What it took to lead Clorox when COVID had people clamoring for cleaning products

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Alan Murray (00:22): I’m Alan Murray, and I’m here with the stupendous, unmatchable, Ellen McGirt.

Ellen McGirt (00:30): Alan, you know I love these introductions. Hello, everybody. I just want us all to stop and think a little bit at the beginning of the pandemic, what we were doing at this time two years ago, early stages. I don’t know about you, but I was stocking up on bleach and sanitizing wipes, and I was very focused on hygiene in ways that I had never been before. Do you remember all that, Alan?

Murray (00:52): Oh my God, the same thing, you know, just storing it at home, in the office. We were trying to grab it any store we could get it. The CEO whose company who was responsible for making many of those cleaning products is the CEO who’s with us today, Linda Rendle, the CEO of Clorox. I’m really looking forward to this conversation, Ellen, in part because Clorox has had an incredible kind of roller coaster ride because of the forces unleashed by the pandemic. It was a huge winner in the early days as everybody stockpiled the cleaning products, but now with the virus sort of receding, and focus on inflation and supply chain problems, that’s creating a different kind of problem for the company. So it should be a fascinating conversation.

McGirt (01:38): I agree and I’m also anxious to hear about this from a leadership point of view. She’s one of the few women who’s running a Fortune 500 company, long time coming, particularly one that originally catered to female consumers and I know that’s changing too. And so, clearly, she’s going to be focused on making Clorox a place where more women can rise into leadership roles, which I think is really important. So let’s get her in here right now. Linda Rendle, welcome to Leadership Next.

Linda Rendle (02:03): Hi, Ellen. Hi, Alan. Great to be with you today.

Murray (02:06): Great to have you. Who’s going first?

McGirt (02:07): Alan, I just want to acknowledge the role that Clorox has played in my life. I’ve got my product placement here. My bleach pen. And earlier in the green room session, I was thanking Linda for the role that Hidden Valley Ranch has played in raising my children. Clorox has been part of our lives for a really, really, really long time. Why don’t we start with where you are right now. Alan had mentioned the roller coaster of demand and share price and all of that stuff, ramping up and trying to meet demand. Where are you right now in all of that?

 Rendle (02:37): Yeah, you know what an interesting last two years for all of us, and of course as people, and then of course for our company as we have done everything we can to serve people during an incredibly volatile time for our world. And unfortunately, that looks like it’s going to continue in different ways than the pandemic, but certainly I don’t expect volatility to go away.

Rendle (02:58): So where are we now? We’re significantly bigger business than when we started this. And that’s a point of pride for our team. You know, the very first thing we did in COVID was to ensure that we kept our teams safe so that they could deliver against really significantly increased demand and we did that really well. And then we needed to ramp up production because we were seeing demand for our products as high as 100 500% higher than it had been pre pandemic. So we ramped up our manufacturing capacity. We went to external partners to help us do that. And we were able to within a span of nine to 12 months get to the point where we were able to fully meet demand across our portfolio. So because of that we’re a bigger company today.

So even though we are lapping growth as high as 27%, demand continues to be robust, our brands continue to grow. We’ve returned to share growth, which is great because we had a lot of people enter our categories during that time. And we feel really good the fact that we’ve built deeper relationships with our consumers and customers during this time.

That being said, Alan is exactly right. We’ve headed into a new period of this. We’re experiencing incredibly high inflation, supply chain that continues to have really significant long-term issues across the world. And we’re seeing what’s happening with Russia and Ukraine continue to exacerbate that. And what we’re focused on right now is what we can control. And I think we’re doing a good job of that—taking pricing, cost savings, all of the things we need to do to rebuild our margins so that we can continue to invest strongly in our business which we’ve done so well over the last few years.

Murray (04:28): You know Linda, our colleague, Geoff Colvin, wrote a story recently saying that unless you were a child prodigy, you have never managed through inflation before. It’s not about you specifically, but I think it does apply to you specifically. I mean, from a leadership standpoint, how have you gotten yourself up to speed on how to handle a period like this when your input prices are rising so rapidly?

