|BUSINESSWEEK ONLINE : AUGUST 9, 1999 ISSUE|
The Saga of Maytag's Lloyd Ward
His remarkable journey to become CEO
The journey began on a narrow country road in southern Michigan. There, in a 20-foot-by-20-foot house with no running water, lived the Ward family: mother, father, three sons, and two daughters. In the rare moments during the 1950s and 1960s that Rubert Ward wasn't working--at his day job as postman, his night job as movie house janitor, or his Sunday job as Baptist preacher--he liked to gather his boys and talk about ''Ward & Sons.'' It was the imaginary auto-repair shop that he dreamed about one day running with them.
In reality, he had no training as a mechanic, but he had made himself an expert by checking out manuals from the library, in the same way he later figured out how to remedy the house's sagging roof and install plumbing. ''He would take on things he had no clue about, and he would get a book, and he would learn,'' says the middle Ward child, Lloyd.
Rubert Ward never got to start Ward & Sons. He died of a heart attack in 1967, at 47. But from his tiny house, with its tight quarters and big dreams, would emerge one of the most driven men in America today: a star college basketball player who studied to become an engineer, an engineer who transformed himself into an inspirational speaker and one of the country's most respected marketers, and a marketer who next month will become only the second African American ever to lead a large U.S. company.
He is Lloyd David Ward, a singular study in ambition, smarts, and resilience. When he assumes the top job at Maytag Corp. on Aug. 12, Ward, 50, will have made a longer journey than any other executive in Corporate America. Some chieftains, such as Lee A. Iacocca, have escaped poverty to find their way to the corner office. A few African American executives, such as American Express Co. CEO-in-waiting Kenneth Chenault, have overcome the racism that still plagues the workplace. The country's first black CEO of a major corporation, Fannie Mae's Franklin D. Raines, is one of them, but his impressive rise from poverty in Seattle to head of the government-sponsored company has taken place more in the political arena of Washington, D.C. than in the corporate world.
No one, in fact, has defeated the pincer of poverty and prejudice as Lloyd Ward has. And he has done it at some of the world's best-known companies, from Procter & Gamble (PG) to Ford (F) to PepsiCo (PEP). Working with Maytag (MYG) CEO Leonard A. Hadley, Ward over the last three years has reinvented the staid appliance company, helping to triple its stock price. A master motivator who listens as well as he speaks, Ward has convinced Maytag veterans that change was both necessary and possible. Colleagues laud his ability to challenge people's beliefs without criticizing them personally, to seize on nuggets of common ground, and then to exploit them. ''He is a good thinker,'' says PepsiCo Inc. CEO Roger A. Enrico, ''but he is an exceptional leader.''
His energy, however, is also the cause of one of Ward's few weaknesses as a manager: impatience. It led to his rash decision to quit P&G in the 1970s when he did not get a transfer he wanted. And it has at times created friction between him and Hadley.
SINCERE. Ward's engaging ways seem always on display. He greets people with a firm handshake, pulling himself closer to them, putting a palm on the back of their elbow, and quickly asking questions about their own life, even when he has never before met them. ''Were you born here?'' ''What's your husband's name?'' ''How long have you worked here?''
At a recent tour of a Sears, Roebuck & Co. store in Des Moines, for example, Ward met a longtime salesman who had persuaded a woman to buy Maytag's top-of-the-line Neptune washer sight unseen over the phone. Ward bounded up to him with a grin: ''I'm Lloyd Ward with Maytag.'' ''I know who you are,'' the salesman said. ''I read about you in the newspaper.'' Ward's attention-deflecting response was quick: ''You're the one whose picture should be in the paper if you sold a Neptune over the phone!''
Ward was being sincere. In an industry that has long suffered from pricing pressure, he found a way to get consumers to pay a hefty premium for big-sticker consumer appliances such as the popular Neptune washer, introduced in 1997. The results are plain to see: Sales of the feature-laden, water-saving Neptunes have exploded, helping Maytag forge a crucial agreement with Sears in 1997 and boost Maytag's market share of major appliances from 15% to 19% since 1996, according to trade magazine Appliance Manufacturer. Throw in a hot-selling redesigned refrigerator and Maytag's ever-popular Hoover vacuum cleaners, and it all adds up to a company on a roll. In 1998, Maytag earned $522 million from operations on $4.1 billion in sales--a near doubling of profits on a 37% rise in sales in just three years. For 1999, Nicholas P. Heymann at Prudential Securities Inc. estimates that earnings from operations will jump an additional 19%, to $620 million, on sales of $4.4 billion.
