Friday, October 22, 2010

Jim Collins on Darwin Smith

  Smith brought that same ferocious resolve to rebuilding Kimberly-Clark, especially when he made the most dramatic decision in the company's history: Sell the mills.  Shortly after he became CEO, Smith and his team concluded that the traditional core business - coated paper - was doomed to mediocrity.  Its economics were bad and the competition weak.  But, they reasoned, if Kimberly-Clark thrust itself into the fire of the the consumer paper-products industry, world-class competition like Procter & Gamble would force it to achieve greatness or perish.
  So, like the general who burned the boats upon landing, leaving only one option (succeed or die), Smith announced the decision to sell the mills, in what one board member called the gutsiest move he'd ever seen a CEO make.  Sell even the mill in Kimberly, Wisconsin, and throw all the proceeds into the consumer business, investing in brands like Huggies and Kleenex.
  The business media called the move stupid and Wall Street analysts downgraded the stock.  Smith never wavered.  Twenty-five years later, Kimberly-Clark owned Scott Paper outright and beat Procter & Gamble in six of eight product categories.  In retirement, Smith reflected on his exceptional performance, saying simply, "I never stopped trying to become qualified for the job."

From Good to Great by Jim Collins, pages 18-20.  (You should read the whole thing.)

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