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October 18, 2005
Newell Rubbermaid's CEO didn't get design or innovation
The chief executive of Newell Rubbermaid just resigned after 10 quarters of bad earnings. The news was buried in most business newspaper pages, overshadowed by the good IBM earnings announcement and the GM deal with its unions over legacy health care costs. Yet the Newell Rubbermaid CEO resignation may be the most important corporate news of the day. Why?
Chief Executive Joseph Galli gutted the design and new product development departments of both Levelor and Rubbermaid in a Price-Cost-Margin business model that failed dismally, according to people I know who worked there. Instead of playing the innovation game, coming up with new products that customers loved and were willing to pay for, he went for the downscale, let's-compete-with-the-whole-Asian-world game and lost big. While Galli talked innovation--his stump speech called for 30% of revenue coming from new products every year--he took away all the resources needed to deliver those new products in a drive to boost quarterly profits. A vicious cycle hurt Newell Rubbermaid deeply.
The board, which never should have agreed to such a backward business plan, has now appointed board director Mark Ketchum as interim CEO. Ketchum, 55, retired last year as president of Procter & Gamble's baby and family care unit (Pampers and Bounty). I don't know if he played a significant role in pushing Galli out, but I bet he had did. Word from P&G is that Ketchum "gets" design and innovation. Perhaps he should also get the CEO job.
P&G is becoming the model for the innovative company, just as GE was the model for the Six Sigma quality company in the 90s. I wonder if it will be a source of innovative CEOs the same way that GE has been a source of quality and cost-control execs in the past.
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When Galli took over Rubbermaid, someone called us to discuss finding them a director of design. If you recall, BW did a cover story on him at the time. The salary was pitiful and the job was not positioned to be effective. I called someone who used to work in design when Galli was at Black & Decker consumer products, then in CT, who said that Galli claimed to be a supporter of design, but he wasn't. For these and other reasons, we decided not to get involved. As far as I know, they never went ahead with the search.
Posted by: RitaSue Siegel at October 19, 2005 10:07 PM
Seems to me that Irwin Industrial Tool Company in a little town of DeWitt, NE, which was an acquired company of Newell Rubbermaid in 2002, is still being run in the same fashion that is being spoken of by downscaling that Galli was mentioned of doing!
Posted by: Tammy at March 12, 2006 04:43 PM
I am one of those unfortunate individuals that do not have a dish washer. Unfortunately my dishes have to get washed any way. I have been a user of your products for ever that I can remember. Each time I buy a product that I am not satisfied with I crinch. I would like to owe one dish drainer pan that is design well. Not all sinks are smooth all around, some have a ridge 1/4 " high. The drainers are design slightly tipped to drain the water , if , every thing is perfectly flat. The world, my world , is not perfect. I would like to buy one that is much higher on the back, 1 1/2" that does not loose its shape after something heavy is put upon it and that the lip is slightly curbed down, not strait out. How about it fellers, can you help an old customer.
Sincerely, Jean Springer. 805 239 0382
Posted by: jean Springer at April 15, 2007 06:32 PM