Rubbermaid CEO: Selling 'brands that matter'Consumer products maker's new CEO had a serious challenge ahead of him when he replaced his ousted predecessor. So far, he's been living up to the task. Fortune's Matthew Boyle sits down with Mark Ketchum and gets the inside story. NEW YORK (Fortune) -- When Mark Ketchum joined the board of struggling consumer products maker Newell Rubbermaid (Charts) at the end of 2004, he had no idea what he was in for. A 33-year veteran of Procter & Gamble (Charts), where he headed mega-brands like Pampers, Ketchum, 57, was asked to serve as interim CEO after the board finally lost its patience with underperforming former chief Joe Galli in October 2005. Last February, Newell's board removed the "interim" label, and Ketchum has embarked on a plan to get the company's disparate assemblage of brands (Sharpie, Graco, Calphalon) moving in the right direction. So far, investors are pleased, as the stock returned 26 percent last year. Fortune's Matthew Boyle recently sat down for an exclusive interview with Ketchum to discuss branding, what he learned from his old boss (P&G CEO A.G. Lafley), and how his golf game might never recover.  First things first: why in the world did you leave P&G? At P&G, I was one of the top four officers reporting to [Lafley], and running a big piece of the business - Pampers and Charmin and Puffs. But I'm two years younger than A.G., so I concluded that I was not going to become the CEO. So I decided to get on two or three good corporate boards, and eventually I wanted to be chair of one of these boards. I was a good match for Newell because they were adding consumer branding capabilities to their board, bringing in people from companies like Nike and Gillette. Over the course of 2005 we parted company with [Galli] and the board asked me to step in, on an interim basis. I was less than a year into my retirement, which my wife now tells me I flunked. What was the situation you encountered? Rubbermaid, in its heyday, was one of the most admired companies in the world and one of the most well respected brands. But was it a good branding company as I walked in the door? No. I was convinced we did not have the right strategy. What wasn't working was the marketing. We were still a "customer-push" strategy. Previous management had focused on pushing things out to [our retail] customers. The [retailers] told us what they wanted and what would sell. Can you give an example? In our Graco car seat business, it would be typical for us to go in with 100 different fabric swatches. We'd walk in to the retailer and they would pick three, but what do you think the likelihood is that those three are the most popular with consumers? Not very good. Often the retail buyer thinks he knows the consumer but the fact is, he has no research to back it up. We had abdicated our responsibility. We own the Graco brand, and nobody else. So now we research the fabric patterns and reduce the number of choices available to retailers. We know the consumer response will be much better. What things have you brought over from P&G? A.G. Lafley was very good at simplifying communication and repeating that message so that it stuck with the organization. I do try and emulate that myself. For example, I added the phrase "Brands that matter" to our [corporate] logo this past year. I didn't ask permission from the board. I just did it, because I really needed to give the organization something to rally around. So, what brands still matter at Newell? There are no brands that can't matter. But some matter more than others. This is an eclectic group of brands, and not one you would put together if you were starting from scratch. But I got rid of the parts we really didn't like, so we are down to a brand portfolio we can grow from. We have a lot of good brands waiting to be great. Even Rubbermaid is only a good brand. It used to be great. We can make it great again. How? We need to invest in them. The infusion of brand spending was the single biggest driver of our performance last year. We went from spending 3.9 percent of sales [on promoting brands] to 5.5 percent of sales in one year. The previous plan had us going to 5 percent over three years. Take Calphalon One, our premium cookware. Its sales in 2005 were flat. We said, how can that be? But we only spent half a million dollars marketing it. I said, why don't you spend $2 million in one quarter? We gave two or three of our brands a shot in the arm like that last year, and we overshot our gross margin [targets] by a wide mark. What have you done to improve the corporate culture? The cultural change is every bit as important as the other things we are doing. If we don't make that happen, none of the other things will work. I have learned that culture trumps strategy any day of the week. And you're right, it starts at the top. You need a lot of stomach to do this, because you will get a lot of resistance. One of the cultural changes is improving collaboration. Before I got here, the direct reports to the CEO got together, at most, once a year. I do them monthly now. Is the housing market downturn affecting your sales? The housing market affects 10 percent of our total business - a portion of our tools business and a portion of Levolor [window blinds]. So is it having some effect? Yes. The point I want to make is that the housing market will not make the difference between a good year and a bad year for us, but it might make the difference between a good year and a great year. How do you like living in Atlanta, where Newell Rubbermaid is headquartered? I haven't had much time to enjoy the city yet. I like to play golf, but I can't say I've played much since I got this job. _________________ |
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