Many of the changes also could serve as a template for other industry players hoping to emulate the giant’s success in coming years as the landscape continues to be volatile with lingering supply chain and labor challenges as well as stubbornly high food inflation.
“General Mills has been among the most agile, I think, of the staples companies over the last couple of years, and a lot of that is due to other structural changes” that were “underappreciated” at the time, but ultimately allowed the company to compete more effectively, Barclays managing director Andrew Lazar said at the firm’s Global Consumer Staples Conference yesterday.
Indeed, during the company's fourth quarter ending May 29 it saw profits rise 23.1% from $1.12 per share in the same period the previous year and group revenues were up 8% to $4.9b -- beating an expected forecast of 91 cents per share and $4.8b in revenue.
In the 52 weeks ending Aug. 22, General Mills saw sales growth of its iconic ready-to-eat cereal portfolio climb approximately 15% -- barely edging out those of competitor Post Holdings and well above those of Kellogg, according to Bernstein analysis. Volume wasn't quite as healthy, dropping about 5% over the past year while Post Holdings saw volume climb about 5%, the report also reveals.
Among the most influential and beneficial changes to which Harmening attributes General Mills’ success in recent years have been reorganizing its internal structure, reshaping its portfolio, investing in diversified talent and setting a new tone that allowed the company to move forward as one with clarity, Harmening explained at the event.
“We’ve made some significant organizational changes … and I understand why they could be maybe not giving us full credit – it’s hard to put in a spreadsheet and algorithm – but it doesn’t mean that they’re not important,” he said.
“As I think about the things we’ve done, specifically in North American retail, we have changed from kind of functional silos to having sales and supply chain and marketing all under one leadership and what that’s allowed us to do is become more agile” with regards to pricing and changes to handle disruptions, he explained.
This approach also is applied in new product development with the launch of GWorks – which uses a tiger team approach to innovation that brings together three experts from across functions, including a technical expert, consumer insight specialist and a business person, to define and solve consumer problems.
“We also made significant changes to our operations outside of North America to reduce the admin footprint we have, but also to increase the number of distributors we had outside of the core market. And that is really important because in doing so we believe that we can accelerate our growth in those markets,” the benefits of which began to play out in the fourth quarter, Harmening said.
In addition, General Mills moved its convenience store business to North American retail to drive “good growth” in its snacking business, he said.
This restructuring also allowed General Mills to adopt an always on approach to mergers and acquisitions to facilitate a much-needed portfolio reshaping, which has included the sales of iconic brands, including Suddenly Salad and Helper, as well as equally high profile acquisitions in its core platforms, such as Blue Buffalo in pet food.
Building a strong team
These changes wouldn’t have been successful without the “exceptional leadership team at General Mills, according to Harmening who called out their talent and diversity as essential.
He explained that while gender and ethnic diversity have been in the spotlight in recent years, just as important is inviting outsiders in to foster fresh perspectives and progress.
“We have a number of people on our team who have come in from the outside, in addition to people like myself, who have been at General Mills for a very long time. And so when it comes to things like data analytics, we brought in somebody from the outside and made tremendous progress. And when it comes to supply chain, what we’ve done, we brought in somebody from the outside and enjoyed a lot of success,” he said.
A shared goal
But for optimal team performance, Harmening said “you need more than talent,” you also need a shared vision and path towards that goal.
“If you have talented people going in the same direction, that gives you a fighting chance,” he said.
Equally important is clear communication and General Mills’ decision during the pandemic to change the “cadence with which we now operate,” he added.
“It’s better to be clear than to be certain in this environment. And so what we have done is now we get together every week and we talk to things that are tactical. We get together monthly and we talk about things that are tactical and a little bit more strategic. And then quarterly we get together and we calk about things that are more strategic. And so what we do now is we have a cadence among our leadership team” to manage both tactical and strategical priorities with “strategic visibility,” Harmening said.
“Time has proven that companies that go through tough stretches, like we’ve all been through the last two and a half years, the companies that prevail are the ones who not only see better through, but invested through those difficult challenges,” he added.
Through this combination of portfolio reshaping and investing in people, Harmening said he is confident that General Mills will continue to grow going forward, even off a higher base as the world – eventually – begins to normalize.