Ian Cook: The Twelfth Annual Robert P. Maxon Lecturer

Thank you very much for those kind remarks, and welcome to this evening's lecture. I'm delighted and privileged to have been provided the opportunity to deliver this 12th lecture in the Maxine Series. And frankly, I look forward to a lively question and answer session after I have finished my prepared remarks. Before I get into them, though, I'd like to put my comments in the context of the changing world we are living in -- a world in which markets are becoming more global, more interdependent with one another; a world where the pace of change is accelerating, and in some cases accelerating in unpredictable ways, as we have seen with events over the last several weeks; a world certainly where speed and transparency of information is increasing. And in that case, in my view, a world in which values and the ethics that underpin them are more important than ever. And I think those forces in the broadest sense force us to consider what this means for companies and individuals. And my remarks this evening try to tie that together by looking at succeeding in a global marketplace.

There will be three parts to the presentation. First, a little bit of background on Colgate to put us in context. Secondly, learnings we believe we have gathered from operating a global business for many, many years. And then, if you'll excuse me, the importance of providing some personal thoughts about what success might look like for individuals like yourselves as you advance your lives and your careers in our global world. So, a little bit of history about Colgate-Palmolive. As was mentioned earlier, humble beginnings downtown Manhattan, soap and candle maker. We bound into 2011 a sprightly 205 years old. We are today a truly global company, and indeed many of the markets we now operate in internationally we moved into as a US company before the First World War in many cases, significantly ahead of our US-based competitors. Today our products are sold in 223 countries -- and there will be a test at the end of the lecture in terms of that list -- and we have operations on the ground in 90 countries around the world. We do business in four basic categories: I think most known to you: oral care, personal care, home care, and our Hills Pet Nutrition business. We are about a $15.5 billion company. Have grown over the last 20 years at a compounded rate of just over 5%. And in terms of our operating profit or EBIT return, over that same 20-year period have grown at a compounded 10% rate.

In terms of sustainability of economic performance in that changing global marketplace, from an investor point of view -- whether you take the long-term view or a nearer-in view -- again we have consistently delivered solid returns. If you look at total shareholder return for a 25-year period -- as you well know, this is share price appreciation plus dividend -- you can see that we have outpaced handsomely both our proxy peer group and the S&P 500. If you look at 15 years, you can see the same trend. You're probably now getting an idea of how the following slides are going to look. If you look at five years, you see the same performance. And even over the three-year period which includes the worst financial crisis since the Great Depression, continued sustainable return to share investors in the company. And if you distill all that together in terms of after-tax return on capital, you can see that in the mid-30% area, the company is substantially ahead of both proxy peer group and the S&P 500. So that's a snapshot of the company and the kind of consistent performance over an extended period of time it has delivered.

Now how does one do that, and what do we learn from the actions taken over many years to deliver that? So today I will go through those key learnings. First and foremost, the vital importance of simple, well-understood strategy. In the case of our company, it falls into two parts. A very simple and well-understood financial strategy understood around our world. The strategy that focuses on increasing gross margin because that gives you the most leverage in an income statement, reducing overhead as a percentage to sales in order to free up investment funds behind community and advertising activities to healthily grow operating return and the cash flow that goes with it. A similar very sharp focus on a category strategy that I outlined before. We are in four businesses. We selected those businesses to focus on over 20 years ago because we like the growth characteristics and the gross margin characteristics of those businesses and felt we could expand and grow them around the world. And that's what the management of the company focuses on, with no distractions.

You need innovation to grow a company. Innovation is not just product innovation; it's business process as well. But in terms of building the sales of the company, you need relevant innovations that meet people's needs both rationally and emotionally to maintain the growth of a company. And when you're a global company, you have the opportunity to approach innovation in two ways. There are some innovations for disease conditions that are truly universal, and there are others that are much more local. And you have the opportunity to take advantage of both. In terms of the examples I will use this evening, the first is a global innovation which is a product called Colgate Sensitive Pro Relief, which offers instant relief from tooth sensitivity when applied topically and then long-lasting relief when you brush with it regularly. The condition is felt the same way by everybody around the world. You know when you've got it and you know when you don't have it. And that allowed us to use consistent advertising to reach consumers wherever they were on the planet. And what I'm about to show now is a compilation of different advertising spots we used in different parts of the world, but as you'll see, in combination it delivers the same message that we used everywhere.

