WL Mellon Speakers - David A Ciesinski

No, just pleasure to be here with you, Blake.

I'd be happy to. I actually started as a part-time student here, working at Scott Paper Company. Scott Paper was in the process of getting acquired by Kimberly-Clark, so I switched from part-time to full-time. I had a chance to work with my classmate David, who graduated in '96 with me. Upon graduating, I joined Arthur Young, where I spent a number of years in consulting. Then I went to a smaller startup consultancy, and then I had a chance to go to H.J. Heinz, starting in strategy and planning. The job that you get isn't necessarily the job that was advertised. I found this intriguing strategy job ended up being reviewing capital appropriation requests, not big fancy investments but wastewater treatment plants, breeder sheds for a chicken business, smoke houses — things that weren't necessarily sexy. But I learned an enormous amount in that job. I had occasions that gave me exposure to the CEO. Fast forward, I had a chance to work directly for the CEO as a director of strategy support, shadowing him and analyzing situations. When we were thinking about some big divestitures, I flew to New York regularly to work with bankers and lawyers, which opened up a whole new world. That turned into an assignment as VP of strategy for the company. I did that for a while, expanded the role, then made a lateral move into marketing, where I led the U.S. ketchup business for Heinz. Truth be told, you could take what I knew about marketing and put it in a thimble and still have extra room. I was forthright with my team about that, but it was a great opportunity to learn a different part of the business. I had been working on Wall Street — growth rates, margins, EPS, multiples — and I had a chance to learn about Main Street: who are your consumers, how big is the addressable opportunity, how do you make margins, who are your competitors. That gave me a chance to tie it all together as a general manager at Craft and subsequently as a CEO, working at the intersection of Wall Street and Main Street. It's been a lot of fun.

The CFO at Heinz had a saying: if you want to build a building, a tall building needs a big, wide, strong foundation. Part of what lateral moves afford you is the ability to build a foundation that's a little broader and deeper. There are two sides: you want to be thoughtful because you don't want to be too broad, but they really afford you a more complete view of the business. As you think about career moves, if you aspire to be a general manager, you have a choice: you can come up through one vertical and be a real specialist, or if presented with the opportunity to see other sides of the business, that helps you understand the way the business works more completely, so you can hopefully make better decisions.

Number one is we're in the people business; we just happen to make food. No matter what you do outside of school, it's by, with, for, and through people. If you want to accomplish anything great, you need to remember first and foremost you're in the people business and it's about relationships. Number two, I fundamentally believe that if you want to help a business grow, you have to figure out how you help the people in that business grow as well. If you want to engage their hearts and minds, you need to look beyond them as a person and the relationship as a transaction. I think about what I know about you, Blake—that you're married, have kids, served at Fort Polk, have broader aspirations. I find it most productive and rewarding to look at that person and ask how do I help them grow, not just as a professional, but help them be a better father, husband, son, whatever their aspirations are. When you engage people at that level authentically, it unlocks magic. The most rewarding moments in my career aren't hitting a number; it's watching a team accomplish something they didn't think they could do and celebrating with them. The business is the beneficiary, but the person is really the beneficiary because they've taken their ability to the next level.

Yes. For the benefit of the group, the question was about navigating cultures in companies and how to think about culture as you move up. Every company has a unique culture. It's harder to break through with people authentically as you move up. Culture begins with you—that's the little C: what kind of culture do you want to create for the people around you? If you're leading a team, you can't control whether your boss is a jerk, but you can certainly control whether the people who work for you have a boss that's a jerk. That's a choice. Engaging people authentically starts with trust—the bottom layer. How do you create an environment with trust where people are willing to be transparent? The next level is transparency and honesty. If you don't create trust, people may hold back. If there's trust, they'll say, 'Blake, this is a bad idea.' With trust and honesty, you can create collaboration, drawing everybody's gifts into the exercise, which drives performance and results. It's taking a deliberate view of the team, not just the business. The goal is to do it over and over, faster and better. It begins with trust, transparency, honesty, collaboration, performance, then results.

