Doing What Matters: How to Get Results That Make a Difference — The Revolutionary Old-School Approach
By James M. Kilts with John F. Manfredi and Robert L. Lorber
Crown Business, 2007, 334 pages
Harvard Business School teaches a series of four cases dealing with James M. Kilts’s turnaround of the Gillette Company beginning in 2001. Kilts’s story is told in other business schools’ case studies as well. No wonder, for it is the textbook tale of a successful revival of that archetypal American business — the consumer products company — by an obsessive turnaround master at the peak of his game. But when Procter & Gamble bought Gillette for US$57 billion four years later and gave Kilts a severance package that was estimated to be $168 million, the deal provoked a political storm in Boston, Gillette’s base, and the amounts paid to Kilts and his team (estimated to be $450 million total) stoked the debates on CEO compensation, corporate governance, and the roles of investment bankers.
Now, to what must be the chagrin of the business schools, Kilts, in concert with two of his longtime associates, John F. Manfredi and Robert L. Lorber, has written a lengthy teaching note that is available to all students. Doing What Matters: How to Get Results That Make a Difference — The Revolutionary Old-School Approach underlines the benefits that an outsider with the right experience can bring to a company in need of a turnaround. In the case of Kilts and many of his colleagues, the experience was provided by the Kraft organization, long regarded as the premier developer of business leaders in the consumer products industry. Kilts had been CEO of Kraft as well as of Nabisco after it got into trouble following a highly leveraged buyout. This experience turned out to be perfect training for the challenges he and his management team would face at Gillette.
Kilts is a monomaniac, and his mania is for building brand value. He dubs his management style “old school,” and his conceptual framework can best be described as Rational Manager circa 1955, with its emphasis on analysis, planning, and control and its assertion that if something can’t be measured, it can’t be managed. Deployed by an expert, however, his framework functions superbly in the highly structured, hyper-measured context of a large consumer products company with blue-ribbon brands. Here the old-school approach helps Kilts cut through the clutter and focus relentlessly on what matters. He assembles a team of trusted associates, consultants, market research specialists, ad agency executives, investment bankers, and other advisors, and uses them to extract Gillette from what he calls the Circle of Doom. The Circle of Doom is a death spiral of overoptimistic promises followed by quick fixes, such as stuffing the distribution channels. This leads only to more missed targets, more promises, and more quick fixes. Everyone inside the company would like to stop it, but nobody can until someone like Kilts, with no attachment to the past, steps in to cry, “Enough!”
Kilts knew that the deal to sell Gillette to P&G would attract bad press, but not even he could have been prepared for the storm of abuse that followed. He was clearly hurt personally by this, and his book deals with all the related issues except that of his outsized severance package. He never questions the logic of paying CEOs for results in the market for expectations (i.e., Wall Street), which they cannot control, rather than for performance in the market for real goods and services. One wonders if even Ayn Rand, of whose writings Kilts is said to be a fan, wouldn’t ponder that.permalink.