So global innovation, same advertising, same disease condition. Alternatively, you have the opportunity to take advantage of local insights. And in India, as in other parts of Southeast Asia, you will find salt used to deal with mouth pain and mouth bleeding. And this provided us an opportunity to introduce an active salt toothpaste in India and other Southeast Asian countries. Let me show you the Indian ad for that product. I thought that was an appropriate ad to use in a media center. And the final thing is, particularly when you think about emerging markets, it's important that those innovations are delivered at price points that consumers can afford. And you will find in many of the emerging markets around the world, we use low-cost packaging like sachets to allow us to provide toothpaste at the price of pocket change for consumers who are husbanding their resources and buying on a daily basis. And as you can see in the larger picture, these sachets are displayed in strips in some of the down-trade mom-and-pop stores in those countries. So global innovation, local innovation, and making sure it's available to consumers who want to take on that new behavior.

Next: strong relationships. This is somewhat motherhood and apple pie, but it is something we have deployed consistently around the world, whether it's with consumers, retailers, the suppliers whom we build strategic partnerships with, the dental or veterinary professionals who recommend and explain our products to consumers often when they're taking on a new behavior, and obviously the very different government and regulatory agencies that you encounter in managing a global business. Continuous improvement: we believe that businesses are built by doing a little bit better every year rather than this swing for the fences, I guess to use the baseball analogy. And perhaps the single biggest area of continuous improvement we have focused on as a company is in gross margin -- a gross margin that over a period of 26 years we have increased from 37% to basically 60%. And it's that focus on year-in, year-out delivering a little bit better gross margin which has allowed the investment to maintain the consistent top and bottom line growth of the company.

Very important, we believe, to managing a global business is the active leadership from global leaders in that business. If we take a look at our company today, we have two chief operating officers that govern our operating business around the world. As you can see, one is Venezuelan, seven years experience with Colgate, 21 years before that, several languages. And the other is French, with all of his years of experience with our company in different parts of the world, and again speaking several languages. And then you walk around each of our operating divisions. Our Latin American division is run by a Brit, 28 years with the company, three languages. Greater Asia run by a New Zealander who holds five languages and 27 years with the company. African Middle East -- similar experience base, multiple languages. And our North American business run by an American, again over 20 years experience, and speaks two languages. Now that's very interesting to put on a slide, but the reasons it is important are the following. Oh, Europe, we have another Frenchman in Europe who is nearly 40 years with the company -- another 40 years, he'll get it right -- and he speaks four languages.

But the importance that global leaders deliver to an organization in our view is as follows. Number one: they master what they do. They don't just learn the job, they define the job, and they take experience from different parts of the world to each new responsibility that they have. They have an enterprise-wide view, and we have built their careers to give them that view, so the decisions they take for geographies that they cover take into context the enterprise-wide strategy. They have lived and worked in cultures outside their own. There is a big difference between living in and absorbing a culture than visiting a culture, and we have for many years put a premium on that experience set for our executives. They understand the power of teams locally and globally. They know how to engage, they know how to align, and they know how to direct. And they are excellent communicators. Much strategy is lost in poor or unclear communication, and great global leaders have strong communication. So it's those skills that leadership diversity brings to a global organization.

And vitally important, and always has been vitally important to our company, a values-based culture underpinned by the highest integrity. Culture in the end is what drives a company. And you could say that culture is how we get stuff done around here. Good culture drives consistently good results, which reinforces good governance, and the good governance pays back to the culture. And as I said, that culture is underpinned by the highest ethical standards. And we operate a program where we communicate to our worldwide organization three precepts of ethical governance: learn, act, and speak up. Learn what it means in terms of our code of culture and the management behaviors we endorse. Act when you see something that is inconsistent with that, either with your peers, your subordinates, or your superiors. And speak up to ask for help and support in addressing situations. Every year we convey to our worldwide organizations communication around living our values, within which ethics sits. The values of the company are these three and have been so for 30 years: caring for people -- in the company, for the consumers we serve, and the communities in which we live and operate; global teamwork to get the best results on a global basis; and the continuous improvement that I exampled earlier with the gross profit.

