Jim Kilts Has The Goods

November 15, 2007

BY MICHAEL KRAUSS

How would you like to have one of the world’s top brand builders, operating executives, turnaround experts and corporate deal makers as your personal mentor?

University of Chicago MBA student, Ashwin Chandramouli, 26, has what the rest of us can only dream about. He has Jim Kilts as his personal mentor and study partner.

“I am very fortunate,” says the understated Chandramouli, who is also a Fellow at the Kilts Center for Marketing at the University of Chicago Graduate School of Business.

Why is a successful executive like Kilts tutoring Chandramouli and investing his hard earned fortune in establishing a world class marketing education center at the University of Chicago Graduate School of Business?

Kilts feels traditional marketing education efforts do a good job with basic marketing training, but they fail when it comes to melding marketing fundamentals with general business management skills. “They fall short on providing a good grounding on the basics and fundamentals of good management,” says Kilts.

“There’s a need to educate people on how to identify what matters, what's important and what can be ignored when you're in a business situation,” says Kilts. “Young managers confront so much information. They need training on how to know where to focus,” he adds.

“Case studies help but you really need to think practically about how to prioritize because there is so much information,” says Kilts. Kilts’ feelings inspired him to write a book, “Doing What Matters,” which was recently published by Crown Business, a division of Random House.

“I was an Executive in Residence at the University of Chicago,” says Kilts. “In my office hours I saw a lot of students who wanted unvarnished advice. They asked, ‘When there is so much information, so many strategic alternatives, how do you prioritize and decide what is important? How do you decide what you're going to do and what you're going to ignore,’” says Kilts.

Kilts says there are three focal points in turning around a business.

“One, you work on growth and innovation. Two, you work on productivity and costs. Three, you work on developing a high performing organization. Those are the three activities that encompass business,” says Kilts. “Sometimes you're working on all three; sometimes you're working on one.”

Kilts is best known for turning around the troubled Gillette Company from 2001 to 2005 and selling the company to Procter & Gamble in 2005 in an all stock deal valued at $54 billion. As chairman of the board, president and CEO of Gillette, Kilts took a floundering organization and transformed it into a winner.

According to the Wall Street Journal, after Kilts’ first year on the job, Gillette sales rose 5% and rose 10% the year after. He cut costs, improved margins and increased Gillette’s share price 20% from 2001 to 2004. In a move to diversify risk, he architected the merger with P&G. When the P&G deal was announced, Gillette shares were up over 50 percent from the day Kilts was named CEO in January 2001. Kilts became vice chairman of the board at P&G.

Kilts is no one hit wonder. Before digging Gillette out of the ditch, he transformed the Nabisco Company from a smashed cookie back to an enduring market leader. As president and CEO of Nabisco, Kilts took the debt ridden, disorganized and demoralized biscuit maker and guided it to health, selling the company to Philip Morris (now Altria) in 2000 for $14.9 billion.

Before that, Kilts was EVP of the $27 billion worldwide food group responsible for integrating Kraft and General Foods. He was president of Kraft and supervised the Kraft and Oscar Meyer merger.

Perhaps Kilts’ greatest turnaround was in the early 1970s at General Foods where he helped revitalize the Kool-Aid brand and launched Country Time Lemonade. Under his leadership Kraft Lunchables were introduced.

Kilts is truly a hands-on marketer. Despite his success as a deal maker, if he had it to do over again, he would start in branded packaged goods, not on Wall Street.

“Some people might like retailing. Other people like pharmaceuticals. I love consumer-packaged goods because of the feedback mechanisms and the nature of the products. They are part of people's everyday lives,” says Kilts.

“We had a problem with our macaroni and cheese business at Kraft. I went home and asked my son what he thought about the product. He said the product had a specific problem. Six months later the research data bore him out. I love to get feedback on our products. I love consumer products. For me it's the most interesting part of business. That's why my private equity firm is focused on consumers, consumer businesses and relationships,” says Kilts.

What sort of advice did Kilts get as a young man?

“My father gave me some great advice. He said, ‘Find something you like to do and get someone to pay you for it.’ I've done that my whole life.”

“The difference between people who are really successful, and others,” says Kilts, “is the depth of understanding they develop of their customers.” Kilts’ MBA training taught him how to ask the right questions, deal with piles of data and turn it all into action. “That combination can make a difference in business,” says Kilts.

Kilts’ mother saved her son’s marketing career before he attended business school.

“I was a planner ordering materials for the old Kool-Aid plant,” says Kilts. “My mom got a call at home. The foreman said, ‘Jim forgot to order the cartons. We're out of cartons, what do we do?’ My mom got a hold of me and said, ‘Jim, you're going to get fired. They’ve got 100 people on the line and they're not going to have anything to do unless they get some cartons tonight.’”

Kilts picked up the phone, tracked down his supplier and got a truck loaded with cartons delivered to the plant. He helped them unload it and kept the line running. It’s a story Chandramouli has heard many times.

When he’s not mentoring aspiring MBAs, Kilts remains active. He’s a Founding Partner of Centerview Partners, a private equity firm. He serves on the boards of MetLife, The New York Times, MeadWestvaco and Pfizer. He also serves on the boards of Knox College where he was an undergraduate, and the University of Chicago, where he received his MBA.

Where will Kilts’ mentoring lead Chandramouli?

“I will be working at Kraft Foods in brand management,” he says. After being mentored by Jim Kilts, that seems like a wise choice.

Michael Krauss is president of Market Strategy Group, based in Chicago, and can be reached at Michael.Krauss@Mkt-strat.com or news@ama.org.