We invest time in offsites—this past year we probably had four or five principally geared towards improving team performance. Every time you bring a new person into a team, dynamics change. It's like having kids in a family—you set values and expectations for normative behavior, starting with how you treat one another. Our number one value is respect: we fundamentally respect the dignity of every single person. Another important one is courage—not running into a burning building, but the courage to speak your mind. Another is humility—the farther people get in their career, the more they feel they have all the answers, but that shuts you off. Without humility, you can't be truly open-minded, and if you're not open-minded, you can't learn, and if you can't learn, you can't grow. The last is hungry—not hungry for lunch, but driven, having an inner desire to be better. 'Best' is abstract, but 'better' is measurable every single day.

I think it's the four values I described. There's a book by Pat Lencioni called 'The Ideal Team Player,' something like that. We look for someone who is hungry—driven to perform—but also fundamentally respects the dignity of every single person. That one has continued to move to the forefront. Respecting people whether they're white, a person of color, gay, straight, cis, trans—looking beyond what's on the surface and understanding that every person has a soul. We all have an aspiration to grow. If you're committed to helping somebody grow, it may mean they need to move on, and you have the courage to have that conversation.

Sure. We're in the food space, so it's all about flavor. In our corner—sauces, dressings, dips—something has taken place over the last 10 years that moved the world in our direction. From a protein perspective, beef has been flat to declining, while chicken, because of its nutrition, cost, and environmental impact, has been growing. Chicken tastes bland and begs for sauces, and that's where we come in. We have a team of chefs and product developers who regularly sit with some of the biggest restaurants in the country. They come to Columbus, where we have a big innovation center with benchtop kitchens. We look at their calendar six to 24 to 30 months out and go season by season, talking about trends—sweet, spicy, hot, Asian hot versus Mexican hot. They discuss what they want to plan for their menu—salads, protein, sometimes beverages. We come up with, say, 50 ideas, then rapidly prototype them. We replicate their kitchen and literally try the food. They'll say they love 15, put 15 on the shelf, and we iterate again on the remaining 15. Sometimes we do that in the same day. Then they want consumer testing, so we have a place to get feedback right there. They might love three and want to test them in restaurants. We make smaller batches, send them, and get feedback on consumer reaction and how hard the item is to work with. If they like them, they'll say they're taking five, and we help scale them to 3,000 restaurants. It's a cool space where we work with them on flavor development and sauces, and we can also scale. For example, Nashville hot from KFC was an item we developed. The forecast started at X and ended up being 3X, so we had to figure out how to scale and keep up with demand.

In the last few years, we've been through a big technical transformation. We had a very old ERP system installed in 1996-97, it was COBOL-based. We replaced it with SAP end to end. Having SAP as one common cloud platform has allowed us to use front-end planning systems for forecasting and production scheduling, and downstream automation—things that control fill rate and weight control. At this point, it's less about AI and more about improving our manufacturing systems to operate cost-effectively. But with the right platform in place, we can begin to think about much more advanced tools.

Sure. On July 20th, 2019, a Saturday, I was out on a bike ride with teammates for Pelotonia, a big cancer fundraiser. I came back and our CIO, a close personal friend, texted me saying we're having a network issue. By the time I got home, he said it's not Verizon, it's our issue. Production was impacted. I went into work, and by the time I got there, everything was shut down—black screens of death. About two hours later, we saw identifiers that it was ransomware malware that had locked us up completely. Fortunately, our old COBOL systems were air-gapped and kept running, but everything else shut down—email, printing bills of lading, communication with teammates. We had a crisis. We called the leadership team together, then the extended leadership team, and shared what we knew. We couldn't print, so we went to Office Max, bought a printer, and printed flyers to call a company meeting. I stood up on a table and explained the situation. We quickly assembled in a room and put issues into two buckets: incapacitating issues that could kill us within days or weeks, and inconveniences. Incapacitating issues included accessing cash—we needed to make payroll for union plants on Thursday, but we couldn't get to the cash. We also couldn't present bills of lading to get shipments out. Inconveniences included not being able to get to email. We brought the board along. The ransomware was from a Russian crime entity. They wanted $350,000 ransom; our insurance deductible was $250,000. We debated paying. We had to ensure it was legal to pay a Bitcoin purse, which involved working with lawyers and learning how to get Bitcoin. The negotiation happened on the dark web via a consulting firm from our cyber insurance. It was a steep learning curve. We ultimately paid the ransom to get the domain controllers back, but it took about six months to fully recover. We created a new clean production environment and scrapped over a thousand computers. We transitioned to Office 365 and told people to find a millennial to teach them. By August we were running normally, by November we were in the new cloud environment. The silver lining: when COVID came in February, we had transitioned everything to single instance in the cloud, which allowed our IT team to control everything remotely. We deployed Microsoft Teams and said find someone who knows how to use it. That exercise brought us together as a team and prepared us for working in a distributed fashion.

