Chairman and Chief Executive Officer, S.C. Johnson & Son, Inc.
Deming Cup 2013: H. Fisk Johnson, Chairman and CEO, SC Johnson & Son, Inc
... this incredible honor on our company and I have to say the credit for this really goes to the many SC Johnson people around the ...
About H. Johnson
In his acceptance speech for the 2013 Deming Cup, H. Fisk Johnson, Chairman and CEO of SC Johnson & Son, discussed the company's management philosophy. He stated that, unlike many public companies, SC Johnson does not view maximizing shareholder value as its ultimate objective or a measure of success. Johnson said the company instead prioritizes an intangible element he called "goodwill," which he traced back to a 1927 speech by his great-grandfather. Johnson cited the closure of a factory in El Salvador as an example of this approach. He said that after the closure process, the employees who were losing their jobs gave the company a standing ovation. Johnson attributed the company's success to its employees and described financial results as a means to an end rather than an end in themselves.
Transcript (12 segments)
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H. Johnson0:09
Well, thank you Christy and Tom for those incredibly generous and kind remarks, and thank you Nelson and the selection committee for bestowing this incredible honor on our company. I have to say, the credit for this really goes to the many SC Johnson people around the world who are the ones truly responsible for our successes.
I'm also very pleased that nine very talented colleagues of mine are in the audience tonight, most of whom work in our Wisconsin factory. It's great to have them here to share in this award, as we're very grateful for their leadership in driving our continuous improvement program in our largest and most important factory in the world, in Wisconsin.
You know, on a more personal note, having spent 10 years at Cornell University, it's always nice to be back on an academic campus, especially one as prestigious as Columbia. My dad was always very supportive of me continuing my university studies at least until about the eighth year or so, and then he started to get a little antsy. By the time the 10th year rolled around, they used to go around telling people that I was living proof that you could go through 10 years of fraternity parties and survive. I actually might add that I've got a whole table of fraternity brothers here tonight, so guys, please remember what happened in Ithaca stays in Ithaca.
Anyway, let me begin with a personal comment about Deming. He was truly one of the great business thinkers and practitioners, and someone I've always admired. By background, he was an engineer, a mathematician, a physicist, and yet this man of numbers and processes and management as a science also allowed into his thinking the intangible and the indefinable.
He once said that the most important things are unknown or unknowable, the factors that can have the greatest impact long-term can be quite surprising. He also said that the most important things can't be measured. I find that really interesting, because for us at SC Johnson, that intangible, indefinable, immeasurable element of management is vitally important.
It goes back to something that my great-grandfather said in Newark in a speech to our employees back in 1927. He said, 'The goodwill of people is the only enduring thing in any business. It's the sole substance, and the rest is shadow.'
For us, the intellectual and practical challenge is how to build a business in the modern age that contributes to the greater good and earns goodwill, but at the same time continues to win and be highly successful. I think it's safe to say that CEOs in most public companies believe that their ultimate objective is to maximize shareholder value. As a closely held, multi-generational family company, we don't think about shareholder value in that way. In fact, this may surprise you, but we really don't think about it much at all. We don't see that as any kind of measure of success.
Now, that doesn't mean financial performance isn't important. It's very important, because strong financials are critical to keeping the company strong and successful well into the future for the benefit of everyone that the company touches. But we view financial results as the means to achieving success, not the success in and of itself.
Inevitably, though, if you're going to succeed financially, you have to make tough decisions that can affect people's lives. For example, do you keep alive the status quo with jobs that you know will someday be gone, or do you change and adapt and invest in the future and the creation of future jobs? I think the answer to that question is evident — you have to adapt to the future. But the real question lies in how you act on those life-changing decisions and the impact of those decisions on that unknown, immeasurable value of goodwill.
Not too long ago, we decided that we needed to close a factory in El Salvador. The remarkable thing is that after we got through the process and had a final meeting with all employees to complete the closure, we got a standing ovation from the people who were losing their jobs. I'm not patting our company on the back — I'm just saying that even in the most difficult of situations, sometimes the smallest things, including acting with respect and compassion, can be a very powerful thing. I think it also happens to be where you can find the most fulfillment personally and even the greatest success as well.
So for us at SC Johnson, success lies in that intangible, indefinable, and immeasurable value of goodwill, and it defines our path to Deming's goal of continuous improvement. It's been that way for over 125 years, and I want to thank you all here at Columbia for recognizing our attempts to get it right.
So in closing, let me just say that we're very honored and humbled by this recognition from such a prestigious school as Columbia, and I accept it with great pride on behalf of all of the people at SC Johnson who created the successes for which we are being recognized tonight. Thank you so much.