But that 'Living Our Values' communication is translated into all the local languages we have around the world -- it's over 40 today. And we bring training around values and ethics to all 38,000 employees around the world, either face-to-face or online, in each local language. And certify that people have conducted and understand the training. And we repeat that annually and for any new employee in the company. And finally, whilst one always is rooted in the present, we believe we have learned that a focus on the future is vital to maintaining the consistency of performance over time. And in our world, if you take a step back, sustainability I think is the frame to look at that. We brand it internally as 'Giving the World Reasons to Smile.' And we look at it quite broadly: we look at it in terms of people -- again, people in our company, people we serve, and the communities in which we live; performance, because economic performance consistently delivered underpins all of this; and planet, in terms of what we use to generate our business and the waste we create in managing it.

These are our three areas of focus, and one example I'd like to show this evening that has been durable for us over 15 years is a community program that we believe passionately in.

This for us is an example of where community meets business and both prosper. So those are the learnings we believe we have garnered over the international journey that we have undertaken and what it takes to succeed on the business side in that fast-changing global marketplace. And I think it's sort of summed up perhaps in the market share progress we have seen that underpins the financial results that I showed you in the beginning. This is a global toothpaste share, and it compares our market share globally at over 44% with our three principal multinational competitors. And of course, it is our intention to keep moving that share up as the years unfold. So those were my comments on the company and what succeeding means from a company point of view. Now I'll turn to my impertinence section -- with some observations, personal observations, on thoughts about your success in that global marketplace.

I guess in the end it boils down to two things: it's what you do -- what we do as individuals -- and it's how you get it done. In the area of what you do, I think simplistically, in whatever field you're in, it's about delivering results that are helpful to that field and advance that field consistently, and do so in a way that demonstrates managing with respect. It's as important how you get it done as what gets done. And again, in our company, this is how we define managing with respect. Every year when people go through their annual performance review, they are rated on these managing with respect principles. And if they receive a negative rating, it negatively affects the salary increase they get in the following year. So we put pay for performance against a behavior that is managing with respect. More broadly in the area of how you do it, my observations would be these: keep calm under stress. A lovely quiet Monday and a screaming Tuesday does not lead to an aligned organization or promote good workplace behavior, so I think folks that are successful manage to keep calm whatever the stress is around them.

I think people that are successful and good leaders in general are optimistic and resilient. They face the truth, but they are optimistic that they as individuals and the organizations they work within or lead can work their way through it, and they have the resilience to deliver against that. Make personal contact in human terms -- that's get out from behind the email, that's get out of the office, and that's connect with human beings. People have different styles; there's no one cookie-cutter style to do that, but it's important that people make authentic personal connection as they proceed in life. I mentioned it earlier with those global leaders: communicate well. And sometimes communicating well delivers a little bit of the unexpected. Here's an ad that we think communicates well -- simple, but it communicates well. And I'm glad that got a laugh because my next point is that I think it's important to have a sense of humor and not take yourself too seriously. Life will go on without us, trust me. And a sense of humor can bring great energy to a group and diffuse tensions. Let's see whether you think this delivers.

Finally, I guess my closing thought would be a challenge. And the challenge is: get outside. Get outside yourself as you push yourselves forward. Definitely get outside your country and get beyond your culture so you can bring broader experiences to make you a stronger professional and a broader individual. Because a global world today needs global leaders. So those are my prepared remarks, and now I would be delighted to turn the floor open to questions.

I would pick up the phone. I think, you know, first I would say if you're looking for that partnership, one would hope it's grounded in a strategy that shows benefit to both sides of that partnership. In other words, there would be an idea and there would be a plan. And then I think the simplest way in life is to pick up the telephone on the assumption you have done your homework and contact the prospective companies and ask for a meeting and have a discussion about the plan with honesty and transparency. And if the lawyers insist, put a confidentiality agreement around it. But I think you talk. Thank you.

