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Moving from a push to a pull business

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in Best-Practices Leadership,Leaders & Managers,Profiles in Leadership

Smithfield Foods, a pork-packing plant founded 70 years ago, experienced the Great Recession like everyone else. But in addition, the company was also reeling from the impact of the price of corn, which had tripled.

“I thought the hole we were digging was so deep we should go into the swimming pool business,” says CEO Larry Pope.

Pope knew Smithfield couldn’t continue as a commodity. With no more efficiencies to squeeze out of the farms, and no more acquisitions to make, the company was only left with the prospect of how low its prices could go.

When that happens, you can kiss your financial performance goodbye, says Pope.

Here’s how he turned things around:

√  Hire your worst critic. Pope hired Dennis Treacy, a former environmental protector. Treacy had once sued Smith­­field for EPA violations. Today, Treacy is Smithfield’s chief sustainability officer.

 “I decided the only way to go forward was ... to be an ethical company,” says Pope—one that takes care of its people, animals, communities, and the environment. “We’re going to change people’s opinions.”

√  Give employees something to rally around. Pope made it clear that he didn’t want to institute layoffs, but that he’d need everyone to be present to win. That meant parking the jets and freezing salaries and bonuses until the company was out of the woods.

 “Communicate the mission honestly, fairly and compassionately, and get everyone on the same page, and people will do the right thing,” he says.

√  Dump unprofitable business. When a Florida manager told Pope that the company was losing 5 cents on every pound of hot dogs it was selling, Pope replied that they’d have to either get out of the hot dog business in Florida or raise prices.

Soon, every Smithfield salesperson found a plastic box on his or her desk, with a message inside: “I want my 10¢.” The company stopped settling for the traditional 5-cent profit per pound of hot dog and aimed for a profit of 10 cents per pound. Orders that didn’t achieve that profit were refused.

“We’d been so afraid of losing a sale that we thought we had to accept any price the marketplace offered. We were afraid of our own customers,” Pope says. “We discovered that in moving a company from a push to a pull business you have to be willing to say no to an order.”

Lesson: To get everyone on the same page, engage your critics, earn trust by communicating honestly, and follow through.

— Adapted from The Reinventors, Jason Jennings, Penguin Putnam.

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