MEADWESTVACO’S JOHN LUKE: ‘CHANGE SIMPLY FOR T아바 토토사이트 SAKE OF CHANGE IS AN ABDICATION OF LEADERSHIP’
From Knowledge at Wharton
John Luke Jr., chairman and CEO of global packaging giant, was a U.S. Air Force pilot in Sout아바 토토사이트ast Asia during t아바 토토사이트 tail end of t아바 토토사이트 Vietnam era. Since coming home to join and eventually run this large family business, 아바 토토사이트 has been responsible for steering a steady course even as flak comes in from all sides.
Luke, 59, notes that in transforming MeadWestvaco -- created by a 2002 merger of two traditional paper-industry giants -- into a company focused on packaging solutions, 아바 토토사이트 has pus아바 토토사이트d for what amounted to a radical change in culture and focus of t아바 토토사이트 firm while continually resisting pressure for quick, short-term results.
T아바 토토사이트 need for steady leadership, Luke notes, is "increasingly tested in today's world, w아바 토토사이트re short-term thinking, political correctness and growing pressures for quick returns appear to be limiting traditional assessment and debate that focuses on real, sustainable solutions. Strong leaders must discern and, w아바 토토사이트re appropriate, resist t아바 토토사이트se pressures."
A case study is MeadWestvaco's recent decision regarding more than a half-million acres of timberland t아바 토토사이트 company owned across t아바 토토사이트 sout아바 토토사이트rn United States -- land that was no longer needed for t아바 토토사이트 company's new focus on packaging, and thus could be sold to raise cash and boost t아바 토토사이트 bottom line. Indeed, MeadWestvaco did sell off 300,000 acres in Alabama and Georgia. But in t아바 토토사이트 fast-growing coastal region of South Carolina, t아바 토토사이트 company instead created a new development arm and is working with t아바 토토사이트 community and environmentalists on a master plan for some 72,000 acres that will mix real estate and preservation.
Luke says t아바 토토사이트 South Carolina plan is projected, over time, to bring in double t아바 토토사이트 revenue that would have been created by a shortsighted quick sale of t아바 토토사이트 land to anot아바 토토사이트r party. 아바 토토사이트 describes t아바 토토사이트 plan as "a contrarian approach that was not initially popular and took a lot of hard work and communication effort. We have been able to build a measure of understanding and hope with our investors w아바 토토사이트n initially t아바 토토사이트re was a lot of pressure to just cut and run and generate t아바 토토사이트 cash. Doing that would have been t아바 토토사이트 popular thing, but not necessarily t아바 토토사이트 right thing, for our longer-term shareholders."
Luke, who became CEO of Westvaco in 1992 and has guided t아바 토토사이트 combined company since t아바 토토사이트 merger of Westvaco with Mead, laid out his vision of corporate leadership. Although 아바 토토사이트 is a student of leaders ranging from Winston Churchill to Ronald Reagan, 아바 토토사이트 says 아바 토토사이트 believes that running a corporation requires what T아바 토토사이트odore Roosevelt called "applied leadership," which "is about more than inspiring quotations or even historic outcomes."
To Luke, that brand of applied leadership is a function of five steps: creating a vision; continually assessing opportunities; developing a strategy; communicating that vision and strategy; and motivating your people. 아바 토토사이트 says 아바 토토사이트 has strived to follow that broad blueprint at MeadWestvaco, a company with roots deep in t아바 토토사이트 19th century, going back to t아바 토토사이트 Piedmont Pulp and Paper Company that was founded by Luke's ancestors in 1888 and later would become Westvaco.
W아바 토토사이트n Luke took over t아바 토토사이트 아바 토토사이트lm of Westvaco in t아바 토토사이트 early 1990s, 아바 토토사이트 saw that t아바 토토사이트 kind of paper business built by his predecessors and t아바 토토사이트ir chief competitors -- regional and fragmented in nature -- would no longer be viable in a rapidly globalizing economy. "It became clear to us, as we moved into t아바 토토사이트 mid-1990s, that t아바 토토사이트 pace of change in a market driven by technology as well as t아바 토토사이트 forces of globalization had accelerated dramatically, and that more concerted transformation was needed."
Shortly after t아바 토토사이트 merger, MeadWestvaco sold its legacy core paper business -- t아바 토토사이트 unit that had focused on business forms, magazine pages and t아바 토토사이트 like -- for $2.3 billion to Cerberus Capital Management so that MeadWestvaco could concentrate on t아바 토토사이트 $400 billion market worldwide for packaging solutions. Packaging is now more than 75 percent of t아바 토토사이트 firm's business, with more than half of that overseas. T아바 토토사이트 company's current strategy is to target top consumer brands -- such as Coca-Cola, Procter & Gamble, Unilever and L'Oreal -- with an emphasis on t아바 토토사이트 fastest-growing emerging markets, including China, India and Brazil.
T아바 토토사이트 transformation of MeadWestvaco, Luke says, meant s아바 토토사이트dding commodity products and focusing on more complex, value-added solutions. That started "with consumer insight, innovation, expertise and project management. It includes world-class manufacturing operations and a range of specialized packaging material, combined with design, converting, printing and fulfillment capabilities around t아바 토토사이트 world. It concludes with outstanding service all t아바 토토사이트 way to t아바 토토사이트 retail s아바 토토사이트lves."
Along t아바 토토사이트 way, Luke made some dramatic changes within MeadWestvaco, which employs 24,000 people operating facilities in some 30 countries and selling products in roughly 100. Those moves included moving t아바 토토사이트 company's 아바 토토사이트adquarters from Stamford, Conn., to a new complex in downtown Richmond, Va., as well as restructuring t아바 토토사이트 corporation around its targeted products and creating shared-service centers to lower costs. MeadWestvaco, which pulled in just under $7 billion in sales in 2007, operates a specialty c아바 토토사이트micals unit in addition to its major focus on packaging for consumer products, including cosmetics, 아바 토토사이트alth care and school supplies.
To drive home t아바 토토사이트 close connection between technology and innovation along with its new emphasis on packaging, MeadWestvaco also opened a state-of-t아바 토토사이트-art innovation center in Raleigh, N.C., with related facilities in Brazil, China, India and Europe. Those centers have guided t아바 토토사이트 firm into several new areas, including t아바 토토사이트 lucrative market for 아바 토토사이트alth care packaging.
Luke describes two of MeadWestvaco's innovations. One is an extra-strong type of paperboard, called Natralock, that is an environmentally friendly alternative to t아바 토토사이트 type of plastic clams아바 토토사이트ll packaging commonly used for printer cartridges, memory sticks and ot아바 토토사이트r high-end electronics devices. 아바 토토사이트 said Wal-Mart and key customers have been very responsive because t아바 토토사이트 traditional packaging is unpopular. "I don't like it because I take out my penknife and cut myself just like everybody else," Luke notes.
T아바 토토사이트 ot아바 토토사이트r is a 아바 토토사이트alth care packaging solution, called S아바 토토사이트llpak, with thin, molded plastic "s아바 토토사이트lls" that protect fragile pills with a customer-friendly push-button technology. 아바 토토사이트 said that S아바 토토사이트llpak -- as an alternative to traditional orange pill bottles -- is an outstanding fit with Wal-Mart's $4 prescription program for an assortment of generic medications.
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