Newman's Own after Paul

When brands are linked to iconic founders, outliving them is a tricky task. At Newman's Own, leaders are laying plans for the brand to reach the next generation.

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Two-thirds of family businesses fold before reaching the second generation, and just 12% make it to the third. Advance planning is the key to a lasting corporate legacy.More

(Fortune Small Business) -- What happens when a company's eponymous founder and celebrity spokesman dies?

Executives at food company Newman's Own are now facing that question, as 83-year-old founder Paul Newman passed away Friday following a bout with cancer.

"When a celebrity dies without a plan, the company and product can die with him," said Les Banwart, vice-chairman of the nonprofit organization Aileron, which consults on issues of professional management.

Newman's uncertain health and advanced age raised questions throughout this year about the future strategic direction of the food company Newman launched in 1982, with a salad dressing first mixed in the basement of the horse barn on his Connecticut property. Today, the company has a staff of 28 and an independent management team. It also launched a spin-off, Newman's Own Organics, run by the actor's daughter Nell Newman. But Paul Newman remains tightly entwined with the brand image of his namesake company - his face is the logo on all of its products - and executives have been tight-lipped about their future leadership plans.

"For 25 years, we at Newman's Own have had a front row seat to watch Paul's entrepreneurial brilliance, humor, and compassion at work helping those in need," reads a note posted on the Newman's Own and Newman's Own Organics Web sites on Saturday. "We will miss Paul, but we will honor his vision for the Common Good through dedicated stewardship of his company that will perpetuate his philanthropic legacy. Paul wouldn't have it any other way."

Company representatives were not immediately available for comment.

In the early days, Newman's Own traded heavily on the image of the actor known for classic films such as Butch Cassidy and the Sundance Kid and Cat on a Hot Tin Roof. Shoppers thronged around store displays that boasted the banner: "Butch Cassidy is also a gourmet cook." More than 10,000 bottles of Newman's now-iconic salad dressing were sold in its first two weeks on the market - and after the national and international press came calling, so did the supermarket chains.

Newman's Own says it turned a profit in its first year. All of the privately held company's profits and royalties went directly to Paul, who has from the start distributed the money he takes in from the company to charities. In 1988, Newman launched his flagship charity, Hole in the Wall Camps, which brings together children with serious and terminal illnesses for a free summer-camp experience. (Paul's daughter Clea sits on the Newman's Own Foundation board, which oversees the charitable grants.).Today, Newman's Own is close to hitting the $250 million mark in charitable giving, according to company spokeswoman Susan LaMontagne.

In an interview in May, Nell Newman acknowledged that her father's identity was critical to the success of Newman's Own and its associated brands.

"We definitely rode on his coattails," Nell Newman said of Newman's Own Organics, which she launched in 1993 under her father's tutelage. Independently owned since 2001, her company operates as a traditional for-profit entity, paying Paul a royalty for the use of his brand and image.

"That opened doors for us, but it wouldn't have flown if we hadn't maintained the high quality of the final product," she said.

At Newman's Own, Paul Newman was still involved in product development, according to senior vice president of marketing Mike Havard. Paul stopped by the company's Westport, Conn., headquarters in December for the final taste testing of the new line of cereals, Havard said this spring.

"Paul went through every one," Havard said. "He loves to write the legends on the back of the bottles."

Whether a formal succession plan is in place is unclear. But most signs indicate that Newman had already transitioned out of the day-to-day operations of the company.

"He's a taster," said Nell Newman. "We don't put him in the middle of the process because it can be tedious."

A board with a president and CEO oversees operations at the Association of Hole in the Wall Camps, although Paul Newman was known to spend many summer days visiting with the children who attend.

"That's what he wants his legacy to be - the camps," Nell Newman said. "I mean, wouldn't you have more fun hanging out with the kids versus hanging out with a bunch of executives?"

Succession experts point to the restaurant chain Wendy's (WEN) as an example of how celebrity brands can outlive their chief spokesman. Unlike Newman's organizations, Wendy's is publicly held, but founder Dave Thomas appeared in television commercials and was nearly synonymous with the brand.

After Thomas died of liver cancer in 2002, it became clear that the company had begun the process of succession long before the transition came to pass, said Matt Paese, vice president of succession management at consulting firm DDI. Wendy's board had in years prior already moved Thomas out of the operational leadership role and named a longtime veteran to the company's chairmanship. Wendy's survived Dave's passing with its sales intact: It reported revenue last year of $2.45 billion, up 19% from 2002.

"That's the rule for healthy successions," Paese said. "Start now. Meaning you never stop planning - it's not a static event."

Succession management consultant William Rothwell points to Gianni Versace's fashion house as another example of a successful handoff, one managed in particularly abrupt circumstances. After Gianni's murder in 1997, his sister Donatella stepped in as creative director and his older brother Santo became CEO. The company farmed out design responsibilities to another famous design house, and the brand survived.

"You have to preserve that level of confidence in the name," Rothwell said.

As for the future of Newman's Own, marketing VP Havard said the company embarked on a "new strategic direction" this year and plans to expand into new food categories.

"We want to get into younger consumers," Havard said. "Those Baby Boomers that love Newman's Own - we want their kids to love Newman's Own, too."

Will Newman's stay in the family? Nell hopes Paul's two grade-school grandsons, Peter and Henry, will take an interest in the venture. Their mother, Lissy, designed the Newman's Own Organics label.

"They love Pops," Nell said of the grandchildren. "But it's a tricky thing to make that work with family businesses. It's difficult to tell how the next generations will perceive it when they don't have any relationship to the person who was ahead."

Meanwhile, Newman's book may help his story survive the ages. Publisher Nan Talese recently reissued in paperback Shameless Exploitation in Pursuit of the Common Good, the book that Paul and Newman's Own co-founder A.E. Hotchner wrote about the company's start. (The title refers to the famously publicity-shy actor's take on the brand's marketing strategy.)

"It's an absolutely wonderful blueprint for starting a company just using your common sense," Talese said. "Paul's legacy is a whole new image of philanthropy." To top of page

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