Michele Buck, who leads the Hershey Co., said she is spending “a lot of time thinking about the organizational construct that will let us win.” More specifically, she said Hershey needs “shifts” in its talent pool “just to have the energy, the momentum, the expansive thinking and people really approaching the business that way more than ever before.”
Insights perhaps most germane for the baking industry came not from a food executive but from Benno O. Dorer, chairman and chief executive officer of The Clorox Co. With roots dating to 1913, the household products maker produces a number of popular, but not necessarily fast-growing, brands, with familiar names such as Clorox, Kingsford, Pine-Sol and Tilex.
In his three years as Clorox c.e.o., Mr. Dorer already has made his mark, with the center-of-the-store company producing consistent top-line growth and impressive earnings gains each year. The company’s share price has appreciated about 40% since he took the helm, and Mr. Dorer was named “the most beloved c.e.o. in the United States” earlier this year based on a survey using anonymous, voluntary feedback conducted by Glassdoor, Inc., a job recruiting company.
Among steps taken to keep the Oakland, Calif.-based business moving forward, Mr. Dorer said Clorox has tried a range of metrics to reward those responsible for marketing.
“We would reward them for all kinds of different things, and you get what you measure,” he told the audience. In the end, Clorox settled on a metric that should resonate in grain-based foods.
“We have declared that for us, household penetration is through analysis most closely correlated with long-term success,” he said. “So increasing household penetration is a key measure, and if you do that, all of a sudden people become interested again, and you know who is using our brands and who is not using our brands and why are they not using our brands and what innovation do we have to deliver to get access to more households and it’s changed everything. It’s changed the way our marketing groups operate. It has changed the effectiveness, and ultimately it’s changed the growth rates of our company.”
While eking out a few extra percentage points of household penetration for dominant brands may seem basic or unexciting, Mr. Dorer said the mindset required is very much akin to that of the start-up entrepreneur.
“We can learn from the single-minded obsession that start-ups have, which is around getting access to new households,” he said. “That’s all they care about.”
For the company’s top executives, 15 different metrics help determine the company’s short-term incentive pay, including a number of financial measures. But household penetration is part of the mix.
Understanding what households are and are not purchasing bread and other grain-based foods long has been squarely within the radar screens of the industry’s executives. In a recent presentation, Allen L. Shiver, c.e.o. of Flowers Foods, Inc., set the stage for his presentation by describing the bakery business as a $31 billion market (retail and food service), adding that “98.6% of households buy fresh bread.” The introduction of half loaves for baby boomers and new brands targeted toward millennials are examples of steps bakers have taken to maximize household penetration. Still, whether baking companies are measuring household penetration rates as an incentive compensation metric is a different matter. Bakers who have concluded certain of their brands no longer resonate with consumers should look no further than the “stodgy” category of bleach and household cleaners to see opportunities to breathe new life into aging brands.