I make very important speeches at universities that cost less than your tuition. The... you know, that's a loaded question, and frankly a little bit of a cheap shot, loaded question. I could take you back to the performance of the company. I could show you data that would show my return, if you will, at the low end of my peer group. I could tell you that I have not taken a salary increase in over three years. And no one's going to cry in their beer. So I think what one would say is that the performance of the company speaks for itself. That investors in our company have taken a very healthy return. And more than that, as I tried to demonstrate, the purpose that we try and deliver to communities around the world means we are bringing benefit beyond the economics to people's health and well-being. And you can rest assured that I invest every ounce of my being in trying to make that happen. And if that doesn't make all of the people happy, then so be it. Thank you very much.

Well, let me... can I go to that? I don't know where you're going, but I hope it's the right place. So this is perhaps a bit broader than that because it was a broader sustainability piece. We have lots of backup sections in our investor presentations which one can call on in response to questions like that. So I talked earlier about this piece. This defines how we define sustainability in the broadest terms within the company. I assume everyone has read that we deliver it through products and we deliver it for caring for the environment. And these are the goals we set for ourselves, and in each case we exceeded the goals. This was particularly important, we believe in the world we're in, and in these particular goals we will be announcing new goals precisely six weeks from today at a global meeting, and we will have every bit as challenging goals going forward for the next five years. So I guess the answer is it's more of the same. We have been very deliberate in our manufacturing strategy to accomplish this. We started maybe 15 years ago with over a hundred factories around the world, 130 something. We have today less than 60 servicing that 16 billion dollar company. We have equipment that is allowing us to produce more tonnage of our product and using 30% less water and putting out 30% less water rate. So when you reduce the number of factories you have around the world, your ability to deploy efficient capital is much higher because you have less places to go, and that helps you deliver these kinds of numbers. So it'll be more of the same with a goal for the next five years through 2015. I think earlier mention was made of the Dow Jones Sustainability Index, but we also have the same kind of goals on people, not just on environmental emissions. This, I hasten to say, is not a reduction in the number of Colgate people; this is a reduction in the lost day rate due to accidents that we have delivered over many years. We are now in the top quartile of all companies that submit their data in this space. So we do it in the environmental area and we do it in the area of our employees. And in that same employee space, you can see the kinds of recognitions we get for programs beyond basic health and safety, but in terms of advancing people's ability to be leaders and indeed the company being a best place to work. So the answer is new goals as ambitious, next five years. Go on the internet six weeks from today and you'll see what they are. What else?

Yeah, the older I get, the more I believe in culture. And I think culture is discriminating and determines the consistent strength of a company. It takes a long time to build a culture, a robust culture. It takes one thoughtless act to destroy it, and it is very difficult to recover both internally and externally if you do destroy it. Now, the culture needs to be supported by a strategy that is smart and execution that is as flawless as you can make it on the ground around the world. But if I had to force rank, I would say that a culture is what drives a company's ultimate performance. It permits brilliance or it permits mediocrity or worse.

Yeah, candidly, in that era I would say anything's possible. You know, I see a couple of intersections. One intersection I see is community with business. You take that Bright Smiles, Bright Futures program that I showed you, and you look at a Facebook. There's no reason we couldn't sign up 600 million people to work with us in country on that kind of a program, with Colgate providing the ammunition to get that done. So I see an intersection between the way business is done and the way communities operate, may be facilitated by our digital world, Facebook being the example of today. On the product side, I see no end of opportunity. Not everything in life can you ultimately predict will be reusable. And I think our view is we have steadfastly avoided the notion of green marketing, if you will, to tout an idea because it has currency today, but it doesn't change the fundamental underpinnings of your sourcing, your packaging, or your product strategy on the rest of the business. So our approach has been more holistic. And indeed, you see new technologies becoming available every day that can certainly make packaging reusable, that can certainly reduce waste, and we will mine all of those technologies to the fullest extent we can, so long as it's real, that's not just green marketing. So I wouldn't say anything is off the table, and we keep a very open mind as to how far ultimately one could go.

