering, research, and new-product development were unmatched within all consumer products.

Not only had Gillette invented the safety razor and the double-edged blade, it had also commercialized every major advance in wet shaving for over a hundred years. And in recent years, the Gillette development machine seemed to be working better than ever. The Mach3 shaving system that was introduced in 1998 was a runaway success that generated more than $2.5 billion in sales during its first three yearsa premium-priced, exceptionally high-profit product that men all around the world loved.

WHERES THE GROWTH?

So what was the problem?

Start with net sales, net profit, and net earnings stalled at zero growth, with Wall Street and the Gillette board of directors convinced that the worst was yet to come. Yet in 2001, as the new Gillette CEO, the first outsider to run the company in more than seventy years, I was told by Gillettes vice president of human resources that 65 percent of the managers had received performance ratings of exceeds expectations or outstanding. And Gillette was not just in a tailspin. It was caught deep in a circle of doom.

My job was to turn things around, and do it without having the luxury of time. Yes, we had to preserve what was importantworld-class brands of the highest quality, great traditions of unmatched innovation and technology, integrity, and respect for people. But I also was there to lead the revolution by using the past as a starting point. Old-school approaches would be built upon, adapted, and, at times, totally transformed and overturned so Gillette would return to its glory days and its managers would be among the most prized in business.

Lets take the performance measurement system as an example of what had to be done. Like many companies, Gillette used the five-grade system of Does Not Meet Expectations, Needs Improvement, Meets Expectations, Exceeds Expectations, and Outstanding. Perversely, the worse a company does, the more likely it is that more people will be graded higher. Managers dont want to demotivate people in bad times, so they move them up the scale. Thats why two-thirds of Gillettes managers were at the top of the performance scale despite the companys ongoing decline in performance.