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NOVEMBER 10, 2003
William Wrigley on "Generational Growth" The candymaker's chief talks about the company's long-term perspective and his own contribution to the Wrigley legacy William Wrigley Jr., president and CEO of the Wm. Wrigley Jr. Co. (WWR ), will take on the title of chairman in January. He figures that will enable him to better handle acquisitions he would like to make, should the opportunities present themselves, as part of his plan to move beyond gum but stay in the candy business with his fourth-generation company. Wrigley made a run at Hershey Foods Corp. (HSY ) last fall, only to have the Hershey board decline his $12 billion offer. Wrigley, 40, sat down with BusinessWeek Chicago Bureau Manager Joseph Weber and Correspondent Pallavi Gogoi to discuss his business and other publicly traded family companies. Here are edited excerpts: Q: Why do family companies tend to do better than non-family companies? A: Generally speaking, with a family business you get longer-term vision, someone who's not looking out just for a career or a certain point in time or trying to make sure they perpetuate their career. But they're looking at, gee, they're going to be around for a long time, how are they going to continue to grow the company? They're looking at potentially passing the company on to other family members. So it's that whole long-term perspective that's really important. We call that generational growth. As you know, there have been four generations of family members running the company, and that generational growth is what we look for. It's [a matter of] how are we going to be an even stronger company a generation from now, so that whomever takes this company on, they're in a stronger position to carry things forward than anyone else. And when you look at in that long-term type of basis, you make different kinds of investment decisions. Q: Such as? A: Such as, you invest even more in people. You invest in things that aren't going to give you a rapid return, but you know that they're right, or they'll give you a good return and a solid return over time.... You're willing to build a business longer, you're willing to invest more to make it stronger before it becomes more profitable. Oftentimes, I think, you find managers who have difficulty making that trade-off. They'd rather see the profit come first, but it's sometimes at the expense of the strength of a brand, for example. The other thing I think you get with the right kind of family business is passion, people who are passionate about the business, who really care. In our case, obviously the family name is on the door, so we take great pride in that, and as a result take great pride in the whole company. But even without the family name on the door, there's usually a very strong association with a family, and so it's more than just a job. It's not something you just walk out the door and don't think about. I'm not suggesting that other company CEOs do that. But there's a certain passion and energy and commitment that goes with a family business. Q: We were going through the Wrigley museum a little while ago, and it seems that every one of your predecessors has made some distinctive mark on the company. One moved the company abroad in a big way. Others added certain products. What do you think your mark is going to be? Do you have a sense of that? A: Certainly I think in the last four years or so, we have strengthened the company –- really all aspects of the company, our skills, our capabilities, our infrastructure, our brands. All of that, I believe, is sort of at the highest level it has been in many respects. We've spent a lot of time really strengthening the organization. And also, as I say, focusing on the culture.... We have continued to grow aggressively and expand our business aggressively. So far, we've basically taken existing brands we have and really increased the innovation in the category significantly, with some fairly dramatic results. In terms of measured risk, we're less of a conservative company. That doesn't mean we're now an extremely risk-taking organization.... But we're somewhere in the middle in terms of measured risk and qualified risk, and thoughtful or intelligent risk and investment. So we've sort of shifted the profile of the company in a sense. Q: In terms of risk, obviously what comes to mind is the attempt to acquire Hershey –- a big, bold move. Was that uncharacteristic for Wrigley to do that? A: It's definitely uncharacteristic of the history of the company. But I think it's something that's absolutely necessary for this generation -- for whoever's leading this company, and it happens to be me -- to be looking at. We do need to be more aggressive, and that does tie into measured risk. That was an extremely thoroughly vetted approach to an acquisition and an opportunity that was, and to this day I still believe is, a sort of unparalleled strategic fit for our company. It was unfortunate that it didn't go through. Yes it was very large, but it really was the right thing to do. Q: Had any of your predecessors done anything even remotely like that? A: I don't think so. It was completely different. Q: I know they faced external challenges, like the gum shortage during World War II -- how to deal with not having the raw materials for your major product. A: Exactly. And someone at the time could have done an article and said, "Oh my gosh, you took your product off the market!" That's a very dramatic move in a sense, to have enough confidence to know that you can bring it back at some point in time and pick up where you left off. So, oftentimes you look back on things, and they seem a little less impactful. [This] ties in with your earlier question [about the] legacy of my generation. It will mostly likely be expanding the business into the broader confectionery category, which we've begun to do on a number of fronts, most notably the flash strips, that you're familiar with -– those breath strips that are out there. Q: You're not going to acquire candymaker Mars? A: No. And it's not all about acquisitions. Hershey was a unique opportunity. And I told our shareholders this, because everyone was like "Oh my gosh, what are you going to go spend $12 billion on?" And it wasn't about that. It was about a good strategic fit. We look at lots of acquisitions, and that's not something this company has [traditionally] done.... And we really haven't acted on many of them because they haven't had the same type of strategic fit and the ability to add value. Q: You still are in kind of in the market if something good comes along? A: Oh always, absolutely. We have to be. Q: Why do you have to be? A: Because it's an aggressive world out there in terms of people looking for growth, and there are opportunities I think that we have the capability of leveraging as a company. Our competitors are very active, people looking at our category and what we've done, and the innovation in the confectionery category. And I think if we ignore some of those opportunities, we risk standing still or we risk a competitor being able to leapfrog us. Q: And you're in the market if something else comes along, but you're not going to say if there's anything out there at the moment, are you? A: No. That's always tough to say. Q: Tootsie Roll (TR )? A: People are writing about that. Q: Your board is fascinating. You've got several leaders of family businesses on it: Howard Bernick of Alberto-Culver (ACV ), Penny Pritzker, the fellow from Smuckers (SJM ). They're all involved in family businesses. Is there something about their experience that's particularly helpful to you? A: We use the board very actively. And we have a terrific board. I'm thrilled with the board. First thing I would say is that each of the board members is there for their own capabilities and skill sets and what they bring to the board, not because they happen to be part of a family business. I think that's sort of an added plus at the end of the day with some of those board members, because they do have oftentimes a better understanding or a greater sensitivity to some of those dynamics and what I call the soul of the company. And that can make a big difference. Q: What's your favorite product? A: All of them. 
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