International Flavors and Fragrances, Inc. (IFF)
Give people the ability and authority to get things done, and hold them accountable for the results.
Richard Goldstein of International Flavors and Fragrances says that his most powerful leadership secret is empowerment, “giving people the ability and authority to get things done, and then holding them accountable for the results.
“If the person you want to empower refuses to ‘take the reins,’ then you have the wrong person in the position. Replace him or her.
“It is important to keep in mind that empowering someone does not mean that you allow them to act in a vacuum. People who are empowered to do their jobs must also know when to seek the counsel of others.
“How do you know when to consult with others? It’s simple. If the decision you are about to take is reversible, or if the cost—financial or otherwise—of a potential mistake is affordable, then I say go for it. If, on the other hand, the decision is irreversible and the cost of a potential error is considerable, then it is probably prudent to consult with others first.
Richard offers this example: “Shortly after becoming Chairman and CEO of IFF, we took two significant and virtually simultaneous actions. First, we decided to reorganize our company, bringing our previously separate flavors and fragrances businesses together and implementing a global matrix structure to ensure the entire company was working toward the same goals. And second, we decided to acquire Bush Boake Allen (BBA), a half billion dollar leader in the flavor and fragrance industry.
“It goes without saying that I could not single-handedly manage the reorganization and integration, particularly given the exceedingly high and often skeptical expectations of the financial community. To help run our new matrix organization, I appointed a global head of business development and a global head of operations, and I named the former CEO of BBA to lead the integration.
“We were all in general agreement as to the overall course of action needed, and all three consulted with me on the broad issues throughout the transition. Nonetheless, there were instances when they took different decisions than I would have taken on particular issues. But leadership requires that the boss lets that happen.
“Why integrate flavors and fragrances? The answer is quite simple, though the execution of it was anything but.
“The consumer who wears our customers’ fine fragrance is the same consumer who cleans her house with our customers’ cleaning products. She is also the same consumer who eats our customers’ snacks, brushes her teeth with their toothpaste, and drinks their beverages. We supply ingredients for all of these products. This holds true whether the consumer is in Singapore, Shanghai, Sao Paolo, or San Francisco.
“We reorganized because consumers consume our flavors and our fragrances, and because our customers manufacture foods, home and personal care products, and fine fragrances using our flavor and fragrance ingredients.
“What’s more, many foods have both flavor and fragrance notes. And more and more fragrances are derived from or inspired by fruits, vegetables, herbs, and spices.
“In addition, our customers wanted us to be easier to do business with, and that included providing a single point of contact for all of our interactions, be they global, regional or local—flavors, fragrances, or both. They needed us to be able to go to market as one. So we did.
“What did we gain by integrating flavors and fragrances from an operations and marketing point of view? From an efficiency standpoint, there were compelling arguments to join forces.
“Why, for example, should we have two separate market research groups? Or two separate sales forces, for that matter? If a global customer has a need for both flavors and fragrances, why send two sales teams? Isn’t that overkill? At the very least, by operating separately, we were missing a lot of opportunities for cross-category synergies.
“Our new structure and organization helped us address many of the critical issues we faced. First, our reorganization made us stronger, more flexible, and more efficient. The new IFF is better structured to serve our important global customers and to allow us to deliver improved customer service overall.
“Our new structure also has enabled us to go to market as ‘One IFF,’ which our customers told us they wanted and needed. Finally, as a result of the reorganization, we can better leverage our existing capabilities and, at the same time, find significant cost savings and supply chain efficiencies through the consolidation of our facilities, and improved asset utilization.
“By every key measure, the integration and reorganization have been successful. We closed a total of 26 facilities, and initiated, tracked, and completed 650 integration and reorganization-related projects.
“In terms of pure financials, we are meeting or exceeding our targets. We forecasted $70 million dollars in synergies from the integration. Our savings run rate today is over $80 million dollars. And when we announced our reorganization plans, we said we expected to yield $25 to $30 million dollars in annual savings by 2003. As of today, we are on track to deliver just that. The reaction from the financial community was positive.
“Overall the acquisition has been very successful. I am pleased to count IFF in the minority on that score.”
How to become a better leader? “Learn to delegate,” says Richard. “Stand back and give your reports the breathing room they need to take command and do their jobs as they see fit.
“Unless you believe the consequences will be too serious to bear, you should by and large accept the decisions your people take, even if they are not the ones you would have taken yourself. Impress upon your entire organization that, above all else, when faced with a decision—just do the right thing.”