Rendle (04:51): Yeah, you know, the good news is, well, maybe it’s not good news, Alan. But I’ve been through periods of inflation before. Now nothing to the degree that we’ve experienced now. But we’ve had recessionary and inflationary environments in my history at Clorox where we’ve had to take pricing and we’ve had to activate things like value across our portfolio to ensure that we were helping consumers get through those times. And we’ve done really well during those periods because our business tends to be pretty cyclical from a cost [hard to hear] perspective. So we had all the raw tools that we’ve leaned into before, and we’ve always been able to manage that.

What characterizes this period differently is the severity and the length. And so that’s what we had to go back and say what tools do we want to lean on more intensely? How do we get more external perspective so that we can scenario plan in a different way? I mean, scenario planning and volatility are the name of the game now. And we have to get better at doing that. And that’s one of the things our team has been working on. We have historically been a company very good at managing a very steady growth rate, and then managing through those smaller cyclical periods. And what we need to get better at is managing through volatility that we believe is going to continue into the future, and that’s what we’re doing through investing in digital transformation, and upskilling our people to be able to deal with those things moving forward.

McGirt (06:08): Well, using the same analogy, unless you’ve had a time machine, nobody’s managed through a pandemic before and you actually became CEO, like right in the thick of the middle of it all. What was that transition like for you?

Rendle (06:20): Well, it was an incredible challenge and an incredible honor. You know, to be able to take the reins at a company that I love that I’ve been with for 19 years now. And then I know how much our purpose resonated at a time like this for people around the world. I couldn’t be more honored to have that task.

That being said, it was an incredible challenge, and what was really important was to focus on what matters first, and that was what I did every single day before I got up—what matters today in order to move our business forward for all of our stakeholders. Whether that be our people, you know, and keeping them safe and focused, and well not just you know, physical safety from the pandemic, but mental well being during a time where they had incredible uncertainty when they were leaving the office, etc. to how do we make sure we have what we need for our consumers? How are we communicating with our investors on what’s going on? Our suppliers? Our customers? And that was really the name of the game was being focused on what mattered at the moment and not getting distracted by everything else that was going on.

And of course, personally setting myself up for that. Watching my children at home, you know, having to do remote school and dealing with all of those things as well. So I felt that personal connection to what my teammates were going through because I was also going through it as as a person.

But that being said, you know, what we leaned on was our purpose. We champion people to be well and thrive, and that was the rallying cry for our team. If that’s the case, then what do we do? And that made everything very clear, crystal clear for our team, in terms of what mattered.

Murray (07:46): That’s really interesting, Linda you know, on this podcast, we talk about how leadership is changing. If you’re right, that we are in a world where volatility of the sort that you’ve lived with over the last two years is standard, how does being a CEO change? How does running a company like yours have to be different than it’s been in the past?

Rendle (08:09): Yeah, I think it is different. And we have to take that very seriously. I think the name of the game is being resilient, adaptable and flexible. And you have to take a multi-stakeholder view that is critically important. I think a lot of CEOs started to feel that before the pandemic, particularly on that multi-stakeholder view. But this idea of being flexible and adaptable to what’s happening, you have to. You can’t take a rigid view. And that means you need to be more externally focused.

You know, I spend a lot of time connecting with peers, connecting in the industry, to hear what people are experiencing so that I can bring that back into Clorox and ensure that we’re taking that into account. I spent a lot of time listening to our customers, our investors, our consumers. And I think that’s going to be critical as we move forward through this pandemic that’s still out there and now move through this inflationary period and of course, what’s going on with the awful tragedy in Ukraine. It is going to be a world where we’re going to have to react quicker, and we’re going to have to put the systems in place to allow us to do that.

Murray (09:09): So Linda, we’ve heard so many leaders say some version of what you just said: That it’s a different world. That you have to pay more attention to a broader group of stakeholders. You have to listen more carefully. You have to be empathetic. But I tell you, there’s still people out there who say I don’t buy it, that that’s just a bunch of public relations and that CEOs are still managing to the shareholder the way they always have. What do you say to those people to convince them that the world is different?

Rendle (09:39): Unequivocally the world is different, and I vehemently disagree with that point of view that it is not absolutely linked to creating long-term value. And I think that’s the whole point. Every CEO is accountable for delivering long-term value. And of course, that is about, you know, company valuation and share price and all those things, but the way you get there is through embracing diversity and fully leveraging it because the reality is we have a diverse population, and that’s the workforce of today, and the future is by having a healthy planet because we can’t thrive without one. It’s about thinking about the views and lenses of all the people that you serve. You can’t deliver value if you don’t take care of the your teammates, you cannot do it. And so I can’t delink them and I think that’s the whole point.

