The Fast Track Quick Screen Elimination Process: Jim Kilts at Gillette

James Kilts was the first outsider to become CEO of Gillette in 70 years. He was brought in to do a turnaround. Like many great executives, Kilts possessed the ability to cut through the noise to focus on the small handful of things that truly mattered. Unlike most great executives, though, Kilts took time to explain how he did this, in his 2007 book Doing What Matters. 

This is the story of Kilts’s approach, which he applied in the first few months of the Gillette turnaround.

As a young man from Chicago, Illinois, Kilts began his career in 1970 at the General Foods Corporation, a subsidiary of the Philip Morris Companies. He started out in marketing, and eventually rose to the ranks of vice president and division manager. 

In 1989, Phillip Morris merged General Foods with Kraft Foods Division. Kilts was made the president of Kraft USA and Oscar Mayer. By 1994, Kilts had risen to executive vice president at the Worldwide Foods Division of Philip Morris. Three years later, he left Philip Morris to found his own investment firm, JMK Investments. This was not to last, however: he re-entered the corporate ranks a year later in 1998, when he joined Nabisco, Inc. as its president and CEO. At Nabisco, Kilts lead a successful turnaround.

Gillette acquired the Duracell battery company in 1997, the same year that Kilts started JMK. At the time, the Wall Street Journal said, “Gillette’s profits will rise at least 15% this year … growth will surpass 18% in the years ahead. Gillette expects Duracell to expand profits at close to a 20% annual clip in the next few years, compared with an average of 12% in the past three years.” 

Kilts found this ludicrous. In his 2007 book Doing What Matters, Kilts talks about data he pulled showing that only 158 companies out of a sample size of 1,056 were able to sustain double-digit earnings growth for five years. That number dropped to five companies for 10 years and just three companies for 15 years. He observed that no consumer product company could achieve such sustained, indefinite growth. He was right. For fifteen consecutive quarters, Gillette missed every estimate made at the beginning of that quarter. These were not Wall Street’s estimates, by the way. These were the company’s own estimates. In those four years, they never once hit their projections. 

Gillette’s elevated stock price lasted about two years after it was clear that the company was not keeping its promises. Inevitably, its stock plummeted from $64.25 in early 1999 to $24.50 in the spring of 2001. Wall Street quickly developed a consensus that the company issued bloated estimates, broke its promises and was run by bad management.

Gillette’s board of directors was embarrassed and frustrated with the company’s track record. They decided to suspend all short-term guidance to Wall Street. From now on, the board declared, Gillette would only talk about long-term plans and strategies, and stop all talk of annual earnings estimates, with no more quarterly guidance or mid-quarter updates. 

This news went over like a lead balloon. Wall Street hated this idea; analysts began clamouring for a change almost immediately.

At this point, Kilts was engaged in informal discussions with seve ...

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