Amid the good news, however, Ward faces big challenges. He is inheriting a lean company whose profits have been driven by a supercharged U.S. economy that sooner or later will cool. Meanwhile, Maytag's weak overseas presence, a recent plus for the company, may come back to haunt Ward as markets abroad strengthen. ''There are assumptions built into the stock that are going to be tough to achieve,'' says Jim Wineland, senior vice-president at Waddell & Reed Financial Inc., an Overland Park (Kan.) investment company that just sold its Maytag stake.
But Corporate America's newest star is hardly a stranger to challenges. ''My whole life I've been faced with 'No,''' he says. Indeed, his success against all odds demonstrates to what extent bigotry continues to be a part of the American experience. Every step of the way, from a college roommate who wanted nothing to do with Ward to a resident of Maytag's hometown who told Ward his ''kind'' wasn't wanted there, he has encountered indignities and obstacles that every African American knows and few whites can fathom.
''I'M THE ANT.'' Ward is quick to credit those who have guided his career. There were the older black mentors, including the few African American engineers who preceded him at Procter & Gamble Co. and Dr. Price M. Cobbs, the well-known psychiatrist and workplace consultant who counseled him to contain his rage. Most important, there was the woman who taught him to give speeches and carry himself with poise: Lita, his college girlfriend and wife of 30 years. He says he feels like the ant in an African fable who turns to an elephant after the two have walked across a bridge and says: ''We really shook that bridge!'' Says Ward, laughing at his own story: ''I'm the ant that kept walking with elephants.''
But Ward has often been the elephant, too. While working in Dallas, he persuaded Frito-Lay, a PepsiCo unit, to adopt a struggling local high school. Ward then led a group of employees in tutoring the students, brought in local pro athletes to give them pep talks--and even rewarded students who passed a test with a trip to an amusement park in a corporate jet. Now he's playing a major role in an ambitious initiative to reach a 100% graduation rate for Des Moines-area African American high school students. ''Just because you can't see how to get someplace doesn't mean you don't set the goal,'' he says.
It would have been difficult for anyone to see his way to the corner office from the street where Ward grew up. It was in Romulus, Mich., then a rural town about 20 miles west of Detroit and now the site of the sprawling Detroit Metro Airport. His neighborhood was little more than a stretch of gravel, pockmarked by tiny square houses. The Wards and their five children squeezed their lives into three small rooms. The three boys lived in one, with a bunk bed that nearly scraped the ceiling. The girls slept in another, and the parents bedded down on a fold-out couch in a living room full of secondhand furniture covered with dropcloths.
Despite the hardships, the Ward household was a happy place. ''It's hard to imagine,'' Lloyd says now, ''but when I think back, it was a wonderful childhood because we were so close.'' Rubert Jr., the eldest child, was the one Lloyd wanted to be like, the one who pushed him constantly. Delbert, next in line, was the brother Lloyd wanted to be with, the one who was his friend. The sisters, Cheryle and Vivian, meanwhile, idolized Lloyd. He played the big brother, fending off boys who bothered them, and they in turn always seemed to have a glass of lemonade or a home-baked cookie at the ready. ''People think it's good to be a CEO,'' he laughs. ''I say: 'You don't understand. Growing up, I knew what it was like to be a king.'''
The family's weekly rhythm revolved around the father's grueling schedule. From Monday to Friday, Rubert drove into Detroit on his motorcycle and delivered mail for the U.S. Postal Service. On most nights, he then went to Engleman's Theater in Detroit, where he swept the floors. Lloyd remembers tagging along with his dad to the movie house. While his father cleaned up, Lloyd watched films like the Western The Magnificent Seven. On Sundays, Rubert would load the family into the car and travel back to Detroit to preach at the Christ Temple of Science Church. He was an intensely hard worker who was almost impossible to rattle. ''Lloyd reminds me so much of our father,'' says Delbert Ward, an electrical technician who lives in Michigan with his family. Lloyd's other siblings have similar stories: successful careers, marriages, and children.
