Developmental Successes at Clorox
This case story is told by Will Lynn, former Group Vice President at The Clorox Company. It shows how the developmental methods taught by The Carol Sanford Institute facilitated growth, both for individuals and profits, at Clorox subsidiaries Deer Park Spring Water, Kingsford Charcoal, and Hidden Valley Foods.
Deer Park Spring Water
In the second year of using the developmental technology we grew the company 22 percent, and profits increased by 10 percent in after tax earnings in one year.
All this was in the middle of the recession with people really worried the business was going to be sold. In about a year’s worth of time we made the kind of turnaround that business leaders dream of. Business went from losing money — a substantial loss, to a substantial profit in 2 years. We became a business that was making margins equal to most of Clorox’s other businesses, with margins as good as what the very best people in the industry were making — 25 to 30 percent improvements in margins.
The first noticeable result is changes in capacity. Charcoal went from 13 plants and 2 contractors to 5 plants producing exactly the same amount of tonnage. From a safety record that was substantially worse than the industry average, substantially worse than the rest of Clorox, it went to leading Clorox, in terms of the lowest number of lost time accidents. It was setting the safety program standards for Clorox so that the rest of the company started talking, with an accident record that was not only the best in the company but well below the established industry average of the charcoal business.
With the change in capacity came a dramatic improvement in quality. Every quality measure we had, including everything that was important to the customer, improved generally by 10 fold. There was a dramatic improvement in profitability, about 250 percent, making Kingsford the most profitable business inside Clorox. That 250 percent was using some of the profitability from the charcoal business to launch new products in the business at the same time. So actually the numbers are like 500 percent profitability from charcoal alone. We wound up launching a number of businesses with the profits, still being able to sustain good profit growths on charcoal, as well as profit growth for the division, while also adding new products. The division actually wound up 6 times bigger than it was from a profit standpoint.
The bottom line is sales went up for the division in total between triple and quadruple, from a few hundred million to several hundred million. Along with earnings, margins improve dramatically. We made very good money in businesses where others weren’t doing very well, thanks to the developmental approach.
Hidden Valley Food Division
At Hidden Valley, we had three to five new products out in record time where all of the functions of the group worked together to create the new products. Bottled Hidden Valley Ranch, a new product that Clorox had been trying to launch for six years and had never been successful with, we actually got in the market in a year — beginning with a complete review of the R&D program and finishing in a test market with the product that was later very successful — first and second brands in the category. A bunch of products were done in three to five months, from start to finish. When things are working this way, the right things happen. You win awards from your suppliers about how well you launch new products because you get a product that is recognized as a winner and the packaging supplier is an integral part of that. One of my keepsakes is a packaging award we won and which also got us a whole lot of new business.
One of the reasons I believe so much in this process is everybody who is involved in the process benefits. It’s not only linking the employees’ goals with the organization, or being able to satisfy both of those, it’s being able to satisfy everybody involved. The customer does better, the supplier does better, the landlord who rents you the building does better, and the community does better. We were able to contribute substantially because we were more profitable.
One thing that makes an immense difference is keeping the organization focused on the results while you’re doing this work. You will get improvements. I expected improvements. I insist you learn this for the benefit of everyone in the organization, but it’s got to show on the bottom line as well.
The place where the developmental approach works the best is when the entire organization is using it, from a strategy on down. The measurable result happens in plants and in functional operating groups. One of the earlier things that happens is you begin to get alignment between functions. Manufacturing realizes that in order to have charcoal in the stores on Memorial Day they have to do their job and if sales sees something waiting on a dock, they’ll help ship it. The customer service goes up, because somebody in a plant makes it work. People know what they have to do and why they have to do it, because sales and manufacturing have suddenly become linked together to make sure that the particular goal is achieved. This happened in both cases — very large successes, both at Kingsford and Deer Park. The work started with strategy at the Management Committee level and then a lot of changes started happening — because we got people working in the same direction.
