“If you have good numbers, show them up front!” begins Reuben Mark. The numbers for Colgate-Palmolive are indeed impressive. Speaking as a guest at the Harvard Business School, the former CEO of Colgate-Palmolive can show a total return of some 4200% during his 23-year tenure. This is more than 40% higher than peer companies. But Mr. Mark claims that this success is due to the company’s ability deal with the small, everyday issues. This may not make for dramatic headlines, but they are universal things that have kept the company in business since its creation in 1806.
Focusing on the small things
“Incremental and consistent gains” are very much the leitmotif of the former CEO of the US consumer products corporation. Famous during his time for shying away from the limelight, Mr. Mark claims that continuous improvement was one of the key elements to Colgate’s strategy. This meant focusing on every department and each person within the company. This might seem like a simple concept, but Mr. Mark points out that such concepts need to be explained again and again within a company. And you need to concentrate on the small things and constantly trying to improve each little element.
This policy began at the top by designing a strategy to make it a very focused company. They sold off all the non-core businesses such as jewellery, apparel and shoes etc. They then concentrated on a small number of businesses that had global scope. This allowed the company to devote more time to promoting the four ‘families’ of products; oral, personal and home care, and pet nutrition. Colgate toothpaste and Palmolive soap, are of course, household names today, but so are other products such as the Speed Stick deodorant and Ajax cleaner. The idea was that the company would be dominant in a limited number of categories rather than lose its direction through too much diversification.
Culture and process at Colgate
Perhaps because of this relentless pursuit of improvement through small issues there is also the need to constantly energise people within the firm. During his time at Colgate he had championed the wearing of name badges for all the employees to make it easier for people to get to know each other. But Mr. Mark also advocates discussions from other firms or other industries as well.
“You have to get people to interact with each other both inside and outside the firm.” Says the former CEO.
Such encouragement for sharing ideas was designed to increase the culture of innovation within Colgate. But getting the right culture also requires a detailed analysis of how the company goes about it daily business.
“Without process you can’t build culture.” Claims Mr. Mark. “You need to be constantly comparing the way you do things.”
Finding best practices and for things such as speed to market and an efficient supply chain network all come from improving the processes within the firm.”
Training and Educating Employees
When Reuben Mark took over as CEO in 1983, gross margins were at 39%. The company immediately fixed an objective of 44% and today there have climbed past 60%. This improved performance was also due to the policies they implemented for training employees.
“At Colgate we were insistent on having a strong training policy. This was through formal and informal learning. We had 3000 teachers in the company.” claims Mr. Mark.
However, training was not just about the procedural aspects of the job.
“This was not just about technical skills but also about teaching employees to respect each other.”
Career plans were designed for people at all levels. In fact, Mr. Mark states that no promotions were given in the company until employees’ evaluations for respect and general behaviour had been verified. A clear, two way communication process was also established so that people could give their ideas freely and easily.
Diversity of ideas and employees also became one of the major policies of the company. Indeed, Colgate scored an A for its diversity in the workplace in the 2012 Human Rights Campaign “report card.”
A massive corporation still focused on little things
Today, Colgate sells products in 223 countries in the world and has more than 37 000 employees with revenues in excess of $17 billion. Despite the size of the corporation, Mr. Mark maintains that success has been founded not on grand schemes, but constantly looking for small improvements in every part of the company. Those little things added up to a 4200% return in the 23 years that Reuben Mark was CEO.