It was reading books that really opened up the Ward children's world beyond Romulus. To this day, Lloyd credits his parents for his love of learning. ''His parents didn't have the opportunity to go to school,'' recalls Ward's best friend and teammate from college, Rich Jordan, ''but you just knew talking to them that they were very intelligent.'' The children would read such books as The Adventures of Tom Sawyer, and their mother, Sadie, would quiz them on the story. ''We made our own entertainment,'' Lloyd says.
Finishing high school in 1969, Ward won a college basketball scholarship to Michigan State University. Ward knew how to use it: He wanted to become a doctor. Before his studies could begin, however, he had some hurdles to climb. When he arrived at college, his white Southern roommate insisted that Ward not touch his bed or anything of his in the bathroom. It was a chilling welcome, but he rallied quickly. Ward got to talking with teammate Jordan, who happened to have an empty bed in his room. Ward moved in, and their first night as roommates the two stayed up almost until dawn, talking of the racism Ward had experienced and of the anti-Semitism Jordan had endured when he played away games during high school.
ODD COUPLE. They soon became fast friends, making quite a duo: the 5 ft. 10 in. black kid and the 5 ft. 7 in. Jewish kid who were the only two on the team under 6 ft. who could dunk the ball. They would stay up late playing basketball with a coat hanger as rim before Jordan drifted off to sleep and Ward hit the books. To this day, Ward and Jordan--the corporate chieftain in Iowa and the high school fitness teacher in Florida--remain close, as different, and as similar, as ever.
Other barriers awaited him at Michigan State as well. When the basketball team's academic adviser saw Ward's courses in organic chemistry and calculus, the adviser told him to switch to easier classes such as health and ''introductory basketball.'' Jordan remembers a coach telling Ward: ''We're paying you to be a basketball player.'' Ward balked. So the adviser called the registrar's office and switched his courses himself. But Ward walked over to the office and changed them right back.
Good grades and a strong record on the court proved the coaches wrong, and they eventually left him alone. ''Lloyd came into Michigan State with the focus not only of playing basketball but of getting a superior education,'' says Ron Binge, another player. ''He was probably the only guy on the team like that.''
It was a tumultuous time for Ward, with huge highs and lows. His studies veered from medicine to engineering after he got into a car accident and discovered he couldn't stand the sight of blood. Although hardly a radical, Ward joined in many of the era's civil rights demonstrations. And at end of his freshman year, his father died suddenly. It left his mother a widow at 43, with few job skills and two teenage daughters to bring up. After working as a janitor, she eventually went back to school to get both bachelor's and master's degrees in social work. Few memories light Ward's eyes today like retelling that story.
UNASSUMING JOCK. One story that does is how, in Ward's sophomore year, he met and ardently pursued an English major from Detroit named Lita. When he called to ask her out on dates, Lita would always say she had other plans. He kept calling. ''Lloyd,'' she finally told him, ''I would like to go out with you, but you have to call me two or three weeks in advance. I go on a lot of dates.''
Soon afterward, at a Michigan State basketball game, Lita's date that evening pointed to a guard warming up and said he heard that player had been asking her out, too. ''What?'' Lita remembers asking. She knew about the 5 ft. 10 in. guard who could dunk, but she had no idea his name was Lloyd Ward. So she put her glasses on. ''And it's Lloyd, cute legs and everything,'' she says now. Until that moment, Lita had not realized Lloyd was a team member. ''Jocks usually want you to know [first thing]. I thought: 'You're a diamond in the rough, and I could polish you up.'''
It was the start of a partnership that has played a bigger role than anything else in Ward's career. Lita is the gregarious one who taught Lloyd how to connect with people. She often edits his speeches. In his eyes, she's still the literary college girl dishing out verbal gems to the tongue-tied engineering student. Thanks to Lita's coaching, Lloyd works a room while giving a speech, peppering the audience with impromptu questions. Says Lloyd: ''How many times do you listen to an executive and think, 'What are they saying?' or 'I'm bored?'''