Do you remember back before you did business this way — the developmental way? You had some contrast of having worked with a couple of business who didn’t do business this way and then moved towards development. Can you describe the changes?
I remember before I learned this way of working very specifically, because of my background, I think I always wanted to do things developmentally. I took more time to tell people why we’re making changes than most other supervisors. Back when I was a personnel supervisor, I always took more time to explain plant codes to people in plants and that, in its self, was a pretty big difference than from other supervisors. Then you start uncovering potential and being able to put more structure behind the work and having some tools when you set a group of people down and get them to discover the way a particular process works and think about what is going on. Process is kind of a bad word for the kinds of things we’re talking about because people think a process is something that can be done by a process engineer. The kinds of processes that change here are really thought processes; the way people organize business. The process of organizing and doing work is what is taking place.
Those tools to analyze that are not very well taught. Frederick Taylor taught a set of them, but its not a very complete set, and not with a systems view. Taylor’s set measures speed and accuracy. It doesn’t measure overlaps nor allow you to take care of the bigger issues that happen when there isn’t an incrementally measurable output. One of the things that you want to do is make the way two people interact more effective, like the maintenance guy and the operator. You want to make them not have any wasted time and you want the operator to do as much maintaining as he can and be helpful. You want the maintenance guy to be ready to appear out of nowhere the instant that the machine looks like it going to break down or before. That’s the process that you want to work on, the inner relationships, not what the maintenance guy does, because he can come when the machine is broken, and the operators going to run it if it’s not. Most of the waste is what happens when one state stops and the other state starts. I have even seen places in that example, when the maintenance guy would literally not do things so they can frustrate the operators.
That’s one end of the spectrum and the other end of the spectrum is the operators and the maintenance guys deciding what’s going to get done next, when it gets done and doing it in advance so the down time decreases dramatically and then beginning to leave the equipment in better shape every time they work it. We saw this happen in a bunch in our plants. Springfield for example did a great job organizing the way maintenance got done. They moved from better routine maintenance and the operators’ involvement in maintenance, using the maintenance guys as facilitator and resources for how to fix equipment, to creating ideas that went beyond problem solving and into improving the efficiency of machines repeated on their own initiative. They did some incredible things. When that starts to happen, if it happens, you can dramatically change the rate at which you’re able to move the business forward or improve it’s operating results.
If a good boss knows what needs to be done and starts doing it he can make some improvements. If he starts making improvements and five of his direct reports start doing the same thing, adding their own thoughts about what makes it better and might work better (knowing that they have the right kind of boundaries to work in), that they can do it, then it gets better at some order of magnitude faster than if just the boss is doing it. If the people who are actually doing the work become receptive to that and start adding stuff on their own, then the rate goes even faster and that’s why you see major and rapid improvements
We’ve had good, strong, well-developed people following the strategic direction of management in some of our businesses for several years. Before, they were only able to “wiggle the needle of change” a bit. We had implemented teams but had not been connecting people to the business drivers and the customer service people so that everyone knew why what they are doing is important and how it fits into a part of the big picture. They learned in this process that they had something larger to serve than simply the territory that they were responsible for a year before. When this started happening, in the course of nine months, we went from small improvements to a dramatic turnaround in the business and you can almost look at the number of people involved, and begin to tell by that number how fast the turnaround is going to start taking place.
One of the things that always felt to me as really unique about this process is that educators really only touch about 10% of the people and yet effect the whole organization. Whereas most processes require training everybody to do everything before anything changes. And yet somehow the whole thing can shift with 10 or less percent of the people engaged intensely in the change process and they aren’t even active in going out and teaching anyone else, but it always changes.
One of the things I notice when I walk through a plant where this process has been initiated, is that there’s a real difference in the spirit that’s in the place and part of it is tangible, as you were describing, operators working together and cooperating, but there’s something different that happens with the spirit, which is the underlying phenomenal here. I don’t know how to describe that. But you can’t live inconsistent with your own values for very long.
