Newell Rubbermaid's CEO didn't get design or innovation

Bruce Nussbaum

The chief executive of Newell Rubbermaid just resigned after 10 quarters of bad earnings. The news was buried in most business newspaper pages, overshadowed by the good IBM earnings announcement and the GM deal with its unions over legacy health care costs. Yet the Newell Rubbermaid CEO resignation may be the most important corporate news of the day. Why?

Chief Executive Joseph Galli gutted the design and new product development departments of both Levelor and Rubbermaid in a Price-Cost-Margin business model that failed dismally, according to people I know who worked there. Instead of playing the innovation game, coming up with new products that customers loved and were willing to pay for, he went for the downscale, let's-compete-with-the-whole-Asian-world game and lost big. While Galli talked innovation--his stump speech called for 30% of revenue coming from new products every year--he took away all the resources needed to deliver those new products in a drive to boost quarterly profits. A vicious cycle hurt Newell Rubbermaid deeply.

The board, which never should have agreed to such a backward business plan, has now appointed board director Mark Ketchum as interim CEO. Ketchum, 55, retired last year as president of Procter & Gamble's baby and family care unit (Pampers and Bounty). I don't know if he played a significant role in pushing Galli out, but I bet he had did. Word from P&G is that Ketchum "gets" design and innovation. Perhaps he should also get the CEO job.

P&G is becoming the model for the innovative company, just as GE was the model for the Six Sigma quality company in the 90s. I wonder if it will be a source of innovative CEOs the same way that GE has been a source of quality and cost-control execs in the past.

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