From Michigan State, it was straight to P&G, where Ward confronted an old problem in a new guise. Instead of overt racism, Ward this time encountered the patronizing attitudes of P&G's efforts to hire minorities in those days, say people who were at the company at the time. Despite his B average in engineering and his having been the captain of a Big Ten basketball team, P&G was willing to hire him and a handful of other blacks only for its ''qualifiable'' program, an early version of affirmative action. ''They brought us in under the stigma of being 'qualifiable,''' Ward says. ''The idea was that there weren't qualified African Americans.''
Ward nonetheless holds no grudge against P&G. In fact, he now praises the company as an early supporter of diversity. ''If it were not for the so-called affirmative action of the '60s and '70s,'' he says, ''people like me may not have ever gotten the opportunity to provide the leadership that we have now been able to give.''
SOUTHERN HOSTILITY. Ward made the most of his opportunity, moving up the ranks of the engineering department. His first triumph came in 1972, during a yearlong assignment overseeing the building of a paper plant in Albany, Ga., a city that had been famous for its racism ever since Martin Luther King Jr. was arrested there for demonstrating against segregation in the early 1960s. Now, Ward faced hostility of his own: White workers refused to do any new task until Ward personally walked onto the production floor, rolled up his sleeves, and showed them what he wanted. Focusing on every aspect of the new plant, which churned out Charmin toilet paper and other products, Ward won many of them over and built the plant under budget.
Back at headquarters, Ward let people know he wanted much more than an engineering career. Floyd Dickens Jr., one of Ward's early supervisors, remembers a meeting in the '70s. Ward was wearing his usual gray suit, white shirt, and red tie. Dickens asked Ward about his goals, and Ward didn't mince words: By the age of 45, he wanted to be chief executive of a major U.S. corporation.
It was an astonishingly bold ambition. When Ward came to P&G in 1970, he was one of just eight African American engineers in a department of around 1,200. In large companies, a black CEO seemed as likely as a black President of the U.S. But that wasn't all. Dickens knew that engineers stood no chance of reaching the top of P&G. That was reserved for marketers and product developers, who knew how to bring money to the bottom line. ''You're in the wrong organization if you want that,'' he told Ward.
So Ward pushed for a transfer that never came. Frustrated, he left P&G to take a job with Ford Motor Co. in 1977 and took his family back to Detroit. The move was a disaster. Ward became lost and struggled inside the massive auto company. A year later, he jumped at the chance to get back to P&G. All he wanted, he said, was, someday, an opportunity to transfer out of engineering.
He got it--and made the most of it. Over the next decade, Ward skipped from one field to the next, often stepping down a rung in the corporate hierarchy in order to earn his spurs. In 1984, for instance, he remade P&G's 100-year-old Ivorydale soap plant, which had been expanded in haphazard fashion over the years. Working with the unionized workforce, Ward redesigned the plant from top to bottom. ''Lloyd is a high-energy, very focused, very competitive individual,'' says John E. Pepper, chairman of P&G and Ward's former boss. By 1986, he had made the move to general management, heading up P&G's dishwashing unit.
But Ward was tiring of the P&G bureaucracy. In 1987, he was off again, this time for P&G's corporate opposite: the rough-and-ready culture of PepsiCo Inc., where Ward thrived. As head of Frito-Lay's western and central divisions, Ward led the charge against archrival Anheuser-Busch Cos (BUD).' Eagle Snacks. At the time, Eagle was trying to speed the launch of its new corn-chip brand by offering a free bag of potato chips with every purchase. When Ward heard about the strategy, he upped the ante. With a ''supersize'' bag of Frito-Lay chips, the company threw in a large bag of Doritos, a far more popular and established product than Eagle's entry. Unable to sell its brand, Eagle soon pulled back, and later Anheuser-Busch got out of the snack business altogether. ''It was a major victory, and it was a lot of fun,'' says Ward.
PEP TALKS. Pepsi was also the place where Ward began to polish his leadership skills. He was constantly out in the field trying to rev up the troops, even showing up at the loading docks to give an informal pep talk to workers there. Through it all, Ward's go-for-the-throat competitiveness and gung ho motivational tactics helped increase his division's overall market share in the region from 50% to 56%. ''People in that division had decided that you couldn't grow market share because it was already so high, '' says Steven S. Reinemund, chairman of Frito-Lay. ''Lloyd didn't accept that. He went on a personal crusade.''
