Poul Weihrauch, Mars: Purpose Is Easy Until It’s Tested
Founder's Mentality: The CEO Sessions
Host Jimmy Allen interviews Poul Weihrauch, CEO at Mars, regarding the transformation of Mars Pet Care from a legacy food business into a le
Key takeaways
- Poul Weihrauch utilized a 'Pathfinders' program to study global companies and bring fresh visions back to Mars Pet Care.
- The strategy shifted focus toward healthcare and diagnostics, leading to acquisitions like VCA, Linears, and Ikura.
Main topics
- Mars Pet Care transformation
- Purpose-driven decision making
Notable quotes
move our purpose from sitting on a wall to decision-making at the table
Conclusion
The episode provides a masterclass in how leaders can embrace complexi
Transcript preview
Speaker 2 (0:00) We started a strategy that we need to move our purpose from sitting on a wall to decision-making at the table. So a better world for pets had to be actively used in deciding what business we are in. Speaker 3 (0:18) A purpose-driven company. Almost every great firm claims to be one. It's there in the annual report, in the CEO letter, on the website, often supported by posters decorating meeting rooms. And most teams not along, never quite sure what leaders would do if they were really tested. But until tested, they store the slogans in the, you know, things we say file. I'm Jimmy Allen, and this is Founders Mentality, the CEO Sessions. Speaker 3 (0:54) Paul Weyrouk is CEO and Office of the President at Mars. And you know Mars, but mostly from the checkout aisle. Snickers, the world's best-selling candy bar, M &M's, Twix, Orbit gum, you name it. It's a global snacking powerhouse. But the part of Mars you may not know is the one Paul helped build, Mars Pet Care. Before taking on the group role, Paul helped transform Mars Pet Care. He turned a legacy pet food business into a leader in pet health and pet care. During his time as president, the company doubled in size and tripled its organic growth rate. But that's the what. How he did it is extraordinary. And it begins in a graveyard. Well, that needs a little context. One of the reasons I was so excited to speak to Paul about the transformation is because of an amazing article by Professor Thomas Molnight at IMD. You'll find it in the show notes, but the short version is this. After touring the business in 2014, Paul was convinced that Mars Pet Care could be something much bigger than the sum of its parts. So over steak, fries, and Belgian beer, he and Malnight hatched a plan. Paul would take a group of next-generation leaders, who he called the Pathfinders, and he'd tell them, act as if you've been fired. Go out and study some of the fastest-growing companies in the world, and then come back and tell us what you found. Six months later, the Pathfinders came back with a brand new vision for Mars Pet Care. And Paul, well, he didn't just ask for a report. He asked the Pathfinders to help design part of an upcoming summit for senior leaders. And he said to them, you show us what Speaker 2 (2:37) needs to change. Speaker 2 (2:40) We were all summoned to go to a graveyard. And in this graveyard, they had made a complete dark room with tombstones everywhere, somber music, and a bit of skeletons hanging, and it said, Blockbuster. A kind friend of yours, born this year, dead that year. Eastman Kodak, inventor of digital photography, died a year. And it basically said to us, if we don't open up and don't change, somebody could beat us. So we all walked out of the service thinking, oh, we have to take this serious and change the way we operate. We didn't know that they had made the graveyard. And then we walked into... How is our strategy going to change? How are we going to collaborate? And out of that, we started a strategy that we need to move our purpose from sitting on a wall to decision-making at the table. So a better world for pets had to be actively used in deciding what business we are in. I love this idea Speaker 3 (3:49) of the graveyard, the imagery, all of it. You know, here you've got these young people, they've traveled the world, they have their new ideas. So the purpose had to move from the walls to decisions. Speaker 2 (4:00) Yes. So one example of using the purpose as a decision-making criteria is to define the business we are in. Jimmy, you know, when I go to the doctor, the doctor, she says to me, Paul, you need good nutrition. You need access to good healthcare. So I dutifully do my annual health check. And I'm being told to exercise. It's fundamentally the same for cats and particularly dogs as well with the exercise. And we thought, hang on, that is a better world for pets. So we will only be in a business that led us up to the purpose. So we decided we have to get big in healthcare. Then we started analyzing the spend in healthcare and realized that the spend on healthcare would exceed food. So if we didn't make a substantial strategic switch here. we would actually lose our global leadership. And then we realized, oh, but a lot of data sits in diagnostics that can help inform us to make the best and most precise nutrition for our clients in the hospital. And coming out of the summit, we were lucky timing-wise that we then acquired VCA very quickly in the United States that had a thousand hospitals and diagnostic labs we bought. a company called Linears in the UK, and Ikura in continental Europe, etc. So we got a lot of momentum of the energy. And the second thing they had designed was what unites the businesses other than the purpose. And what unites it is science. Food is the most important thing we can control for cats and dogs. And our job is then to offer the best available nutrition at all price points. And likewise... The access to healthcare and the science and data became very important. Purpose, data, and science became the uniting factor, which this group came back with. Speaker 3 (5:54) You know, the way you describe purpose is very similar to within founders' mentality. We talk about it, which is every great company has an insurgent mission. They're almost at war against their industry on behalf of underserved customers. But we're talking there about founders. You had a business. You had a group of leaders that were not involved in the extraordinary exploration of companies, but are then being presented this incredible vision. For most CEOs, this is then the classic problem. I know where I want to go. But I have a whole set of people that are involved in legacy businesses, all of which are profitable, all of which are helping me fund this beautiful future. How did you keep them on side, knowing the reality that not everybody would be the perfect leader for the perfect new businesses you were creating? Speaker 2 (6:47) This was very tough. And I would not say we got it perfect. In the beginning, the leadership team I ran had... As a base, the legacy business. So the first thing we did was to change our leadership team. The top team became heads of what was in essence four divisions. Our legacy pet nutrition business, our wild canap business, and our veterinary business. And then we had a data business called Kinship and later our diagnostics business. We did not have manufacturing because obviously you don't have manufacturing in a hospital in a diagnostic business or a data business. So we moved manufacturing to where manufacturing was relevant, i.e. in the food producing businesses. And that was a big thing to do because we are a proud manufacturing company as well. Then we worked really hard on communicating the importance of each division. So as an example, we measure how many pets we touch in each division. And our legacy businesses at the time touched about 375 million pets. Out of the world's 800 million. Our hospital business, around 40 million pets. So our legacy business remained hugely important in terms of communicating to the pet parents. And in order to live up to our purpose, we have to touch the pet parents and remove their pain points and make it easier for them to be a good pet parent. So the communication around the importance to the purpose, the investment level. They had to feel we didn't starve them to invest. Quote, one of the guys said, yeah, I just fund all your fun bit in the new businesses. And so, you know, constant communication about how much capital allocation we made, how much we invested in marketing and always put what was still today the biggest division at the forefront of our communication. Did we get it right? No. Will you still find a little bit of cynicism in a corner or two of those that have spent most of their career? I'm sure you will, because this tension of creating the new and retaining the old is a very, very difficult