Well, sure as hell isn't Crest. No, I think it's all of the above. You know, in the end, I know this sounds awfully trite, but you have to be driven by the consumer. I mean, that's what the tech guys are doing today. They're responding to what the consumer says they want, because the consumer is now ahead of workplace technology and leading technology. So you have to listen to the consumer. Setting up inward-looking goals to only have the next big innovation is a mistake. We have a product called Softsoap. It is a simple liquid hand soap that you pump. We have a version that has a 3D character inside the bottle. This is not Phi Beta Kappa science, believe me. It happens to be patented, and moms love it because when the little kids come in from the yard, they think it's cute, so they wash their hands. As far as I'm concerned, that's innovation because it serves a need for consumers. And I'm just as excited about that as I am about the Pro Relief, which actually is patented, world-beating science in terms of sensitivity relief. So the answer is you should deliver to the consumer what the consumer either needs and can't define or expresses a desire for. And as I said earlier, innovation is not just in product. Innovation is how you engage with consumers, and innovation is how you run and operate the company. And we have found over the years many inventive examples of changing the way we operate to accrue benefit. And certainly, I just came back from the West Coast visiting many of the digital companies out there. There are limitless opportunities to use some of those capabilities to engage with consumers both rationally and emotionally. So the simple answer to your question is all of the above. Most importantly, you have to keep an open mind and you have to stay curious, and candidly, change your mind if the facts show that you should be changing your mind. Many businesses struggle because they create a model and then they are unprepared to go outside the model even if the world is changing around them.

There are certainly cultural differences country by country, and indeed there are some regulatory, labor, governance issues that you have to manage. But in the end, ethics are ethics, and right is right, and wrong is wrong. And whether it's ethics in general or whether it's the quality, for example, that we seek to put into our products, we have one standard for the world. There's no 'we'll give them a pass because it's a little bit early in their development.' So our standards are universal. How you communicate them with the appropriate cultural sensitivity is something we do adjust. I showed you a simple language change. Now we've got these things in over 40 languages, but they're delivered differently in some cultures. An online training or communication program would be uncultural, and so we make sure it's person to person, and the delivery can be different country by country. So yes, you navigate the culture in terms of how you execute it, but you don't change your standards in terms of either ethics of behavior or operating quality for the company.

Yes, one I've already talked about, and that is we now operate many of what I would call the support services globally. So you know, if you go back 20 odd years ago, Colgate, no different to many companies, was basically a feudal empire. Right? The king of France did what the king of France wanted to do, and if the king of England thought it was a good idea, they probably copied. And each of these general managers had their own factory, their own human resources group, their own finance organization, totally self-sufficient. And as the world changed, that became impractical. The EU arrived and hopefully will stay, and that meant we started to source our products now more regionally than we had done before. Now we have moved our global supply chain to a global organization. So we source toothpaste from Colombia in China, we source toothpaste from the EU for the US, from Vietnam, and from the US to countries outside the US, because that's more efficient from a global point of view. And we have been able to reduce the number of factories we have. We have done the same with research and development, managed as a global resource. We have done the same with information technology, now managed globally rather than having separate IT groups in each of our countries. Now we've gone beyond that to what I would call this notion of shared services, which is certainly not a new concept. And one of the most recent examples is six months ago in Europe we opened a shared services center in Poland. And that shared service center is managing the back office financially for 27 of our operating units in the greater European area, west and eastern Europe. That has reduced the number of administrative folk we have at the subsidiary level, but gives our operating folk better quality of information. And interestingly, when you aggregate all of that stuff, you start finding efficiencies in the aggregation that you can take kinks out of some of the locally developed processes and get even more efficiency. So my two answers would be: globalization of what is not essential to win on the ground (and winning on the ground in our case is converting consumers and building market share), and then the idea of grouping services so you can get better quality talent to deliver better quality human resource, finance, legal services to a group of countries, rather than again having those resources in the countries. So those have been two aspects of our strategy.