Winning at business was hardly his only crusade. While at Pepsi, Ward got deeply involved in the Dallas community with his push to get more high school kids into college. Employees became mentors to students. They dropped in at school after work and on weekends to help with homework. Ward tutored kids in his office and brought members of the Dallas Mavericks basketball team to the school to give them a lift. And he whisked kids who passed a state test to a Six Flags amusement park on the Frito-Lay corporate jet. By 1996, 61% of the students passed the state's math test, up from 32% in 1994. ''Dare to dream,'' Ward would tell them. ''Learn to love adversity. Perform--good intentions are not enough.'' To this day, Ward urges self-reliance. ''There are many who are systematically excluded. [But] the oppressed have to overcome the prejudices of society,'' Ward says. ''Knock on the door, pull on the handle, and, if you have to, dismantle the hinge.''
Meanwhile, Ward was intent on advancing his own career. So when a small Chicago search firm came calling in 1995, with an opportunity to interview for a job that could lead to the CEO's office, Ward convinced Lita it was a good idea--even though it was in Newton, Iowa, 40 miles from Des Moines and a world away from big-city life in Dallas. It was a huge leap of faith: Ward was willing to leave a hot career at marketing heavyweight Pepsi to head the appliance division of a sleepy company personified by the hangdog look of the Maytag repairman in TV ads. But the fast-track shot at the CEO's job made it worthwhile for Ward.
It was also a big risk for Maytag leaders, who typically promoted carefully groomed insiders. CEO Hadley, for example, has been at the company for 40 years. This time, however, he instructed the board that his successor should be an outsider. The company needed ''an extroverted marketing man,'' he says. ''Brand management is very delicate. It's one of the things I drooled over when I had only seen [Ward's] resume.''
LOCAL OUTRAGE. When Ward got the job, Lita, fearful that there would be no place for an African American to shop in Iowa, went out and bought a year's worth of pantyhose. But as strange as it was for the Wards to remake their lives in the Corn Belt, their arrival was equally momentous for Newton, population 15,000. After the Wards' encounter with the local who said their ''kind'' was not welcome, the story made its way around town, and general outrage ensued. The mayor wrote an apology on the front page of the paper, and the folks who hang out at the Midtown Cafe on the town square worried that it would cause Ward to move Maytag's headquarters elsewhere one day. Says Ward: ''People don't understand that for an African American male, it was pretty mild.''
Indeed, Ward has endured much worse. Back at Romulus High School, Lloyd, captain of the football team, was not allowed to crown the homecoming queen because she was white. Once, at a gala black-tie dinner in Dallas where Lloyd and Lita were the only black guests, Lloyd was returning to his seat after making a phone call when a man at the next table stopped him and asked him for a cup of coffee. ''I don't do coffee. I do potato chips and Doritos, but not coffee,'' joked Ward, then a Frito-Lay executive, trying to make light of an awkward moment. The man turned back to his tablemates and said, with a straight face: ''You see, you can't get good help these days.''
This is just the sort of incident that has made Lloyd and Lita adamant about giving their two boys, Lloyd II, 27, and Lance, 24, an unvarnished sense of their heritage. The sons grew up in affluent surroundings far removed from their father's Romulus boyhood. Lloyd II went on to graduate from Harvard University, and Lance from Stanford. Both are now well-paid consultants at Arthur Andersen. ''We have shared with them our life story,'' Lloyd says, ''so they've lived both through their eyes and our eyes.''
In Newton, though, Ward's focus is all on the present. Once Hadley dumped unprofitable units and revamped products, Ward set about reinvigorating the company's unsophisticated marketing culture. He sped up the pace of product introductions: Maytag will launch 20 new products this year, up from only a few in the mid-'90s. He lured more than a dozen executives, mostly from Pepsi and P&G, to Newton. He developed new consumer-research methods, sending observers into people's houses to watch them cook and clean, rather than simply asking them to fill out surveys. One result: a new $400 washer to help Maytag compete for the lower end of the business it had long shunned. ''Ward has been able to almost reinvent Maytag,'' says Mike London, a senior vice-president at Best Buy Co., a major client.