That's a super important question. At my level, I look at my direct reports and their direct reports, constantly assessing capacity and capabilities. It's natural to ask about machine capacity, but it's equally important to look within your team and ask if we have the right capacity and capability to meet the evolving needs of the business. In the last eight years, we've gone from $1 billion to $2 billion in sales, and what needs to be true today is different. As we think about growing to $3 billion and beyond, we need different skills. That's one side. The other is watching your culture—bringing in people who fit our values of respect, courage, humility. For CEO succession, I've been in the seat about 8.5 years—the average is more like four, so I've outlasted most. I'm very focused on where the business is likely to go over the next few years: are we domestic today, will we be international; we play in sauces and dressings, might we add another leg. I have regular conversations with the board about my own timing, being transparent as a fiduciary to allow an orderly transition. I've told my board I don't want to stay until I have to be pushed out. If the right person is ready and the timing is right, I'm okay stepping back a little early. If that person isn't growing as fast or something happens, I'll stay a little longer. It's more of a window than a point in time. Humility is important—you can't do it forever, and the needs of the business evolve.

It's a massive consideration. As a public company, you need to think about enterprise risk and redundancy—system redundancy, making yourself a hard target for future cyber attacks. Also manufacturing redundancy, supply redundancy. We live in a complicated world. Even as a domestic company, we spend time looking at where we source ingredients. If there was an issue in the Taiwan Strait, how could that impact our supply chain? Or bird flu affecting the price of eggs. We have a process where the CFO, CEO, head of supply chain, and general counsel meet monthly to look at end-to-end enterprise risk. We do deep dives on employee safety, food safety, production resiliency, cyber, and we've added a segment on suppliers—you're only as strong as your supplier. If we're single source for key ingredients, how do we have contingency plans?

If the place relied on me for great ideas, we'd be in deep trouble. But I have a pet idea. There's a place in Washington, D.C., called Crisp and Juicy in Northern Virginia, a Peruvian chicken place with an amazing sauce, but it uses a hard-to-source pepper. We've taken the sauce apart and tried to figure out how to make it at reasonable cost. I'd love to get that to the marketplace—it would be a world beater. But honestly, most great ideas come from other people, and I just cheer for them. Let me share one more thing as leaders. Everything is by, with, for, and through people. When you think about leaders versus managers, a leader works at the nexus of two things: focusing on accomplishing a mission, and having a moral obligation to uphold the dignity of every single person. The true leader figures out how to help the business grow while protecting and enhancing the person. If you're all about dignity, you probably won't have a profitable business. If you're all about the mission without dignity, it's not sustainable. Enter the workforce understanding that if you're a caring leader who engages authentically, sometimes it works perfectly. But often you face the hard circumstance of someone not performing. You coach, but if they still don't perform, you have the honest conversation that maybe the skills aren't a fit. Understanding that as you graduate and embrace it, you'll deliver better results and feel better about what you're doing. The business world is hungering for more of that behavior.

It's beautiful. Thank you very much. It's been a pleasure being with you guys. Thank you.