Actually, I didn't think that would be that would be us. But I had done a presentation somewhere else about that. Do you have the slides or whatever it's called? Yeah, so this is the beginning. As you could probably tell by the accent, I joined in the UK in the marketing organization. Marketing was then fashionable; I'm not sure where it sits on the pecking order these days. And then I moved to New York. It was interesting because I had started again at a time when subsidiaries were single entities; we had all of the resources we needed. And when I moved to New York, we had just started a global strategy group. We were just beginning to say, 'Hang on a minute, Colgate is a worldwide name, and we better put some buffers around it so that we know strategically how we're going to manage that name for the next 50 or 100 years. We're not going to let general managers put the Colgate name on toilet soap even though it would sell well, because Colgate is an oral care equity.' So for me, this was an opportunity to get to the headquarters, and I met people that I worked with for the rest of my career. And back to that point I made on global leaders, started to take an enterprise-wide view in terms of how we should think about our brands and the way we did business around the world. Three years and broke, I left New York went to the Philippines.

I was there three years. I guess one way of characterizing it is I was there for a revolution and five coup attempts, which was an interesting social journey. I was watching it on CNN like everybody else. But I learned a new culture, and I learned that people don't operate to Western standards everywhere, and that you have to be attentive as much to what people don't say as what they do say. And you have to start to form a view on body language as people express themselves in different ways in different rooms. And you have to take yourself away from the natural instinct to engage in a pretty forthright conversation if you know that's going to close down a room, or you need to start meetings 10 minutes earlier to get people to arrive on time, which was my first big frustration. You need to start thinking differently to get the best out of people in different cultures. And I guess the learning I took away from the Philippines is one of the biggest skills an executive must fight to keep is an ability to listen. It becomes too easy to stop listening, particularly the more senior you get in an organization. You get fixed in your ways, people try and keep, 'Well, let's not bother him with that.' So you have to become very attentive to listening. And from the Philippines, apart from the great business experience and the ability to see Southeast Asia and enjoy a great culture and learn new histories and have our kids see that (in fact Andrew was born in the Philippines, Charlie the eldest was born in New York), that single thing, the recognition that the fact that cultures are different doesn't mean they're any lesser or they have to conform to the way we were educated or brought up, and listening was the biggest thing I picked up from the Philippines.

Then the Dominican Republic, where I ran that was my first general manager assignment, heading up the Dominican Republic and Haiti, which I have read more about than any other place on earth, which has always been saddening for me. But again, a different culture. And there, now you're responsible for a company. You're no longer responsible for a function. It's not about how smart you are. You have to think about: are the bathrooms clean in the factory? How does the trade union feel? Are our bonuses fair? Are our work conditions fair? What's happening outside the workplace that one can influence? And you really started as a general manager to feel your way into community, recognizing that a company is bigger than the business it produces and sells.

Then to Fort Collins, Colorado. I had never heard of Fort Collins, Colorado. Frankly, I don't think I'd even heard of Colorado. One of the most beautiful places we ever lived. This was a business we had acquired from the outside, and was an opportunity for me to integrate three disparate businesses we had around the United States in one location. And in order to do that, I had to go through the pain of restructuring two companies. And when you have to look people in the face and say, 'I'm sorry, we're closing down the business here because we're consolidating it somewhere else because that's more strategically correct,' if ever as a human being that doesn't pain you at whatever stage in your career you're at, you should get out of the business, because that should always pain you. And it led for me an enormous learning about preparation and sensitivity. Even if the news is bad, people deserve a fair accounting, and they deserve human and personal treatment, and you can't hide behind other people.

Then back to Denmark. I was in fact responsible for the Nordic group of companies, so managing disparate geographies. And of course I went in with the view that it's Scandinavia, and you learn that actually Danes and Swedes have history too, and the Danes are the Danes and the Swedes are the Swedes and the Norwegians are the Norwegians. But it was a multi-country experience and an opportunity to try and bring different cultures together to create the best for this grouping of geographies.

And then back to New York, which is where I have been since. I headed up marketing in the US company, then ran the US, then North America and Europe, and then kind of the rest of the world, I guess. So that was the journey. Great personal learning, I believe great growth for our kids, met some great people along the way, some of them are here this evening, and you know, wouldn't have traded it for the world. But if you don't go into those experiences with a curiosity to grow personally and professionally, if you're only doing it because the organization you are working with or for wants you to tick that box, don't do it. I would encourage you to do it. So that's the, I guess, the Cook's tour. So what else?