I have gotten really personal rewards out of seeing people who wouldn’t usually be expected to be able to make wonderful contributions, making wonderful contributions inside a business that everyone thought was sick. The whole business turns around. When Deer Park made their real nice profit the last quarter as a part of Clorox, despite the fact that the business had been for sale for a year, despite the fact that the sale had been partially announced and lots of problems were going on, they still made great numbers. That’s the kind of success that everybody feels really proud of. Even though that business was sold and a lot of people wound up not working for the new buyer, they were proud of what they did in the last year with Deer Park. They felt a whole lot better about themselves and they were a whole lot more able to face the dramatic changes they were going to have in their lives because their job went away. Because they could say this was not a failure, the company didn’t close. We actually went out, doing better and better and the company grew 22 percent the last year and profit went up from a small loss, to a 10 percent increase after tax earnings in the last year. Not bad.
As a result, from the Clorox standpoint, they were able to sell the business for substantially more money than they expected. The buyer thinks they got a wonderful deal because the parts they did keep operating actually provided a template for them to change their own organization.
How did you see people change?
Perhaps most significantly, our people became different as a result of the way we involved them in the business. Everyone is a businessperson; they all are focused on keeping the totality going and that is a complete paradigm shift for the company.
Plant managers changed a lot, as did many operators we thought never would. For example, one operator I met the first time when he was a kiln operator and when I met him he emerged from a cloud of smoke. Out of the smoke comes Moose. Moose was aptly named. The guy was huge. I used to tell people that when Moose shook my hand, he would shake my hand up to my elbow because that is how big his hand was. He came out of this smoky cloud and he was totally covered in soot. He had on a yellow safely helmet that hardly any yellow was showing though and said “hi” and turned around and walked away. That’s as much conversion as I was able to have with him for nearly 2 years.
When he started with this process he would move back to the plant and some changes started to happen and they were incredible. Suddenly Moose was coming up with great ideas. Suddenly he proved he could do developmental process ideas for charcoal blending. He started a contest between himself and 2 other plants to reduce starch in briquettes. Moose was not the kind of guy that you would think would be a natural leader of places outside of Bell, Missouri, but he had Springfield and Parsons both trying to catch him on starch utilization and he finally developed the best starch utilization method the company had. People, senior officers of Clorox, also had known him before and would come back and see what had happened over the course of the 3 years. They would come away from the plant and say, “is that the same guy? I can’t believe it.” This guy had made incredible strides. He was always capable of those things, I mean the capacity was always there, all we did was help show him how — gave him the capability — and it made huge changes and that feels wonderful when you watch it happen.
There was something in him that changed as a person. Part of it was skills and tools and then part was his character changed through understanding how to handle himself and others. He had never before been given a context in which he was allowed to do it. Or any tools to really help him to focus on why what he knew worked, other than intuitively. He began to take things apart and understand why they worked the way they did and to influence other people.
In Burnside I probably saw bigger changes. I call what happened to Moose a refocusing, allowing him to focus his energies and the companies energies in the same direction. In Burnside we saw some people with some fundamental changes. Some people, who went back to school, really improved their own abilities dramatically by getting some extra math background and those kinds of things. Kids actually would bring their parents into the program and lead them through those GED questions. We probably had even bigger effects on some of those people than we did on Moose.
With one plant manager, the big change was in his own ability to relate to the people who worked for him. He is one of the ones I would say was more personally affected by exposure to the developmental technology. While he was technically always a good manager and very good at getting things accomplished and very good one on one for the most part, he was horrible in front of groups. This trouble with public speaking was really holding him back, both in front of senior managers, and also in front of big groups of his own employees. I saw a substantial change in his ability to get groups of people working together successfully and provide leadership for those groups. He really started growing and understanding what leadership for these groups was like and realizing that relationship never hurts. There are lots of tools in this technology that you can use that are effective. He learned some of those very well and they were really helpful for him.
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