If those people believe they can, I’d love to hear the rationale on how they think that’s the case. But I think that’s we’re hearing from has nothing to do with the idea of being woke. It has to do with this is the way that we actually create value and we’ve been underleveraging it as a society for many years. And now I think it is the way and the path forward to continuing to create good growth, and really a more comprehensive view of capitalism.

McGirt (10:52): Let’s talk about where that view intersects with the nuts and bolts of Clorox. I’m guessing that this is going to be a way for you to talk about your ignite-strategy work in 2019 when you were chief operating officer. Can you tell us a little bit about that? Because it sounded like from just what I’ve read about it, that this was an attempt to make systemic, all of the things that you talked about—the big goals and the big objectives—by changing the way the company actually works with each other. Can you tell us about the ignite strategy?

Rendle (11:23): Yeah, Ellen, you know, first, I’d say our ignite strategy was not the first time we had declared that ESG was important to us, or that multistakeholder capitalism was important to us. I’m really proud to say that our company’s been doing that for many years. But what we really needed to do in 2019 was say how do you take the next step to embed that in your business? So what had happened is we built a lot of centers of expertise and excellence in our company, to go deliver packaging reductions to advance our work on inclusion and diversity, etc. And what we realized is to create the difference it needed to be embedded into the businesses. It couldn’t be separate, it had to be linked. And that’s what we did in our ignite strategy in 2019. We said that we’re going to do this work as part of the business units.

So let me give you an example. All of our business units are accountable to have three-year innovation plans and three-your cost savings plans. As part of that strategy we said now you have to have multi-year sustainability plans included in that and those all have to come together so that we can find a way to create better product solutions for people, that they’re more sustainable, and hopefully we have the trifecta of them also costing less. And that’s been a game changer. So as we start to look at the innovation, we’re launching as a company., we’re taking all of that into account and our general managers are accountable for that. That is very different than how we operated four years ago and I think it’s going to be critical to how we do it moving forward.

Murray (12:48): Linda, when you talk about embedding sustainability into your operating plan. We had a pretty big event recently where the SEC came out with a 510-page proposal, talking about how companies like yours need to disclose what you’re doing to address climate, address the environment, and not just within your own operation, but within what’s called scope three, which is all the people who provide you your supplies and your inputs, as well as all the people who use your product and even what they do with your packaging. What’s your reaction to the SEC proposal? Is it in line with the way you were thinking or does it go too far?

Rendle (13:27): You know, obviously, we’re still learning about that. So we’re watching that closely to hear what the FCC finalizes. But from their initial communication, you know, it’s in line with how we were already thinking about disclosure, and certainly in line with the choices we’ve made. As a company last year, we released our approved science-based targets which deal with scope, one, two, and three by 2030. Of course, we made our net zero commitment by 2050. So the spirit of what’s intended in that is very much aligned to what we believe and of course, we believe in good disclosure that helps our investors to understand the risks that we have, and of course also the opportunity we have as we attempt and you know, go after these goals that we’ve set that we think are aggressive and, and of course importantly, address things like scope three.

[Music]

Murray (14:16): I’m here with Joe Ucuzoglu, the CEO of Deloitte US, and the sponsor of this podcast for all three of its seasons. Thank you for that.

Joe Ucuzoglu (14:24): Pleasure to be here, Alan.

Murray (14:25): Joe we had this rising talk about a notion of stakeholder capitalism, that businesses have a responsibility not just to their shareholders but to their employees, to the communities they operate in, to the natural environment. Is all of that talk real and will it last—particularly when times get tough?

Joe Ucuzoglu (14:43): I see a pretty durable shift, Alan, with a lot of momentum here. CEOs are prioritizing sustainability. They’re prioritizing purpose. They’re prioritizing trust. You certainly see some noise. On one end, there’s some skepticism as to whether this is virtue signaling. On the other end, there’s some lingering debate about whether this broader focus on stakeholders detracts from shareholder returns. If you cut through all the noise, what we’re seeing is actually a huge convergence of interests. This is core to sustaining a vibrant capitalist system. If you take a long-term view, the only way that you’re going to deliver sustainable shareholder returns is to take really good care of all of those constituents that you referenced.