Well, luckily I don't have to answer the why not. They are, and we audit them, and we order them from a human point of view, we order them from a labor practices point of view, we audit them from a base material sourcing point of view. And in some cases, we do random surprise audits with those suppliers. And we have moved to a place where we are now taking our code of conduct, so now broader than the frame of sourcing, even though it includes labor and human aspects, to get an acceptance from our suppliers. Difficult in many countries of the world to get certified agreement that they understand our code of conduct and are prepared to abide by it. Now, you can't audit all aspects of that, but to us that seemed like the next logical step to bring them within the framework of our company. And I would go back to the comment I made on our global supply chain and sourcing. We have over the years reduced the number of suppliers that we are sourcing from. So many of the cost benefits or savings that we today enjoy are the result of cost sharing and negotiated investment to structurally lower cost, not simply wage arbitrage by putting one bid against another bid. So we have reduced our supplier base and focused on strengthening the quality of the relationship, and then frankly the quality of what we can demand from those suppliers. Did that answer your question?

Of course it is, yes, of course it is. And in a global world, I don't think there's anything wrong with that. We make a great degree of our products here in the United States. I'm saying that it is not a wage arbitration discussion in 2011 followed by a successive wage arbitrage discussion. When you move to an international sourcing strategy, by definition there are wage differences around the world. But once we've made that decision, we stay with that decision and we continue to source and build the relationship over time. And in many of these geographies, Eastern Europe would be a classic example. What may have been wage arbitrage five years ago is no longer there, but we're still there with a great quality workforce and now getting the efficiency from the capital investment we put in the facilities. So yes, there's a one-time wage benefit. What I'm trying to suggest is we don't jump from one to the other. It's a strategic choice. Wage is a component of it, but distributing our strategic sourcing sites around the world, thinking of risk management, is another very important part of it as well.

Okay, I guess you have to decide what's important, and that changes as your life evolves. And you know, there are times when you don't have children and you can die, and there are times when you do have children and you have to be present to perhaps the important points in their life. So of course it's not easy in today's world that we all carry around at least one, if not three, portable devices depending on how hooked you are on gizmos, and that keeps you pretty involved 24/7. And if we have an oil spill in Australia at three o'clock in the morning, guess who gets a phone call. So those things happen. I think what you have to do is to try and manage that work-life relationship. I'm not sure there is such a thing as balance these days; it's how you integrate the two. And I think it's being thoughtful and choiceful about where you need to spend your time at specific points of time. So you may not be able to be at every family event, but you try not to be looking at the Blackberry under the table, because otherwise you might as well not be there. So when you're there, be there, whether that's a business issue, a family issue, or some other community issue that's important to you. So I guess it's time management and it's being disciplined about how you allocate the time. Time is, after all, the most precious resource.

Actually, investor debate, perhaps the answer is yes. From an internal point of view, the reason we provide that focus is that we think that is reinforcing and building a culture for the long term. We want to be around another 200 years, and we think that's important to do that. You know, I give one classic example. Before the subprime crisis, I can't tell you, in fact it was probably every investor meeting I was at, the suggestion was we're a very under-leveraged company. We take about nine percent of our equity in debt. Our cash flow basically could cover the debt in just over a year. And the suggestion was, 'Geez, interest rates are so low, why don't you guys leverage up and either do a big one-time dividend or make an acquisition just to grow?' And the answer is we're not in the business of making money from money. We're in the business of selling one tube of toothpaste at a time. And we're not in the business of making rash acquisitions. Acquisitions for us are a strategic process: strategic at one end, and as your grandmother always said, don't pay too much at the other end. And we all know how many companies have been destroyed by imprudent acquisitions. And we received criticism during that period. You can rest assured when the day came, nobody ever mentioned why we had not leveraged up. So I think you have to have principles, you have to communicate them effectively, and you have to stay true to them.

Thank you so much. Your name and of course the max election. Lovely. Thank you very much. Thank you very much. Thank you so much.