Take the now textbook case of pricing Maytag's new Neptune washer. The initial plan was to price the water-saving machine at around $800, a good 33% above any rival product. Ward figured Neptune should be priced even higher--at an unthinkable $1,000. By marketing the machines as environmentally friendly and gentle on clothes, Ward and his team reasoned people would be willing to pay even more. ''Lloyd brought a boldness that we did not have,'' says William Beer, now head of Maytag's appliance business, who participated in the meetings.
Ward, for instance, supplied a drought-afflicted Kansas town of 200 people with free Neptunes and watched newspapers run front-page stories on how much water it saved. He ordered up a carlike gilded hood ornament for the front of the dishwasher. And to cap it off, he introduced the washer at Lincoln Center in New York, with four of television's most famous moms, including those from The Brady Bunch and Leave It To Beaver. ''This is not something that a company in Newton, Iowa, would have been likely to think of before,'' says Maytag board member Wayland R. Hicks.
ROUGH SPOTS. The Neptune set the industry on its ear. It showed investors and rivals that consumers could be persuaded to buy a new appliance even when their old one was not broken and that price was not the only reason to choose one brand over another. ''It's an incredible story,'' says Sean D. Katof, an assistant portfolio manager at Invesco Funds Group in Denver, which owns about 1 million Maytag shares. ''The appliance industry for years and years has been a very boring industry. Maytag really changed that.''
Now, Maytag is on a tear, producing new appliance products and features that consumers never dreamed they needed. There's the $1,400 Gemini range, which will go on sale in August, with its two ovens. And there's a super fast-cooking oven, due out by yearend, which has been designed to combine the speed of a microwave with the crispness that a regular oven produces.
Maytag's success has inspired rivals to follow in its footsteps. In General Electric Corp.'s (GE) effort to snatch up a piece of the high-end market Maytag has targeted, ''we have let some share go,'' says David M. Cote, CEO of GE Appliances. Like GE, market leader Whirlpool (WHR) is also scrambling to offer hot new premium products of its own. ''You're going to see Whirlpool go very much in the direction of Maytag,'' says Scott Graham, an analyst at New York's CIBC World Markets.
Still, Ward's hard-charging ways have led to occasional missteps. ''There were a few rough spots in front of a dealer group here and there,'' Beer says. And while Hadley and Ward speak highly of each other, their relationship has been tense at times, say other Maytag executives. Hadley is the veteran, bowing out on a high note and reluctant to relinquish control. Ward is the outsider, fond of shaking things up. ''His style is very different from mine,'' says Hadley. ''He holds meetings I wouldn't hold. He invites more people than I would invite. He says to me: 'You have to go out and sell your program.''' Says Ward: ''Succession is hard at this level.''
Differences aside, the results have made both men look smart. And Maytag's remarkable run has at last paid off for Ward. In May, Maytag's board gathered to announce that Lloyd Ward would become the company's ninth chief executive. Afterward, Lloyd and Lita celebrated at a posh Des Moines restaurant.
When Lloyd and Lita got home that night, exhausted, they climbed the stairs to their bedroom and collapsed in two facing chairs. Neither said anything. ''We just looked at each other,'' Lloyd says. The silence lasted for more than five minutes. Their journey was complete. They had made it to the top, together. Rubert Ward would have been proud. It may not have been ''Ward & Sons,'' but a member of the family finally had a business of his own.
BY DAVID LEONHARDT
With bureau reports
To read a letter to the editor about this story, click here.
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BACK TO TOP
The Saga of Maytag's Lloyd Ward
COVER IMAGE: The Saga of Lloyd Ward
PHOTO: Lloyd Ward with the Maytag Repairman
RESUME: Lloyd David Ward
PHOTO: Lloyd Ward's Childhood Home in Romulus, Mich.
PHOTO: Four of the Five Ward Children: Delbert (left), Rubert (back), Vivian, and Lloyd (right)
PHOTO: Lloyd Ward Addressing Maytag Employees, 1996
PHOTO: Lloyd Ward with Students at A.C. Maceo High School in Dallas
TABLE: Maytag's Hot New Appliances
CHART: Ward's Touch Helps Maytag Clean Up
Don't Mess With This Maytag Repairman
ONLINE ORIGINAL: Lloyd Ward on ``Diversity as a Business Agenda''
ONLINE ORIGINAL: Can Maytag's Stock Keep Spinning Faster?
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