In 1971, Kimberly-Clark was a respectable old Wisconsin paper company that had been falling behind for a long time. Over the previous twenty years its stock had trailed the general market by about a third. Much of its business was in coated paper and other commodity grades, made in big mills where the only way to compete was to be cheaper than the next mill. It had famous consumer names like Kleenex and Kotex, but its identity was paper, and its history was its mills.
That year the board named a new chief executive, Darwin Smith. He did not look the part. He had grown up in Indiana, earned his degree at Indiana University, gone to Harvard Law School, and spent years as the company's mild-mannered in-house lawyer. At least one director openly wondered whether he had what the job required. Smith later said he never stopped trying to become qualified for it.
About two months after he took over, doctors told him he had nose and throat cancer and probably less than a year to live. Smith told the board. He also told them he had no plans to die soon. Then he kept working his full schedule while traveling every week from Wisconsin to Houston for radiation treatment. Any new chief executive is under pressure in his first year. Smith was carrying that pressure and a death sentence at the same time, and he kept his hands on the controls.
The decision he became known for came early in his tenure. Smith and his team concluded that the company's future was not in commodity paper, where it would always be one mill among many, but in consumer products, where a strong brand could be the best in the world. So he announced that Kimberly-Clark would sell its paper mills, even the one in Kimberly, Wisconsin, the town that carried the company's name. Over time the company sold or closed six mills and sold more than 300,000 acres of timberland in northern California, building a war chest of more than $250 million. The money went into the consumer business.
It is hard to overstate how this looked from the outside. Selling the namesake mill felt to many people like cutting out the company's heart. The business press called the move stupid, and Wall Street analysts downgraded the stock. Large write-downs dragged on profits for several years. Smith absorbed the criticism and kept going. He had picked a destination, and he was not going to turn the plane around because the first stretch was rough.
The destination put Kimberly-Clark head to head with Procter & Gamble, one of the strongest consumer marketers in the world. In 1978 the company launched Huggies, a premium disposable diaper with an hourglass shape and refastenable tapes, aimed squarely at P&G's Pampers. By 1984 Huggies held about half of the premium diaper segment, and Kleenex held roughly half of the tissue market. P&G sued over patents. After nearly two years of litigation, a federal jury ruled against P&G.
Smith ran the company for twenty years and retired as chief executive on the twentieth anniversary of his appointment in 1991, with the company raising its dividend for the twentieth straight year. Huggies alone was about a quarter of a business that had grown to roughly $7 billion a year. Over his twenty years as chief executive, the company's cumulative stock returns were about four times those of the general market. Kimberly-Clark went on to acquire Scott Paper, its old rival, and to beat Procter & Gamble in most of the categories where they competed head to head.
He did not make himself the story. He was known for a plain, no-nonsense style, and he did things like closing the executive dining room. He died of a heart attack in December 1995 at the age of 69, nearly a quarter century after doctors gave him less than a year. The cancer did not set his course, and neither did the critics.
Pilots learn early that when something goes wrong in flight, the first job is to fly the airplane. Keep control, keep your heading, keep the aircraft going where it needs to go. The distractions are real, and some of them are frightening, but an aircraft that loses its direction while the crew stares at a warning light is in more danger than the warning light ever was. Darwin Smith had two warning lights flashing at once, a diagnosis and a hostile market reaction, and he kept flying.
Every manager eventually makes a call that looks wrong from the outside for a while. You stop a long-running project. You reassign a strong performer. You drop a product that still sells to commit to one that will sell more. The early numbers usually get worse before they get better, and people will tell you so loudly. That is the stretch where most leaders lose their nerve and drift back toward the comfortable old heading.
So decide where you are going with care, because that part deserves your best thinking. Then commit to it. Tell your team the destination and why it is worth the rough air. Hold the course through the first wave of criticism and the bad quarter that follows. Adjust along the way, but do not let fear choose your direction. Smith sold the mill with his company's name on it while fighting for his life, and he did not turn back. Whatever you are facing on Monday is probably smaller than that. Fly the airplane.