CEOs through the years
The year was 1923, and Merritt J. Osborn was in a tough spot. M.J., as his friends called him, had lost his car dealership business and needed a new source of income – especially with two sons about ready for college. As he considered his options, he remembered a problem he’d seen years before as a traveling pharmaceutical salesman.
He recalled that, to clean guest room carpets, hotels removed them for cleaning by an outside vendor. While the carpets were gone, often for one to two weeks, the hotels shut the rooms down, foregoing revenue until the carpets were returned.
M.J. wondered if there could be a better way. Why not a product to clean the carpet in the room and do it quickly so the room could be rented again that evening?
M.J. was not a trained chemist. But he did some research and blended a few ingredients together. He called his new carpet cleaning compound Absorbit™. And he named his new company Economics Laboratory, conveying the idea of savings and science. Thus was born the company that in 1986 took on the name Ecolab.
Absorbit wasn’t the success M.J. hoped. But he was not deterred. He looked from the hotel room to the hotel kitchen, where electric dish machines were being adopted. He learned that the machines did a poor job of cleaning, partly because no good soap had been formulated for use in them.
With the help of a chemistry student from the University of Minnesota, M.J. created a dish machine soap called Soilax™. Although Soilax did not deliver perfect cleaning, it was the best detergent on the market. It sold well – even becoming a popular consumer product. By the mid-1930s, the company was on solid financial footing.
From the start, M.J. said the company was about: “Saving time, lightening labour and reducing costs to those we serve.” He demanded that products offered by the company fulfill their sales promise to “get the job done.” Getting the job done, to M.J.’s way of thinking, meant that trained service representatives also would be available to help solve customer cleaning challenges.
M.J.’s guiding philosophy laid the groundwork for the culture that has defined Ecolab ever since:
- Products must fill a need that is not being satisfactorily met.
- The company would be a leader in developing new products and technology.
- When entering a new market, the company would know more about the cleaning processes of that industry than anyone else, including the customer.
- The company would deliver excellent customer service. In M.J.’s mind, service was linked to sales and was an overriding priority.
Major achievements during M.J.’s tenure as president and CEO included:
- Raising sufficient capital to keep his young, at times teetering, company in business.
- Developing Soilax, the company’s breakthrough product. It was the first effective detergent for mechanical dishwashers being widely adopted in hotels in the 1920s and 1930s. Soilax’s magical colour change – from pink in powder form, to green when mixed in proper proportion, to yellow if too strong – was made possible by Floroscene, a concentration indicator that, in 1926, became the first EL product to receive a patent.
- Developing detergent dispensing technology to prevent waste and help ensure effective cleaning results.
- Building manufacturing capacity to produce Soilax.
- Investing in research and development to formulate more advanced detergents and rinse aids.
- Hiring sales and service representatives to provide round-the-clock customer service. By the mid-1930s, the company had about 35 so-called “powder peddlers.”
- Building a consumer products business by leveraging Soilax as an all-purpose cleaner and, in the late 1940s and 1950s, developing detergents and rinse aids for home dishwashing machines. Soilax encountered stiff competition in general cleaning from Procter & Gamble’s Spic & Span®, but EL’s Electrasol™ dishwashing detergent continued to lead in home dishwashing. Other EL consumer brands included Finish, Jet Dry and Lime Away.
- Taking the family-owned company public in 1957 with an offering of 100,000 shares at $15 each.
- Expanding sales, marketing and manufacturing to Canada, Europe and Latin America – early first steps toward becoming a global business.
- Rewarding shareholders: When M.J. died in 1960, an original share of Economics Laboratory stock purchased for $50 was worth $1,250.
E.B. Osborn had established a powerful legacy well before moving into a senior leadership role with the company. As national sales manager early in his career, he studied the psychology of sales (and the importance of service to sales) and developed a systems approach to service (for more on his approach, please see History/Service). He also introduced innovative methods for sales training, focusing on preparing sales and service representatives to become dishmachine “consultants.” It’s not surprising that E.B. became recognized as the “father” of Ecolab’s legendary round-the-clock, on-site service, which, to this day, remains at the centre of the value Ecolab provides its customers.
As president and later CEO, E.B. oversaw dramatic expansion of the company in the U.S. and around the world. In addition, he oversaw a number of key acquisitions:
- Klenzade, which made EL an instant leader in Clean-in-Place (CIP) technology. CIP enables dairy, brewery and other beverage and food processors to clean and sanitize pipes and tanks without the labour- and time-consuming process of taking them apart. The acquisition gave EL entry into the food and beverage processing market.
- Fraser Laundry Systems, an institutional laundry business that provided the company early leadership in on-premise laundry operations at hotels and other institutional customer locations – and a first step into the commercial laundry market.
- Magnus Chemical Company, a leader in aviation, marine, pulp and paper, petrochemical and industrial cleaning products, and later, the Maritec Companies, which provided cleaning products to the international shipping trade. The acquisition was the foundation for EL’s foray into the industrial market, which temporarily ended in 1983 with the sale of its industrial division.
