SO WHAT, I ask Tom Falk, did he want to do when he was growing up? Falk, chief
executive of Kimberly-Clark, one of the world’s biggest packaged-goods
companies, raises both eyebrows slowly.
“I am the oldest of nine children, Andrew,” he says in his American Midwest
drawl. “My career aspiration was to have a room of my own.”
Very droll, and something of a surprise as 48-year-old Falk — whose company
makes paper product megabrands like Kleenex, Andrex, Scott and Huggies — is
not known for his humour. Quite the reverse.
An accountant by training and chief executive of Kimberly-Clark for five
years, Falk is a dry financial wizard renowned in America for squeezing up
sales and stripping out costs as the tissue maker has fought rivals such as
Procter & Gamble in supermarkets across the world.
Yet to meet, Falk is less Master of the Universe and more wry combatant in the
global war for brand supremacy. Under his watch, Kimberly-Clark has
completed its transformation from a sprawling paper and pulp company to a
branded-goods leviathan with 57,000 employees and $16.7 billion (£8.6
billion) sales in 140 countries. And now it is moving into toiletries —
right onto P&G’s lawn.
It’s a battle with no let-up, and no opportunity missed. No sooner had P&G’s
global boss, AG Lafley, appeared in these pages just before Christmas, than
Falk’s people rang to book a meeting when he next passed through London.
That’s how seriously they take it.
So here we are, in an opulent suite above Claridge’s hotel. Falk is tieless
and neat, 6ft, his dark eyes watching with caution from an unreadable,
little-boy face. Everything he does comes with a degree of consideration — a
reassurance for shareholders who have watched Kimberly-Clark transform
itself.
For the rest of us, who might already have read of the firm’s lengthy
revolution in Jim Collins’s business bestseller Good To Great, it is the
chance for an update from the battle-front.
And what a battle. Kimberly-Clark’s Huggies nappies are global No 2 to P&G’s
Pampers, Andrex loo roll is No 1 in Britain, Scott is No 1 in America, and
everywhere the company is engaged in a desperate drive for innovation as
commodity suppliers nibble at its margins and profits dip.
“I don’t sleep well at night unless I see the next three generations of our
products,” jokes Falk. “We are trying to bring innovation to all our
categories.”
That doesn’t mean that, like P&G, it will be moving more towards
gadgets — “we won’t be selling coffee makers any time soon” — but it has to
find a way to get consumers in Europe and America to pay more for what are
mainly disposable products. Hence Huggies toiletries for children, Andrex
with aloe vera, antiviral Kleenex, nappies and training pants with pull-ups
and size adjusters and stretchy sides and more.
But how much can you innovate loo rolls, tissues and nappies?
A lot, says Falk. “Think about it, in the last three years we have had three
top 20 nonfood consumer packaged-goods new products. In Britain, Andrex
Quilt was the top new product launch in the category.”
Consumers want innovation, and it will be key to the company’s future.
“Investors ask, ‘what else can you do with a diaper?’ Just wait and see,
you’ll be thrilled.”
Falk likes to undercut his own earnestness. It’s a different style from that
of his arch-rival Lafley: less charismatic but more archly knowing, more
numbers-focused. Kimberly-Clark has never yet had a marketer as boss — it
has been a different kind of business for most of its 135 years.
And Falk, you suspect, reflects that, even in his home life. He is committed
to his local Presbyterian church in Dallas, where Kimberly-Clark keeps its
head office, and he tells me he often likes to sit up reading company data
so he can check that his 17-year-old son is observing his midnight curfew.
This is a man used to controlling things.
At Kimberly-Clark, Falk has bigger problems. He needs more money to match P&G’s
huge marketing spend, so he has been diligently streamlining his business —
out-sourcing IT, human resources and financial functions — to free up cash.
He is also under attack from environmen-talists over how he sources his paper.
Greenpeace claims the company is clear-cutting Canada’s ancient boreal
forest and wants consumers to boycott Kleenex and other Kim-berly-Clark
brands. That, if unchallenged, could create big difficulties for Falk among
increasingly eco-conscious consumers.
“Greenpeace is just wrong,” says Falk. “The issue it is focused on is the
forest-certification process. It prefers a process called FSC [Forest
Stewardship Council], but it is kind of missing the point as less than 10%
of the world’s forests are certified by anybody, and so our policy has been
to get all our suppliers certified by somebody. In 2005 we reported that
around 90% of our fibre came from certified sources, under one of five
certification schemes that we believe are acceptable.”
Why can’t he get all his supplies from certified schemes? “Because the
availability isn’t there,” he says.
But the company is going to work with suppliers to improve the schemes, he
promises. “We feel we are the only tissue company to be doing that, and
Greenpeace is just targeting us because we are the biggest.”
As for the critics who question whether the world really needs all the paper
products pushed so imaginatively by Kimberly-Clark, P&G and others, he
shakes his head.
