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Change is the only constant. Still, how an organization navigates change can have a significant impact on its place in the market and future value creation potential. It’s up to CEOs to lead their businesses through change and come out stronger and more profitable on the other side.
Not all CEOs have a proven playbook for transformation, but seasoned leader Michael Polk, Newell Brands former CEO excels at it. The former executive for Kraft, Unilever, and Newell Brands (formerly Newell Rubbermaid) is renowned for his approach to business transformation — a role that engenders a lot of respect within the industry. “If a business isn’t doing well, leaders have to intervene and create a new formula for performance, or the business will under-perform or sometimes fail,” he says. “In this context, you have to make the harder right decisions, that sometimes carry social costs for the organization and you as the leader. While you will likely earn the respect of the organization and also engender followership, you may have to accept a tradeoff if being a loved leader is important to you. You’ll be respected, and the company will be better off, but you won’t necessarily win popularity contests.”
Polk’s results speak for themselves. In his first quarter as CEO of Newell Rubbermaid, net sales were $5.4 billion. Upon his exit in 2019, sales ballooned to $9.4 billion thanks to an ambitious transformation project. Michael Polk shares his approach to transformation.
“We were trying to make the whole greater than the sum of the parts,” Michael Polk says of his transformation work. “What aspects of the business can be differentiated versus your competition are the capabilities and assets that can create transformative value for your people and your investors?”
For example, as when Polk joined Newell Rubbermaid as CEO in 2011, he believed the business portfolio, which was an eclectic collection of consumer, industrial, and commercial businesses and was being managed as a traditional conglomerate or holding company. The portfolio had no cohesive logic and the businesses that had been acquired had never really been integrated. “Our goal at the beginning was to make the whole of Newell Rubbermaid greater than the sum of the parts. Create an entity that could leverage the consumer facing portion of the portfolio, organize certain capabilities across the enterprise and extend are best brands multi-nationally,” Polk says. To support this vision for the portfolio and company, Polk led the transformation of the portfolio selling its software and industrial products and buying new consumer-facing businesses. In total over his 8-year tenure at what would be rebranded as Newell Brands — his team completed 18 divestitures and 17 acquisitions. He simultaneously transformed the company from a holding company to an operating company building a set of advantaged digital commerce and brand development capabilities that were advantaged versus competition. While the approach led to a lot of change, it transformed the company into a multinational consumer goods powerhouse.
Today, Michael Polk is taking a similar approach as the CEO of Implus, a company with 16 brands across the health, wellness, and fitness categories. “We’re trying to build the infrastructure to be able to allow each of those individual brands to grow and develop while leveraging the scale of the company to bring the right resources to bear on those businesses,” Polk says.
Everyone wants immediate results, but quick wins aren’t always possible. After all, if change were easy, the business would have already done it. Michael Polk works with Implus through Berkshire Partners, a Boston-based private equity firm. “Their value proposition is that they look to create enduring value by building exceptional teams,” Polk explains. “They participate in the business as stewards, but they empower our team. If we need external help from the firm, we can draw on their network of operating partners and we have done that on occasion. Their philosophy is creating enduring value through us. From my perspective, that’s the perfect formula for a leader with the kind of experience I have.”
Investment returns are important, of course, but Michael Polk encourages leaders to take a value-first approach, like Berkshire Partners. Instead of adding pressure by expecting immediate results, long-term thinking focuses on potentially bigger, better payouts in the future.
Transformation leads to amazing results, but change is disruptive. Sometimes, transformation can rub teams the wrong way. “In many of my experiences, I’ve found that companies are very democratic in the way they allocate resources, whether it’s human capital or money. In turnaround situations, you have to be much more choiceful, and that means you’ve got to take from some businesses and give to others that offer more potential,” Michael Polk says.
However, reallocating resources without explanation is just poor management. “You have to bring the organization with you. You have to give people the context for the choices you are making. You have to make sure the team is charging up the hill with you,” he says. “Leaders have to over-communicate to drive alignment and as much support as you can to enable change.” At Implus, Polk has conducted monthly global townhalls since he started in February 2020 to build that alignment and share progress.
Michael Polk is no stranger to the process of change. His policies don’t always earn immediate buy-in, but a careful approach is key to getting the team on the same page. “You have to be really clear with what your intentions are,” he says. “I think it helps when you have experience having done it in different contexts because you have credibility with the organization. But either way, you must earn followership in new environments.”
Resistance will happen during any period of change. Michael Polk heads up these concerns by being transparent about his plans. In fact, during his transformation project with Implus, he supplied a copy of the company’s strategic plan to every employee. “These are devices that help people stay grounded while you’re driving change,” he explains.
Michael Polk’s career has been chock full of leading large change programs. Most of his work has led to amazing returns over time. Polk will not disclose numbers related to his time at Implus, but he has said at a recent investor conference, “We have completed the first chapter of our transformation at Implus and are pivoting to the second. We are very proud of our progress and excited by what comes next. The next chapter will be as dependent as the first on leadership through change.”
