Issue: Monsanto: Seeding the Ground for Growth

CEO Hugh Grant faced a perfect storm: Monsanto was losing money, it was a $10 stock, and it needed a new strategy and structure

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St. Louis-based Monsanto is the leading producer of genetically modified, or biotech, seeds, having made some of the earliest and most aggressive bets on the technology. But those wagers didn't look so smart back in 2003, when current Monsanto CEO Hugh Grant took the helm. Indeed, at that point the company—spun out of the old Monsanto chemical conglomerate—was losing money, its corporate structure was outmoded, and the shares were trading below 10. "We were in very, very challenging times," Grant says.

Now, the stock trades at about 113 and has been one of the best performers in the S&P 500. Monsanto has clearly been the beneficiary of a global agriculture boom, which has seen prices for crops such as corn and soybeans shoot sky-high. But Grant made several key internal moves that helped put the company in a position to prosper financially and outpace rivals once those markets took off.

Once ensconced in the corner office, Grant accelerated an internal shift from the company's agricultural chemical sales businesses, which had been the primary corporate focus going back to the old conglomerate days. Within his first 100 days, he says, he oversaw staff and product-line reductions in the chemicals segment, and redirected resources to the burgeoning—though then still unprofitable—biotech seeds business. "In a very short space of time," Grant says, "we started plans to resculpt the business."

Not Such Golden Wheat

Equally important, Grant and his new management team made hard decisions about what crops to focus on in the seed business. "We made the tough call then to exit wheat," Grant explains. "And we increased our funding in corn, soybeans, and cotton, with the recognition that it was going to take longer and probably cost more, but that's where the opportunity lay." Those decisions have been key drivers of Monsanto's financial success, since corn, soy, and cotton farmers have been more accepting of genetically engineered varieties, while global wheat farmers have not (BusinessWeek.com, 12/6/07).

The changes in the business lines have been accompanied by internal changes as well. What used to be a very traditional strategy planning method, with a yearly retreat with hundreds of managers and countless Power Point slides, has become under Grant a much more dynamic process. For example, Grant started meeting with top executives every Monday morning to run through various strategic and operational issues the business lines are facing. "We kick the tires around the world, and by lunchtime we're done," says Grant. The company also pauses for a deeper reflection on the strategy at off-site review sessions every six to eight weeks. "We do strategy in micro-bursts," Grant says.

To help hasten the transition to more high-tech, faster-changing lines of business, Monsanto came to rely on cross-functional teams. The groups would coalesce around a given problem and would disband as needed. "At any given table, there were five or six disciplines," Grant says. "A lot of our early work on building teams…really started to become a competitive advantage."

Hindo is BusinessWeek's Corporate Strategies editor in New York .