“Think about the disposable pant we make for children who bedwet. It’s pretty
hard to argue that it isn’t helping those kids with self-esteem. Think about
the facial tissue that helps people care for families with colds. Think
about bathroom tissue and helping train children with healthy habits. These
products meet people’s basic needs.”
Falk is unswerving in his belief that Kim-berly-Clark is a big business that
does good in the world. He expresses it personally, sitting on the board of
the Boys and Girls Clubs of America, a fast-growing youth development
charity. Roxanne Spillett, president of the organisation, describes him as a
top-level “thoughtful, strategic problem-solver”.
He also expresses it corporately, ensuring that about 1% of Kimberly-Clark’s
pretax profit is given to charitable causes. That reflects the home-town
values that Falk likes to project, even when he does earn pay and bonuses
totalling $3m. “Both my wife and I grew up in the Midwest in a frugal
environment,” he says. “That’s carried over into how we live our lives.”
Falk was brought up in Iowa, the eldest child in his large family, and started
work helping out in his father’s gas station. He jumped into Kimberly-Clark
after qualifying as an accountant because he liked its culture. “Lots of
people talk about caring, but they really did it. If you were moving house,
people would show up and help. It made you feel good about what you do.”
He started in internal audit, was sent to Stanford to do an MBA — “on a
handshake promise” that he would return — before working his way up to head
consumer products, then pulp and newsprint in America. By 1999 he was chief
operating officer, successfully integrating Scott Paper, another American
rival and inventor of rolled lavatory paper, bought four years earlier.
Since that acquisition, Kimberly-Clark sales worldwide have more than
doubled.
But by the time Falk took over the top slot, the company had missed earnings
projections, hence his careful insistence on sticking to thought-out plans.
He loves targets — he uses a heart-rate monitor to ensure he burns off 4,000
calories doing exercise each week, to keep to his 200lb weight. He likes
figures, too.
“He has the most incredible memory of anyone I’ve ever met,” says John
Bergstrom, a Kimberly-Clark nonexecutive director, “and his mantra is
discipline.”
Falk now wants more premium products, more health and hygiene, less paper.
More environmental targets, too — he promises his sites will be landfill
free, with less fresh water used, and with a reduction in air emissions of various
chemicals.
There will be no major portfolio changes, either. “We’re down to the core of
what works well together,” he says. And he identifies Kimberly-Clark’s
business-to-business division — which supplies hospitals and factories, and
contributes a quarter of sales — as key to its growth, developing technology
that has consumer applications.
He also brushes aside rumours that private-equity groups are gunning for
Kimberly-Clark, still to shake off its outdated identity as a dull, old
paper maker.
“We had a good year last year, outperforming the market by 18%. We are all
about executing our plan to increase shareholder value and, if we do that,
our shareholders will be very happy.”
Will he stay at the top long? One of his friends describes the Kimberly-Clark
job as “a grinder” — all those countries, so many shareholder demands. And
maybe the company now needs a marketer at the top? Falk shrugs. He feels
like he has just started, he says.
“You know, we’ve only had eight CEOs in 135 years.”
He pauses to let me do the arithmetic. “Although some of them might have had
the job for too long — I don’t know.”
And he offers a cautious laugh, emblematic of the man. Then he is away — he
has got a London musical to attend, on a rare night off: the Queen tribute
We Will Rock You.
“Should be fun,” he says, with a small smile, as he shakes my hand goodbye.
TOM FALK’S WORKING DAY
THE Kimberly-Clark chief executive wakes at his home near downtown Dallas at
6am. “I try to work out,” says Tom Falk, “then drive myself into the
office.” He is in Kimberly-Clark’s headquarters by 8am.
“I talk on the phone to my deputies, then go into a series of meetings.” Falk
has 10 senior executives reporting directly to him. His deputy runs the
company day-to-day. Falk focuses on strategy and people development. “I just
had my 360-degree performance review — one area I was working on was talent
building, and I’ve improved, which is good!” He tries to be home by 7pm.
More than half his time is spent away from Dallas, travelling.
VITAL STATISTICS
Born:June 6, 1958
Marital status:married, one son
School:Arrowhead High School, Hartland, Wisconsin
Universities:Wisconsin and Stanford
First job:accountant
Salary package:$1.2m (£620,000) plus bonus
Car:blue Corvette Home:Dallas, Texas
Favourite author:Jeffrey Shaara
Favourite music:country singer Pat Green
Favourite film:To Catch A Thief, starring Cary Grant and Grace Kelly
Favourite gadget:Polar heart rate monitor
Last holiday:northern Wisconsin
DOWNTIME
TOM FALK loves fast cars. “I’ve got three. One is an old man’s car — a
four-door sedan — and I’ve got two Chevrolet Corvettes, one old and one new.
I like Corvettes as they are a good balance of performance and price.”
Aside from the Corvettes, he leads a modest life: a bit of golf, some
racquetball and squash, church on Sunday, only one house. “If we had more
than one home we felt we would probably always be at the wrong one.” He
married his high-school sweetheart 26 years ago. Their son is nearly 18. “We
are learning to become empty nesters,” he says.