E.B. also was president and CEO when the company:
- Began responding to growing concerns about environmental pollution. An early focus was developing biodegradable detergents and removing phosphates from its products in response to growing public concern about environmental pollution. It also began developing low-temperature wash formulations to save energy. When E.B. was invited to meet with the Lyndon B. Johnson administration in Washington, D.C., about the nation’s environmental concerns, he said, “We are involved in this problem, because we are concerned not only with making and selling chemical products, but also with what goes down the drain.”
- Introduced the philosophy of “total responsibility” which aimed to secure customer satisfaction and deliver maximum benefit. E.B. believed this philosophy was a major reason for the company’s success.
- Built a new headquarters – the Osborn Building in St. Paul, Minnesota - to house its 2,200 headquarters employees. “From the outset, I was resolved that the Osborn Building should project a special quality of cleanliness, an atmosphere of hygiene, that would speak for the world leader in environmental sanitation,” E.B. said.
- Helped customers navigate the turbulence of the early 1970s – worldwide oil crisis, recession, high inflation, and rising prices for raw materials. The focus was on helping customers lower costs, conserve resources and improve efficiency.
- Continued to invest in research and development. Expanded its Merritt J. Osborn Research Centre, built in Eagan, Minnesota, in 1962, and opened its first satellite research centre in Rio de Janeiro, Brazil. New labs in Belgium and New Zealand followed.
When E.B. joined the company, annual sales were $147,000. By the time he retired, revenues were more than $400 million – and the company had recorded 44 consecutive years of sales growth. And EL served customers in more than 50 countries and offered more than 1,000 products.
Fred Lanners, a chemical engineer by training, joined EL in 1948 to work in the company’s St. Paul, Minnesota, laboratories. The company soon recognized his considerable sales and executive skills, and in the 1950s, he was given responsibility for developing new markets in Europe. Fred established a sales organisation and a subsidiary, Soilax AB, in Sweden, then followed with subsidiaries in Norway, England, Belgium, Austria, Denmark, Germany and France. Following a series of assignments with increasing responsibility, Fred was named president in 1972 and elected CEO and chairman in 1978, the first non-family member to lead the company.
Fred is credited with continuing to strengthen Ecolab’s focus on service – and made it integral to EL’s market strategy. “Nobody wants to buy a detergent; they want clean dishes,” he said. “We make products valuable to our customer by training him in their use, and by furnishing him with applications systems so that he gains an end result that has economic benefit to him.”
Under Fred’s leadership, EL:
- Acquired Apollo Technologies for more than $71 million, a high price according to stock analysts. Apollo was a manufacturer of chemicals and pollution-control equipment purchased to build share in the industrial market with more comprehensive services and trained technical services engineers to implement Apollo programmes. Although sales grew at first, economic circumstances, governmental decisions and milder than normal winter weather led to the first drop in electric consumption in the U.S. – all of which worked against Apollo’s success. The impact was felt in EL’s 1980 earnings and continued to get worse.
- Introduced Solid Power™, a breakthrough, state-of-the-art detergent packaging in a capsule that could be inserted into a closed warewashing system. Solid Power’s benefits – greater control, improved safety, convenience and low use cost – made it the top-selling detergent in the U.S. institutional market within two years of launch.
Following the tragic automobile death of Allied Chemical President Richard Ashley, who would have been the first outsider to assume the CEO role if he hadn't died before his start date, the board elected Pierson "Sandy" Grieve as chairman and CEO. Sandy was a 55-year-old executive from the consumer goods company, Questor. His experience in acquisitions and corporate planning, as well as his aggressive and articulate management style, were considered valuable qualifications.
After being on the job for less than one week, Sandy shut down the Apollo Technologies business. Soon after EL had purchased Apollo in 1980, changes in the market resulted in declines in Apollo’s business. The decision resulted in a $43 million write-off but it did stop further losses. Later in the decade, Sandy oversaw the sale of the company’s Magnus division, which, like Apollo, targeted industrial customers.
Other major events during Sandy’s tenure included:
- A corporate name change, from Economics Laboratory to Ecolab. The new name suggested “eco” for ecology and environment and “lab” for technology and labour.
- The company’s listing on the New York Stock Exchange – and a change in fiscal year from June 30 to calendar year.
- The sale of the Consumer Products division for $240 million, a move that ended a half-century of innovation which had made Ecolab products known to consumers around the world. Stiff competition from Lever Brothers, Procter & Gamble and other consumer companies, and the big advertising and marketing budgets required to compete, led to the decision to sell.
- The acquisition of ChemLawn, a leading provider of lawn care services in the U.S., for $376 million. When Chemlawn did not generate sufficient revenue, Ecolab increased prices. Consumers resisted, likely because they considered lawn care a discretionary purchase. ChemLawn was sold in 1992, resulting in a $275 million write-off.
- The 1990 formation of a joint venture with Henkel KGaA, a large German-based company with products and services similar to those offered by Ecolab’s Institutional and Klenzade (Food & Beverage) businesses. Ecolab formed the joint venture to strengthen its position as the European Union was being formed. Before the joint venture, Ecolab’s sales in Europe were $150 million. At the end of 1991, Henkel-Ecolab sales in Europe were more than $750 million. The joint venture also built a network of distributors and licensees outside Europe – and by the 1990s, Ecolab was exporting products to more than 100 countries.
