US Trade Representative Robert Lighthizer (front R) gestures while speaking to US President Donald Trump during a meeting with China's Vice Premier Liu He (L) in the Oval Office of the White House in Washington DC on Feb. 22, 2019.
Mandel Ngan—AFP/Getty Images
By Alan Murray and David Meyer
February 25, 2019

Good morning.

I suspect Paul Polman had a good weekend.

The recently retired CEO of Unilever dedicated his time at the top to trying to show that what’s good for the world is, in the long run, also good for his shareholders. His shareholders didn’t always agree. Their spat came to a head when 3-G-owned Kraft Heinz, which is equally dedicated to the notion that it can cost-cut its way to success, tried to buy Unilever. Polman successfully fended off the takeover, but many of his shareholders weren’t pleased.

Then last week, Kraft-Heinz announced a $15 billion write-down. And yesterday, word emerged that the company was thinking of selling off its Maxwell House brand. The acquire-and-cut playbook appears to have hit a wall. (You can read Geoff Colvin’s account of what happened here.)

When I wrote about these two competing models of capitalism in CEO Daily two years ago, the CEO of a Fortune 50 company called me within minutes of the piece’s publication, lecturing: “It’s a false choice. You need both!” I take the point. Polman’s social responsibility only works if he can deliver financial results. And part of the reason the Kraft Heinz playbook broke down is because other food companies were forced to copy its cost-cutting playbook, leaving fewer targets for its acquisitive strategy.

But last week’s news makes clear that 3-G-style short-term returns can often come at the expense of long-term success. I, for one, am happy Polman won this round.

By the way, the Kraft-Heinz debacle is also taking a toll on Berkshire Hathaway. But Warren Buffett avoided comment.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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