Murray (15:27): And is it working, Joe?

Joe Ucuzoglu (15:29): Well, business was at the heart of leading society through the pandemic. Business is at the heart of addressing the climate challenge. We’re seeing massive momentum with very tangible commitments and tangible actions towards decarbonizing the economy. So yes, I think the evidence is ample.

Murray (15:45): Joe, thank you.

Joe Ucuzoglu (15:46): Alan, it’s a real pleasure.

[Music]

Rendle (16:23): Yeah, we’re not where we need to be, Ellen, that’s for sure. I’m incredibly proud to be one of the few. Incredibly proud. And I know my teammates are incredibly proud to have a woman be able to represent our company in the Fortune 500 ranks. So grateful for that, but we have a lot of work to do. And maybe I turn to my own example and say, well, how did I get to where I got and could that be a roadmap? Clorox, I’m very grateful to this company because the focus on inclusion and diversity from the moment I walked in the door and I 10 years ago, created opportunities for me to advance. It created people who leaned into me and gave me opportunities to show what I could do and embrace me for who I am, which is not the standard what we’ve typically seen in the CEO desk. And in fact, in those early days, I would have never viewed myself as a CEO because I didn’t see anybody who looked like me. And the company really helped me. I had managers and leaders, including our last CEO and our board of directors who helped paint a picture for me of what that could look like.

So I think it starts with companies embracing inclusion and diversity and equity work in a meaningful way that helps advance people of color, women, and shows them a path to what they can do, gives them the experiences they need. That’s what Clorox did for me. I had so many experiences in this company that helped prepare me, and I didn’t even realize that at the time, you know, but it was very helpful and helping me to be ready for such an important role like this. And I think that’s what it takes.

If companies don’t do that work, we’re never going to make the change and it requires everybody to understand the people they’re bringing in, how they’re retaining people, development plans, which we’re really focused on, and making a commitment to it needs to look different. And I think you know, a point of pride my leadership team now, my executive team is 50% women. Although we have a good representation of people of color, that’s a place I want to continue to advance you know, we have more work to do there. We have a board that overindexes on people of color and women. And so showing that it starts at the top helps create a culture for us where other people realize they can get there. And that’s important and I think that’s the work we all have to do as corporate leaders.

Rendle (18:55): It helps you a ton. Because I’m not shy, I think he can tell that, but I’m definitely introverted. I think introverts, if you examine yourself, many of them are really great listeners. Because you tend to be quiet, you tend to take things in and absorb them and then think deeply about them. And that has allowed me to get to know our people better, our stakeholders better to hear the so-what underneath. And I think listening always gets to better outcomes because you know what problems you’re trying to solve. And people feel like a different sense from a leader when they feel hurt. And I think our stakeholders feel the same way. And so that’s why I think it’s an advantage. You know, I used my quietness and my introversion to be a better listener and really understand what’s going on in our company and outside of our company. And that’s something I continue to lean into given what’s going on in the world. We need to listen more.

McGirt (19:49): I love it. So we’ve been doing a lightning round with all of our guests this season on Leadership Next where we’re just asked for a quick reaction top of mind on three key subjects facing us all in the world. The first question is what’s top of mind for you when you think of COVID?

Rendle (20:05): Continuing to keep people’s focus on health and wellness at the forefront. Pandemics not over for people and so how do we continue to give them solutions to keep them well.

McGirt (20:14): Top of mind for you when you think about the economy?

Rendle (20:18): This is going to impact everybody, and it’s going to have impacts that we can’t even see right now. And so how do we put people and their well being at the center of how we manage through this—whether that be through how we you know, continue to grow margins as a company and return, how we deal with inflation, how we deal with growth, we really have to understand this as a people problem. And if we solve it that way, we’ll end up in a good place.

McGirt (20:42): And finally, what’s top of mind for you as you think about your own leadership journey?

Rendle (20:47): Yeah, I think you know, it’s going into this next phase. Now that I’m going to be heading into my second year, in a few months here: How do I keep my team motivated, inspired? How do I keep their wellness at the forefront of what we do? Because I’m gonna need them. You know, volatility is exhausting for people to lead through and so making sure that I have the resilience to help them continue to build their resilience and we can continue to help people around the world with our brands.

Rendle (21:22): Thanks, Alan. Thanks, Ellen, so much.

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