- Articulation of a strategy called “Circle the Customer – Circle the Globe,” conveying Ecolab’s ability to provide products and services to address many customer needs – and to provide those services around the world, no matter where a customer may need them.
- Formation of a Textile Care division to provide laundry products, dispensing systems and services to commercial and institutional laundries.
- The addition of pest elimination services, via the acquisition of Lystads, Inc., to broaden services to institutional customers.
- Significant expansion in international markets achieved by establishing new operations or distribution and licensing agreements.
- Restructuring to concentrate on the institutional, industrial, and hospitality industries – and augmenting the business divisions that served them. For example, the acquisition of Kay Chemical provided a much sought-after entry into the quick-service restaurant sector.
The company, restructured and focused on core markets under Sandy’s leadership, was in a strong position to continue its record of dynamic growth.
“The 12 years I’ve spent at Ecolab have been the most successful, satisfying and fulfilling of my 44-year career,” Sandy said in a farewell letter.
Al Schuman’s career with Economics Laboratory (later Ecolab) began in 1957 when he joined as a junior salesman calling on the hospitality industry in the New York region. His career with the company ended 49 years later in 2006 with his retirement as chairman.
Al inspired a culture of aggressive, but ethical, salesmanship. His tough and inspiring style produced results. Under his leadership, Ecolab experienced dramatic growth through strong organic sales and several strategic acquisitions. When Al became CEO in the mid-1990s, sales were $1.3 billion and net income was $99.2 million. By 2005, revenues were $4.5 billion and net income was $319 million.
One of the most significant acquisitions of Al’s CEO tenure was the buy-out of Henkel KGaA’s 50 percent in the Henkel-Ecolab joint venture, formed in 1990 to strengthen Ecolab’s position in institutional and food and beverage sectors as the European Union took form, creating one of the world’s largest markets. In addition, Al oversaw:
- The purchase of Microbiotecnica, extending pest elimination services in Brazil.
- The acquisition of Chicago-based Audits International, a provider of food safety services, which became the foundation for a new service, called EcoSure™ food safety management. EcoSure provided on-site evaluations of food safety procedures in restaurants, hotels, supermarkets and other foodservice and hospitality establishments.
- The acquisition of Kleencare Hygiene, which increased market share for the Food and Beverage division.
- The purchase of Dong Woo Deterpan Co., a leading marketer of institutional cleaning and sanitizing products and systems based in Seoul, South Korea.
Reflecting on Ecolab’s growth, Al said: “First, we have anticipated marketplace changes, always staying several steps ahead of the game. We’ve expanded our market potential, ‘growing the pie.’ We’ve maximized the differentiation between our offerings and the competition’s, and we’ve built rock-solid customer relationships, the foundation of our Circle the Customer – Circle the Globe strategy. We’ve also established a strong leadership team that combines vision and execution. Last, but by no means least, we’ve developed a truly unique culture that ties it all together.
“Doing these things is never easy. Especially when you’re the industry leader, it can be tempting to get too comfortable and think you’re untouchable. At Ecolab, we know that nobody’s untouchable and, most of all, we stay hungry for success. That’s what got us here today – and why we’ll keep ‘turning it up’ tomorrow.”
The story of Doug Baker’s years at Ecolab’s helm is still being written. But his legacy is set: it’s about dramatic growth for the company. The numbers below reveal the trajectory through December 31, 2019:
- Sales as of 12/31/2003 = $3,761,819,000
- Sales as of 12/31/2019 = $14,906,300,000
- Annual sales increase of 334%
Net Income Growth
- Net income as of 12/31/2003 = $260,600,000
- Net income as of 12/31/2019 = $1,558,900,000
- Net income increase of more than 498%
- Share price on 12/31/2003 = $27.37
- Share price on 12/31/2019 = $192.99
- Share price increase of 705%
|Price||Shares||Mkt. Cap||% chg|
- More than 100 acquisitions – 116 as of Dec. 31, 2019
Total Ecolab Associates
- Associates as of 12/31/2019 = 50,200
- Increase of 216%
- Field associates as of 12/31/2019 = 27,500
- Increase of more than 135%
Doug had a profound impact on the company in many ways. He built a culture around a clear and meaningful purpose – to make the world cleaner, safer and healthier, while protecting people and vital resources.
The purpose continues to provide inspiration for the company’s 45,000 employees and provides focus for strategic decisions. For example, Ecolab’s 2011 acquisition of Illinois-based Nalco, the world’s largest water treatment and management company, supported a vision to build expertise, capabilities and global reach to address the global need for clean water. Dozens of other acquisitions and product innovations during Doug’s tenure also have supported the company’s global leadership in water, food, public health and climate.
Doug joined Ecolab in 1989 and held a number of marketing and general management roles in the U.S. and Europe before becoming president and chief executive officer in July 2004. In 2016, Doug reflected on his role: “My main responsibility as chairman and CEO is to make sure Ecolab lives up to its potential. I feel proud of so many things about our company, especially the way we integrate our success with a larger purpose. Our impact – and our potential – are huge.”