CEO Irene Rosenfeld will address the World Business Forum in New York on Oct. 7 and tell executives how she led Kraft FoodsKFT through "transitional change" when it became a giant company in its own right after its 2007 spinoff from Altria Group. Rosenfeld, 56, offered USA TODAY's corporate management reporter Del Jones a preview. Following are excerpts, edited for clarity and space.
Q: You want Kraft to get even bigger by acquiring Cadbury for $16.7 billion. How does that fit into your strategy for change?
A: It's a logical next step in our transformation toward a high-growth, higher-margin company ... to create a global powerhouse in snacks, confectionary and quick meals. Kraft would become a $50 billion company with the scale, scope and the resources to grow faster.
Q: This follows Kraft's spinoff from Altria, when you tried to lead Kraft as a start-up. How is that possible with a Fortune100 company that has ambitions to be much bigger?
A: We redefined the higher purpose of the company and the core values. A higher purpose was "making today delicious." Everything employees do, from product quality to social responsibility to marketing, is about what they can do to make today delicious. That's been a powerful rallying cry.
Q: Sounds like sloganeering. Is that more than a good jingle?
A: Of our seven values, the one that has had the most profound impact is the one that encourages all employees to act like owners. Everyone understands what it means to own a business. You spend money like it is your own, you make sure you're getting a return on your investment, you treat people like you would like to be treated. Of all the changes we've made, that's the one I've gotten the most feedback on.
Q: You have six rules for the road in leading change. No. 1 is "getting the right people on the bus." Is that the most important rule?
A: With proper credit to (Good to Great author) Jim Collins, the first step in most turnarounds is making sure you have the right leadership in place. As a result of our rewire strategy, more than half of our leadership is new to their role at Kraft over the last two or three years.
Q: Sounds like getting the right people on the bus means throwing many others off the bus.
A: We didn't make all these changes simultaneously. It was over the course of two to three years. When you seek to transform, there are some who like the new direction and are prepared to follow and others who can't. A number of people retired. Not all were active employees who were thrown from the bus. We used this opportunity to make changes, either with new blood from outside the company, or we promoted people.
Q: What qualities did you look for in new people?
A: A passion to win and a sense of urgency about getting it done.
Q: Large companies are deep in bureaucracy. Did that get in the way of operating like a start-up?
A: Definitely, but when we asked people to act like owners, they understood that an owner does not sit in a meeting going through 100 pages of documents. We stressed "keep it simple," and that resonated with our employees.
Q: What behaviors do you personally try to model at Kraft?
A: Values such as we inspire trust, we act like owners, we keep it simple, we're inclusive. I've challenged both myself and my management team to live these values and behave in accordance. We can't expect our employees to do it if we don't do it ourselves.
Q: Where have you fallen short in trying to model behavior?
A: We'll go and do something, and someone will say, "That's not simple." I appreciate the fact that we call each other on this stuff. Creating an open environment with candor and telling it like it is is essential to our ability to transform the culture and to become more nimble.
Q: You recommend focusing on growth in a recession. People don't quit eating in a recession. They still go to the grocery store, so you enjoy a luxury most companies don't.
A: It's not an either/or. We cut our costs to provide the funding to invest and drive growth. Cost cutting should be a means to an end, and that end is growth. It's been an energizing concept, and it has helped employees be much more engaged in cost cutting than they may have been. It's a little hard to get up every morning and just say, "Cut those costs." You need to feel like your work has a higher purpose.
Q: You recommend leading from the heart and the head. What body part wins when the head leads one way and the heart tugs another?
A: At the end of the day, it's about balance. Neither extreme is the right answer. When we issued financial results, I sent a note to the organization congratulating them on their performance and reminding them that we still have some work to do. They don't feel like we're not grateful for the hard work, but at the same time we made it clear that we have more work to do.