1 Lentz Kimberly-Clark has been around since 1872. It wasn't until Darwin Smith took over in 1971 as CEO, when the company could finally be labeled as great. He lead the company for over 20 years to take it from a floundering coated paper business to the direct rival that it is today of Procter and Gamble in the consumer paper products. This company has picked up right up where Darwin Smith left. He instilled the concepts and values of a great company and set up the company to succeed upon his departure. It is hard to replace a leader like Darwin Smith, he exhibited all the qualities of a Level 5 leader. According to Good to Great to be a Level 5 leader they must have a mix of humility and will and have ambition not just for their own gain, but for the company (Collins, 2001). Another dimension of a Level 5 leader is setting up the next generation for success. One way he did this was by choosing the right successor. 10 out of the 11 good to great companies had CEO's who came from inside the company (Collins, 2001). Darwin Smith chose Wayne Sanders to succeed him because he exhibited the Level 5 qualities and he knew the company culture having worked there for four years. Wayne Sanders had large shoes to fill but he certainly did a great job of doing it. Under Sanders, Kimberly-Clark aggressively expanded their market share in Europe and Asia and continued to expand into emerging markets, this all lead to revenues more than doubling (Zellner, 2002). His focus on the company's success was unwavering during the eleven years he spent as CEO. Sanders always believed on looking to the future and he was quoted "The shortest horizon we plan for is a year... We won't make short-term, crazy moves, for pennies in a quarter." Sanders focus was clearly on the company at large ,not just pleasing the investors from quarter to quarter. Sanders retired in 2003 in what he called " a carefully planned transition". His replacement, Thomas Falk, had worked for the company for 19 years prior. Darwin Smith and Wayne Sanders were clearly Level 5 leaders and they handed over a great
Lentz 1 company to Thomas Falk. Falk has continued to embody these characteristics as he continues the global expansion of Kimberly-Clark. Confronting the brutal facts, yet never losing faith is one of the factors that makes a company great. Kimberly-Clark has been able to do this and it is one of the reasons they are ... Darwin Smith had to do this when he realized that coated paper business was a bad market with little competition. He knew it would be tough transition to the consumer paper product business especially going up against a giant like Procter and Gamble, yet he never lost faith and Kimberly-Clark became more successful. Stockholders experienced returns of 19.6 percent annually(insert). Getting the right people on board is more important than having a strategy (Collins, 2001). Kimberly-Clark has been adamant about keeping great people in on their team. Even when Smith sold the paper mills he kept the best people even though they knew nothing of consumer products business (Collins, 2001). Smith continually reviewed company leadership. Those who met his specifications got promoted and those didn't who were let go ( insert). He also instituted programs to strengthen Kimberly-Clark employees. He formed the Educational Opportunities plan to provide continuing education to all workers as well as the Health Management Program to improve worker mental and physical health (insert). Smith's belief in having great employees and trying to make those employees even better has had a tremendous impact on the company's culture, definitely one reason for there continued success.
When Kimberly-Clark changed from a paper company to a consumer product company its concept was very clear, Be the number one consumer paper product company or die trying (Collins, 2001). Technology played an important role in Kimberly-Clark's success. Not because
Lentz 1 it brought rapid innovation to the company, but rather it fit with their concept of becoming number one consumer paper product company in the world. Research and development were instrumental in their success. Smith invested a large amount in developing better diapers and tissues, this led to Huggies becoming the number one selling diaper and Kleenex brand domination of the tissue market. Smith spent over 111 million dollars in 1987 alone (insert). That was also the same year when Wayne Sanders joined Kimberly-Clark. He helped develop Huggies Pull-Ups that became one of the Kimberly-Clark's most successful products. When Sanders took over he invested heavily in logistics technology which saved the company 275 million dollars in just two years time. Kimberly-Clark has continued use technology to there advantage as they diversify and grow. The comparison company in Good to Great was Scott. A testament to Kimberly-Clark's success is they were able to buy out Scott and merge it with their own operations in 1995 (Kimberly-Clark, 2007). The deal with Scott made a lot of sense to grow Kimberly-Clark globally. Scott had a strong presence globally and was strong in Europe. Scott's decline was for a number of reasons. When increasing competition came from Proctor & Gamble and Kimberly-Clark, rather than trying to compete, Scott gave up and began to try and diversify (Collins, 2001). Kimberly-Clark took the other approach and took Proctor & Gamble head on. If you compare Proctor & Gamble in size they are much bigger, but they offer many other products than Kimberly-Clark. So essentially, there really is no fair comparison to make. Kimberly-Clark stands alone when it comes to being a great company who solely make consumer paper products.Even if you were to compare them to Proctor & Gamble have outpaced them in sales and net income over the past decade (Zellner, 2002).
Lentz 1 Kimberly-Clark is the leader in consumer paper products. There focus, leadership, and innovation made them into the great company they are today. Darwin Smith's leadership put them on the right track to becoming successful. He didn't just make all the right decisions, he brought in the right people to help the company, had the right concept for Kimberly-Clark, and use technology and innovation to make the company better. Kimberly-Clark has been around for 130 years and it is clearly one of the great companies that has found a way to succeed for a long time.